A US ecommerce operations business has opened its first UK distribution centre to ensure that its clients can still get their goods to shoppers in the event of a no-deal Brexit.
PFS has run its European operations from Belgium since it was founded in 2000. Its first customer was IBM and today it works with global brands including L’Oréal, Pandora and Asics. Before Christmas it leased and opened its first warehouse in this country, located near Southampton Airport and now almost half full - and says Brexit was the driving force behind its decision.
“We have looked at the UK for years but it is really hard to put a case and ROI together for clients because Belgium was so close and the cost was not astronomic from a freight standpoint,” said Joe Farrell, vice president of international operations at PFS. “Even delivery times were OK but as we got closer to Brexit we have sensed a lot of nervousness with our clients.”
Currently the PFS Southampton warehouse is 40% full, and the company expects it to be half full by the critical date of March 29, which could be the day that the UK leaves the European Union without a deal, and reverts to World Trade Organisation tariffs as a result. If that happens, as the FTA warns today, there could be widespread disruption.
PFS’ largest client will go live in the warehouse on March 28. “The last shipment date we’re going to have for them in Belgium is the 27th so we can get everything through the Chunnel before midnight on the 29th,” said Farrell.
PFS’ retail clients - who sell items from cosmetics and health and beauty products through to fashion and sportswear – are stocking between three and four months of inventory in the UK market. That gives it longer lead times to ship goods after March 29.
“Most of them will be comfortably safe if their goods are inside the borders and would have no issues with shipping," said Farrell. "We’re not going to be able to predict Channel Tunnel traffic or delays with trucks, but from a cost and an ease of doing business, we’re utilising our IT services so that rather than having to do customs clearance for every single small package that goes through we’re going to clear it by bulk. We’re going to put a full load of small direct-to-consumer orders on one pallet and clear that as a small pallet and then send the manifest information to the authorities and the brokers once it goes through.
PFS says there’s still time for other retailers and brands to get their goods into its warehouse ahead of March 29 – but says that they would need to act this week.
At the same time, space is being freed up in its Belgian distribution centre for UK brands who want to hold stock on the other side of the Channel in order to sell more easily into the European market.
“It’s a two way tunnel – whatever I pull out of Belgium to put in the UK today, I can put in UK businesses next week to deliver to mainland Europe tomorrow.”
So will the flow of goods be affected further down the line in the event of a no deal Brexit? PFS’s Farrell says not. “Because we’re here, we’ll be delivering better. With our shipments this week, the client’s extremely happy because we’re shipping out one day and packages are being delivered next morning.”
He says it’s an exciting time for the business. “For most of my staff it’s been a very exciting time – we look at how quickly we move. We received the keys of the building on November 1 and we were shipping orders just under three weeks after that.”
So what can retailers that are concerned about the possibility of a no-deal Brexit do?
“Reach out to consultants like us,” advises Farrell. “Even if they’re not a client or if they’re too small to outsource to a company like us, we can always advise them on what they need to do with the carriers and how they need to go out it to ease the pain of the solution of doing it. We can easily pop up DCs [distribution centres] in stores, which is one of the other alternatives we’re offering to clients as well. If they have a store with large enough inventory we can pop up a small pick area in the back room to at least be a temporary set up until they can put something bigger within the borders.”
Image courtesy of PFS