UK warehouses could reach capacity as demand for goods such as clothing falls due to the coronavirus lockdown.
Peter Ward, CEO at the UK Warehouse Association, said orders placed and dispatched before the lockdown of non-essential goods were continuing to arrive at ports and cause problems for warehouses.
“Warehouses in this situation are quickly reaching capacity, and if they cannot accept any more goods, the consequences potentially could be catastrophic – blockages upstream in the supply chain, fully-loaded containers and trucks unable to discharge, ports unable to cope with the backlog, ultimately prevention of the flow of essential supplies such as food and pharmaceuticals,” he said.
Warehouses handling food and ‘essential’ supplies, such as medicines, are struggling to maintain a ‘business-as-usual’ service “in the face of a massive spike in demand”, Ward warned.
Ward’s comments come as The Guardian reported up to £10bn of clothing could be piled up in warehouses as demand slumps due to the virus outbreak.
Firms including Primark, Peacocks, Arcadia and Next had all stopped taking deliveries to their warehouses because they had no more room.
Next has temporarily closed both its in-store and online operations to protect distribution workers from infection.
Meanwhile, UK-based fashion suppliers are worried for their future as retailers extend payment terms and cancel orders.
Nigel Lugg, chairman of the UK Fashion and Textile Association, told the Financial Times: “The majority of major retailers are extending payment terms and there are widespread cancellations even of orders in progress.
“Terms are routinely being taken from 60 days to 120 or even 150 days . . . it could take out a lot of suppliers.”
A supplier to New Look said it had received a letter warning it would not be paid for orders currently in production.
“New Look is cancelling all orders where they haven’t taken ownership, without compensating for any deposit or raw materials purchased by the supplier, plus delaying indefinitely any outstanding payments to suppliers,” the firm said.
“This will destroy firms and factories all the way up the supply chain in this climate.”
A New Look spokesperson said: “We have regrettably had to inform suppliers that we cannot place new orders until further notice and will be temporarily postponing outstanding supplier payments until the situation improves.
“We have not taken this decision lightly and have only done so out of absolute necessity given the exceptional circumstances we are in.”
Last week, the Bangladesh Garment Manufacturers and Exporters Association estimated $3bn worth of exports to fashion brands had been cancelled or suspended as a result of Covid-19.
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