The twists and turns involved in establishing a warehouse within the EU.
Part 1 – A Brexit contingency
By Mike Stephenson, Managing Director, ILG
In January 2020, with one year left until the UK left the EU, we made the decision to prepare a contingency plan in the event of a hard Brexit. Many of our clients have complex supply chains in and out of Europe. This was fine while we were in the EU, with no duty or customs checks adding cost and delays, but a hard Brexit, we realised, could leave some of them exposed.
One of the major benefits of ILG being owned by Yusen Logistics is that our parent company has operations in just about every country in Europe. So I was able to ask them for support in setting up an ILG warehouse, with all our brand values, offering the recognised ILG customer experience, within the EU.
Choosing a location
With access to Yusen Logistics’ European data and internal and consultative research resource, we launched a project. We were looking for a strategic location with access to a very flexible resource pool at reasonable cost, so that we could support our customers’ volume fluctuations in European markets and respond within 24 hours. Proximity to Germany was important too, as the second largest e-commerce consumer in Europe.
We looked at factors like population density, average age, unionisation, employee relations, militancy etc. After four months, we had our prime location: Wroclaw in western Poland.
Wroclaw is 80km from the German border, with easy access to Leipzig, where many carrier hubs are based. Poland is also where rail imports from China terminate. Yusen Logistics has a depot on the same estate, which would prove invaluable as we entered the next phase.
Setting a date
We signed off on Wroclaw in September 2020 and began work on preparing the site for an opening in March, details of which we’ll go into in Part 2. At this point we believed the UK Government was going to negotiate a sensible deal with the EU, but while uncertainty remained, we had to push the pause button while our clients waited to see what the deal would bring.
Come January 1st, it was clear that the Government had not secured a free trade deal at all and we had a wave of clients suddenly feeling the impact of double duty payments and customs delays, eager to take up the offer of space in Wroclaw. So it was full steam ahead once more, with a new opening date of May 3rd.
A new market opportunity
The benefit for our clients will be immense. If you have product manufactured in the EU, you can keep it in Europe without having to pay any import costs into the UK. Lead times on shipments to your customers are kept to a minimum because there are no customs protocols. Poland is also relaxing the need for UK companies to have a fiscal representation there.
Our decision to open a warehouse in Poland has been vindicated by the level of client uptake and new enquiries. We’ve got 11 clients moving with us to Wroclaw and we’ll be processing tens of thousands of orders per month from within the EU, including big deliveries to retailers around Europe. We expect the site to be at capacity by the end of the year.
What began as a defensive strategy for ILG and our clients is now turning into an exciting sales and marketing opportunity, opening up the European market. By 2025, we forecast that 30% of our overall business will come from Continental Europe and our clients are making similar predictions. If you haven’t yet made plans to move your stock to Europe, there is still time. But every day you wait could be costing money.
Thinking of moving stock to the EU? We’re ready to help you. Call ILG on 0844 264 8000 or email firstname.lastname@example.org.