Articles by Richard Parkinson
In recent months, COVID-19 has put incredible pressure on global supply chains. But it’s not just the pandemic that is causing unforeseen pressure on the UK supply chain. We have an ageing infrastructure, a chronic HGV driver shortage, record-high prices and record low space availability on sea freight options, new rules in trading with the EU, and in addition, a UK-wide shortage of warehousing capacity. While we have had to stay at home, online shopping has peaked and an increasing amount of goods have been transported across the globe. According to UNCTAD, maritime logistics represents 90 percent of the world supply chain. Therefore, ports are an integral part of global trade. Ensuring uninterrupted supply The global freight market is under extreme pressure at the moment, and port congestion results in container vessel delays which might lead to demurrage charges for cargo owners. These are genuinely unprecedented times, requiring decision makers across a wide variety of sectors to think hard and think differently when it comes to ensuring uninterrupted supply throughout peak season and beyond. A multi-modal approach can meet the client’s needs in the best way allowing them to react to change A multi-modal approach can meet the client’s needs in the best way allowing them to react to change and automatically make amends to the plan, in accordance with the issues being faced. However, end-to-end supply chains rely on assets and you’re only as robust as the amount of ships and/or operators involved. The industry has faced many challenges with Brexit, Christmas, COVID-19 and the Suez Canal and although some can be seen as isolated incidents, they have happened and they will again. Improving any breakdowns It’s difficult to prepare for the unknown and when it might happen but I think operators have a great way of gathering the data following these events and use it to improve any breakdowns in the chain in preparation for if there’s a next time. As a result of the pandemic, shipping companies took ships out of the sea due to reduced demand but it’s interesting that demand is now increasing and yet the numbers of ships back out at sea hasn’t increased alongside. The cost of using ships has rocketed - one customer importing from Japan used to pay £900 per container, now it’s £7,000 and even £14,000 from China. Port-centric warehousing We really need everyone working together to benefit all parties - it’s very one-sided at the moment So, we’re seeing prices remaining high with fewer ships operating - what incentive do operators have to get more ships back out onto the water and get back to where they were, when their income is healthy with reduced numbers? We really need everyone working together to benefit all parties - it’s very one-sided at the moment but I understand that companies could be remaining cautious with a fast return to pre-COVID while the pandemic is still impacting life. Looking ahead, I think autonomy is going to be huge and we’ll see the reliance on trained operatives being removed. Autonomous shipping is already being trialled and of course, the capabilities of drones is only going to improve in the future. Whilst there is no silver bullet for the combination of complex challenges we face, one suggested approach is to put port-centric warehousing at the heart of your UK distribution strategy. National rail infrastructure The port-centric model is very simple. Rather than transporting your goods hundreds of miles inland to primary distribution centres, the storage facilities are located close to, or within key ports. By doing so, you take costly, time-consuming links out of the supply chain, replacing them with seamless, simple solutions from ship to doorstep. Another option to consider, which again takes links out of the supply chain, is to utilise the rail network within the port for onward transportation. We’re fortunate at Solent Gateway to offer a dedicated rail link which is connected to the national rail infrastructure and can provide a direct route for freight whilst reducing traffic on the roads. At Solent Gateway, we are committed to solving customers’ supply chain challenges and support businesses that seek facilitation of logistics hubs, business parks, storage, sea to rail, sea to road, automobile, project cargo, general cargo, dry bulk and break bulk.
The UK government has selected eight new freeports in England, as a means to boost trade, jobs and investment, across the country. The special taxation and customs rules for the freeports will help businesses develop new facilities and operations, to trade and manufacture goods more cost-effectively, countering the effects of other complications, such as Brexit and COVID-19 pandemic. Early deliverability of opportunities for new businesses is the key, with Solent Gateway Ltd, at Marchwood Port, Southampton, leading the way with 64 hectares of new space, which will be available from as early as Autumn 2022. Freeport A freeport is an economic zone, such as a freight seaport or airport, where typical VAT and customs rules don’t apply A freeport is an economic zone, typically encompassing a freight seaport or airport, where typical VAT and customs rules don’t apply. This makes it cheaper and easier for raw materials or components to be imported to manufacturers, processed into manufactured goods and imported into the UK, or exported. They can also have simpler planning rules, helping businesses to quickly build or adapt premises in the area. The locations across England for the eight new freeports were announced by the Chancellor, for the budget in March 2021. These locations for freeports include: Solent East Midlands Airport Felixstowe and Harwich Humber region Liverpool City Region Plymouth Thames Teesside The eight freeports will create some 170,000 jobs, in the coming five to ten years. Within the Solent Freeport, Marchwood Port, operated by Solent Gateway Ltd, has been designated as both a customs site and a tax site. Tax incentives of freeports Freeports can help businesses to improve processing time, due to reduced transportation Within a freeport customs site, there are two principal benefits. Firstly, customs duty and import VAT are only charged on goods, if and when they are released from the freeport into the United Kingdom. This enables businesses to process, store and transport goods with greater flexibility, giving them a cash flow benefit. Secondly, duty paid can be on the final product, rather than component parts, if lower, also reducing the tax paid, as raw materials normally have a higher duty rate, in comparison to the manufactured or processed goods. Freeports can help businesses to improve processing time, due to reduced transportation. Freeport tax sites get higher capital allowances Freeport tax sites will benefit from greater capital allowances, when purchasing plant and machinery, or building new structures. Companies will be able to claim 100% enhanced capital allowances, on the purchase of new and unused plants, and machinery that is incurred for a trade being carried out at the freeport tax site. The purchase will need to be incurred before September 30, 2026, for the item to qualify for this benefit. Plus, qualifying expenditure on structures and buildings, within a freeport zone will qualify for Enhanced Structures and Buildings Allowance, at 10% per year, for 10 years on expenditure incurred before September 30, 2026. This is a significant increase on the current level of 3% per year, for 33 years for non-freeport areas. There are also very appealing benefits around national insurance relief, for up to 3 years per employee and business rates relief, with new or expanding business being able to claim up to 100% relief, for 5 years. UK freeports plan The UK freeports plan is an excellent initiative to incentivise new businesses, to set up new operations in freeports" Richard Parkinson, the Port Director at Solent Gateway Ltd, said “The UK freeports plan is an excellent initiative to incentivise new businesses, to set up new operations in freeports. It presents a truly golden opportunity for both UK and foreign businesses. Solent Gateway is unique in its offering, as it is both a customs and tax site, with high-quality logistic space, to be available to new businesses from Autumn 2022.” He adds, “In terms of who will benefit most from operating in a customs and tax site, such as ours, it is businesses that want to develop new facilities and operations, thereby benefiting from all the incentives to attract new business, import goods and components to the UK, store goods for as long as they want, without facing customs duties after 90 days, and manufacture or assemble products, as import duties are paid on the final product or component parts when they leave the freeport, whichever is cheaper.” Richard Parkinson continues, “If goods are exported after manufacture, inside a freeport, no customs duties will be paid, so I have no doubt that freeports are very attractive to manufacturers. Any organisation that wants to import, manufacture and export within a customs site, will avoid all duties, so that is a great incentive. Any business that wants to store items for more than 90 days will also benefit.” Solent Freeport Solent Gateway Ltd is part of the Solent Freeport. Establishing the Solent Freeport will create 52,000 new skilled and semi-skilled jobs, including 26,000 direct jobs in the Solent and 26,000 in the wider UK supply chain. COVID-19 has widened the opportunity gap for these communities and a Solent Freeport provides a once-in-a-generation opportunity to reverse these trends. The Solent Freeport will also support levelling up, across the United Kingdom, in particular, in the UK’s industrial heartlands of the Midlands and North. The potential of significant government investment in freight links between Southampton and the Midlands will be realised, through the connectivity to global markets that the Solent ports provide. Marchwood Port logistics hub Chris Anderson, Head of Business Development at Solent Gateway Ltd, stated “Solent Gateway Ltd, located at Marchwood Port, Southampton is one of a very few locations in the UK that is both, a tax site and customs site. We are, therefore, tailor-made for the development of new facilities for import, manufacturing, assembly, storage, export or delivery into the UK.” Chris Anderson adds, “Marchwood Port is a very high-quality port-centric logistics hub with the outstanding sea, rail and road connectivity, and will have 64.3 hectares of new space available for commercial use starting in Autumn 2022.”