Logistics and warehousing companies in the Netherlands are being inundated with requests from British businesses looking to rent warehouse space, as the country experiences a Brexit boom in investment and jobs.
Thousands of small businesses have been plunged into crisis by the UK’s departure from the EU, with exports to the continent collapsing because of delays at ports, increased shipping costs, and the sudden addition of VAT, customs duties, and in some cases tariffs, on shipments sent from the UK to customers within the bloc.
Many have been left with no option but to invest in distribution networks within the EU, and the Dutch logistics industry is reaping the rewards.
Netherlands logistics companies have been flooded with calls for help, while the number of British companies searching for a base in the country has doubled in the last 18 months, the Netherlands Foreign Investment Agency (NFIA) said on Tuesday. The agency has a list of more than 500 global firms considering investing in the Netherlands because of Brexit – half of which are UK companies.
Toy trainmaker Hornby and clothing retailer JD Sports are among those thought to be considering warehousing in the Netherlands.
“We know for a fact it is going to be complete madness into summer,” said Jochem Sanders, business development manager at the Holland International Distribution Council, a non-profit body which he describes as a “matchmaker” for Dutch logistics firms.
Sanders said he has been contacted by more than one British company per day throughout December and January, all looking for warehousing space, and he expects the number of requests to continue.
“I have had requests from 25 UK companies so far in January, and in December more than 30, asking can you put us in touch with Dutch logistics firms,” Sanders said.
The number of companies searching for a base in the Netherlands has surged in recent months, according to Michiel Bakhuizen, spokesperson for the NFIA, which is a government agency tasked with attracting foreign investment.
While around half are British companies, the other half are from places such as the US and Asia, who want a foothold in the EU, and have decided against locating in the UK following its departure from the bloc.
By distributing from inside the bloc, UK firms are able to avoid their customers in the 27 EU member states being hit by VAT charges, customs duties and lengthy port delays which have impacted cross-border trade since 1 January.
“A lot of companies are thinking of establishing themselves on the European mainland and the Netherlands is one of the big hubs for that,” Bakhuizen said. “We are pretty busy because of Brexit at the moment.”
Part of the country’s popularity can be linked to Rotterdam, Europe’s largest port, as well as Amsterdam’s Schiphol airport.
But the Netherlands logistics sector also boasts the ability to reach customers in all corners of the EU – from Rome and Madrid, to Stockholm and Warsaw – within 24 hours.
For now the EU, with its 500 million consumers, remains the UK’s largest trading partner. The UK exported £294bn of goods and services to the bloc in 2019, according to official statistics, representing 43% of UK trade. Hornby has reorganised its operations. It has resumed EU exports after a pause of several weeks, and will begin serving its European customers from a new warehouse based in mainland Europe within weeks.
Chief executive Lyndon Davies said “We bring in 300-400 containers per year and we are shipping to our warehouses in the US, Australia, New Zealand, South Africa, India, so we will consolidate at our factory and probably bring it direct into Europe”.
The move will save European customers from having to pay higher shipping costs and VAT to receive items ordered from the company’s website, as well as the tariffs levied on certain models.
Under the “rules of origin” outlined in the Brexit agreement, products which are not made in Britain, such as Hornby’s Chinese-made toys, attract tariffs when re-exported from the UK into the European market.
Sportswear retailer JD Sports, which hit £1.6bn of European sales in 2020, has said it is also working out how to negotiate the complex new rules, given much of the clothing and footwear it sells is imported from Asia, and would incur tariffs if re-exported to the EU without being processed in the UK.
The retailer is currently looking at a range of EU countries – including Germany and the Netherlands – to locate a new warehouse to serve EU customers.Smaller businesses have also been looking at how to prevent paying double duty, or seeing its EU customers charged VAT to receive their products. About one in five small businesses export overseas, according to business group Federation of Small Businesses (FSB).
Brie Read, chief executive of hosiery retailer Snag Tights, based in Livingstone, Scotland, decided the firm “just couldn’t wait for a decision on Brexit” and began to look for an EU warehouse last July.
The firm, which sends 1,000 parcels, or 30% of its orders, to Europe each day, has leased a warehouse in Venlo in south-east Netherlands, close to the Germany border.
“Everyone speaks English – and links are great to both the north and south of Europe,” Read said.
Even Strokes, an online retailer specialising in motocross gear and parts, and only established in 2019, has recorded a “horrific” fall in sales since the start of January, said founder James Burfield. “Brexit threw us a bigger curveball than Covid,” he added.
DPD, the courier service used by Burfield, temporarily paused its road service to Europe, blaming new border procedures and additional customs paperwork for increased transit times. Customers have also complained to Even Strokes over higher shipping costs and times. Some have demanded refunds.
As a result, Burfield is now looking to rent a warehouse in the Netherlands or Belgium, and employing a new staff member overseas.