5 Unexpected Ways Technology Is Redefining The Logistics Industry
The industrial and logistics sector had one of its strongest years to date in 2016, according to a new report by Lambert Smith Hampton, and the sector is only going to become more robust as evolving technology and changing consumer habits boost demand across Europe.
UK-wide industrial and logistics takeup totalled 99.2M SF in 2016, up 3% on 2015 and 6% above the five-year annual average. Only 8% of retail transactions take place online across Europe, but online purchasing is already impacting high streets and logistics. With experts forecasting this to rise to 25% of total retail by 2025, greater disruption in the sector is yet to come.
Savills also found seismic changes afoot in the European logistics sector and, predicted five major ways the market could change by 2030:
1) Retailers and manufacturers may relocate warehouses to take advantage of cheaper locations and labour as drone technology will enable deliveries to be made from areas previously inaccessible to lorries.
2) Warehouses will get taller as robotics allow stock to be racked more efficiently, with automation enabling products to be retrieved from greater heights. Warehouse workers may also be supplied with robotic exoskeletons to assist them in the loading and packing of deliveries.
3) Price-savvy, globalised shoppers will purchase more products from retailers based abroad when delivery is not too expensive. Cross-border e-commerce could grow by 25% annually, which would have a major impact on where retailers and manufacturers place distribution hubs. We could see more warehouses closer to borders and more steps and locations in the delivery chain to manage custom and border checks.
4) Advances in battery technology and autonomous electrical vehicles will lead to a proliferation of nighttime deliveries.
5) Brick-and-mortar retailers can use their existing premises, rather than warehouses, as dispatch centres if they are closer to the customer. The cost and compressed timeline to get items to customers could challenge Amazon Prime’s one-hour delivery windows.
Kevin Mofid, director in Savills commercial research team, said variations in retail business models, legacy supply chains and the penetration of online retail country by country means there will be no single solution that can be applied to warehouses and distribution across Europe.
Countries such as France and Germany, where e-commerce is set to rise dramatically, have the greatest potential for change. However, countries in Eastern Europe, where labour is cheaper and land is in greater supply, could be the net beneficiaries should the supply chain centre of gravity shift east, driven largely by the increase in autonomous vehicles and truck platooning, Mofid said.