U.K. to Establish a Post-Brexit Port 70 Miles From the Sea

(Bloomberg) -

The U.K. government aims to address one of the big challenges of Brexit by creating a so-called inland port where imported goods could be checked without causing logjams at the coast, two people with knowledge of the plan said.

Her Majesty’s Revenue and Customs is in talks to rent a warehouse at Magna Park in Milton Keynes, about 70 miles from the coast and 50 miles northwest of London, the people said, asking not to be identified because the negotiations are private. Goods from the European Union could pass through customs there after the U.K.’s departure from the bloc.

HMRC is talking to the owner of the property, Gazeley, about the lease, which is yet to be signed, the people said. A spokesman for the European warehouse developer owned by Singapore’s GLP Pte declined to comment, while an HMRC official said inland customs checks are part of its “business-as-usual” activity.

The government’s plans for the Milton Keynes site come as demand for warehouse space booms in Britain, thanks to e-commerce, which now accounts for a fifth of retail spending excluding groceries. Manufacturers including Rolls-Royce Holdings Plc warn they may be forced to hold more stock if Brexit affects their supply chains, a trend that would further stoke demand for warehousing.

“If Brexit disrupts trade between the U.K. and EU, then supply chains could become less reliable,” said Jon Sleeman, EMEA industrial and logistics director at broker Jones Lang LaSalle Inc. “Some manufacturers or retailers may decide that they need to hold more inventory in the U.K. to cover for this uncertainty. This could lead to requirements for additional warehouse capacity.”

The U.K. and EU are still negotiating a divorce settlement, and there are concerns about post-Brexit congestion as customs checks are carried out at the border. HMRC Director General for Border Coordination Karen Wheeler told lawmakers last November that Britain will need additional inland infrastructure to smooth customs procedures.

There was further evidence of the government’s plans in a job advertisement posted by HMRC on Sept. 17. The ad says the U.K. is establishing two new “inland pre-clearance” sites “in order to meet regulatory requirements,” and that the job involves carrying out customs checks on goods before they are cleared for import.

HMRC said Thursday that it is “committed to collecting and protecting customs duties and import VAT from potential fraud now and in the future, and we continue to evolve our response as new threats emerge. HMRC works in partnership with Border Force to undertake targeted checks inland as part of our business-as-usual activity.”