Keith Taylor, our managing director.
SPEEDY delivery is driving the logistics sector.
Algorithms to optimise routes, automated loading, putting more vehicles on the road – they’re all measures being thrown at the challenge which is ultimately about getting products to customers doors faster than ever before.
However, there’s one part of the puzzle that’s rarely talked about, and that’s location.
Let’s look at one example. Newcastle is one of the UK’s fastest growing cities, with a population that’s expected to reach more than 315,000 by 2040, an increase on 300,000 (2019). It’s also becoming more prosperous with consistent earnings growth. Couple that with affordable house prices and it’s a city with growing purchasing power.
It’s these ingredients that make it a prime growth area for online retail. Geordies are buying more than ever and, like the rest of the country, expect it to be delivered faster than ever. The geography in the North East is favourable to make that a reality.
Newcastle is served by the Team Valley estate – a major centre of commercial property – little more than 10 minutes’ drive from major centres of population. It means fulfilment centres can be on the doorstep for customers, with short hops from there to the front door. Delivery times of within an hour are more than possible, which also makes customer tracking slicker and more effective (no more day-long delivery estimates when using the tracking code).
This model not only promotes speed but has significant emissions-busting benefits too. A recent study from Accenture – using data from London, Chicago and Sydney – found that using such local fulfilment centres could lower last mile emissions by up to 26 per cent in the next four years. Being closer to the customers means fewer delivery miles, and with it, fewer vehicles and reduced emissions.
Talking of which, emissions can be reduced even further with use of electric vehicles. That’s why there’s more to the location angle than just the postcode. Operators need charging facilities and renewable energy sources on site. Landlords and developers are increasingly working towards that, and incentives such as rate reductions and grants from central government and local authorities could help to spur on that trend.
For this to work, support for green transport options also needs to extend into the city and urban areas. That could be timed kerbside pick-ups and drop-offs for delivery vehicles, using quieter times of the day to allow stopping or use of bus lanes at off-peak times.
There’s plenty of innovation happening that can help firms take advantage of location too. For example, two North East-based firms are collaborating to make the switch to energy-efficient transport easier. Software specialists The Algorithm People and micro vehicles provider if.Vehicles have teamed up to deliver what they call “mobile transient hubs”. The concept means vans or light trucks become mobile hubs that are used as staging points, meeting much smaller electric vehicles that will take goods to the final delivery point. These vehicles – such as light quadricycles and power-assisted trolleys – can be operated on pavements and in many cases fold away for storage so they can be retrieved and taken back to base.
Hubs near cities and large centres of population are also going to become important when it comes to reverse logistics. The explosion of home deliveries means product return processes are becoming increasingly important, and stock may need to be transferred back to hubs before it’s processed onward.
And it’s not just retail driving this hunger for proximity. The explosion of casual dining in the UK has led restaurants and food outlets to demand fresh supplies at the drop of hat. There’s no sign of that trend abating due to COVID. In fact, industry research suggests the UK eating out market is set to exceed its pre-pandemic value by the end of 2022.
So, if location is the one of the key ingredients, how do you seek out and secure the best site for your needs? Commercial property vacancy is very low at the moment. There’s demand for space, and it’s a competitive market. But, what is clear is that logistics occupiers are going to need flexibility to accommodate innovation and evolving business models.
A recent major survey of industrial and logistics occupiers, carried out by Property Week, Savills and Tritax Symmetry, found that more than 41 per cent anticipate requiring more space between 2021 and 2022, around 10 per cent anticipate requiring less space. That tells us that most operators need to look for strategic landlords with portfolios large enough to accommodate change quickly and efficiently. That means landlords with a mix of existing properties and development land, and the resources to build quickly and to requirements.