Whilst the full impact of the referendum is uncertain, what we can be sure about is that it has already had an effect on the UK’s global trade.
Uncertainty in the future has led to devaluation of the pound, which has had a number of effects. In general, this has made imports from outside the UK more expensive (relatively), and some manufactures have already responded to this by reducing the size of their products. However there are some benefits too. A weaker pound means that exports from the UK are more appealing to overseas importers.
At Stowga we are collecting data on the import and export of goods in the UK, to enable us to predict future demand and adjust prices to get the best deal for both customers and warehouses. This also means we are able to look at data and determine the impact Brexit has already had. I have picked out a few commodities which we found particularly interesting, and attempt to explain why we have seen such large changes in volume. Imports
It seems obvious that luxury items would fall in volume, and old stamps are a prime example. Collectors are less interested in importing from overseas when the pound has fallen considerably, and whilst investors are looking to stay out of the currency market, they prefer to stick to “safer” commodities such as gold and semi precious metals.
Note: This graph may not look like anything earth-shattering but the graphs are plotted with a logarithmic scale (on the y axis). This means that at each “tick” the volume goes up by a factor of 10. So if there are two ticks separating the lines, the volumes differ by a factor of 100. It was necessary to use a logarithmic scale as the changes are so large!
Poultry keeping machinery
Whilst a falling pound means that importing the poultry-keeping machinery is more expensive, it also means that importing the end product (chicken and eggs) is more expensive too, hence it becomes more attractive to produce more poultry in the UK, and meet demand locally, insteading of importing the food from elsewhere.
Over the three months the tonnage of equipment imported went from around 1,000 tonnes to over 10,000 tonnes - a 10x increase. Exports
It seems that food has been one of the first commodities to respond to the change in currency valuation, with its limited shelf life. Hake, a popular fish in the UK, has seen massive gains in the months following Brexit, with a 10,000% increase on the 7 year average in September. Buyers from the EU taking advantage of the cheaper pound are likely to be the main driving factor behind this, as the Hake becomes cheaper than other fish elsewhere. A number of other foods such as mushrooms, truffles and wheat have seen similar gains.
You would normally expect to have around 5 tonnes of Hake exported at this time of year - but in 2016 we exported over 500 tonnes.
The Curious Case of Coconut Oilcake
Coconut oilcake is a commodity which is primarily used to feed livestock. Import volume increased significantly in the months since Brexit, which seems slightly unusual given that it can’t be processed into anything else. We initially thought this might be due to a significant increase in livestock in the UK. After doing some digging, this didn’t appear to be the case. Perplexed, we were also able to find the export data for the same commodity, and this is where things get even more interesting. Exports of the same commodity have increased too, with a lag of a few months. It is somewhat unclear why this would happen. One explanation is that importers over ordered, and were forced to resell the excess overseas. This is the simplest explanation (and therefore the most appealing thanks to Occam’s razor).
Another possibility is that the oilcake is shipped into the UK from overseas, where some of it is then repackaged and exported elsewhere. If this is the case, it is not clear why export volume increased as much as it did above previous years, by more than two orders of magnitude. A weaker pound would lead to more attractive goods for those buying the exports, but it would also hurt the importer as the raw goods would be more expensive, eating into their margins unless they raise prices. Whatever 2017 brings, you can be sure that at Stowga we will use our data to find you warehouse space at competitive prices; whether you need storage for a couple of weeks or a year. All you have to do is fill out a form, then sit back and wait for us to do the work.
Flexible, Simple, Efficient.