What does the future hold for logistics?
The COVID-19 pandemic has shown what an important component the logistics sector is to the world. At the end of May 2020, e-commerce sales achieved record growth (£2.1bn up from £1.3bn from the year before) as organisations adapted to coping in the challenging social and economic environment. According to the Office for National Statistics, the last and first time online sales broke the £2bn mark was in December 2019. As companies seek to make their supply chains more efficient, the adoption of digitisation, mechanisation and automation into operations is becoming more prevalent.
Having dealt with the unprecedented global circumstances well, the logistics industry will have to monitor the upcoming challenges that manufacturers face over the next 12 months. This is due to the current environment where the global demand for some products has diminished. It is expected that in the short-term, this will restrict the industrial space to reach the record levels of occupational activity that were anticipated in 2020.
According to Colliers International, it is expected that online demand will outstrip demand for warehouses. Consumers are thought to be more used to purchasing goods online and occupiers must be able to adapt accordingly, and will see supply chain models reviewed in a bid to scale capacity.
Demand for urban logistics has significantly increased over the past five years up until the outbreak of COVID-19. Due to the initial disruption, there was reduced activity for smaller distribution warehouses as some occupiers took a pause from their expansion plans. However, despite this, the market grew as larger distribution warehouses reached 100,000 sq.ft or greater during Q2 2020. Colliers expect demand for units sized between 30,000 sq.ft and 150,000 sq.ft located in proximity to urban town areas, will return as businesses transition from crisis management mode to future planning.
It is thought that last-mile logistics costs consist of around half as much of total shipping fees, while fulfilling online orders requires more than double the space needed to serve the store network. Peak periods are becoming more unpredictable and occupiers will need to find scalable and flexible solutions throughout their supply chains. Some retailers’ complacency has left them exposed to this shock and it is expected that over the medium to long-term, demand for warehouse space will pick up in 2021.
According to estimates from the Office of National Statistics, the UK population is expected to rise to 69.4 million over the next decade and 72.4 million by 2043. This will mean UK occupiers will need more and better quality space to keep up with the rise in demand. Some consolidation of premises will occur for those occupiers that are dealing with legacy issues of their distribution networks as they seek to make their supply chains more agile, lean and efficient. As a result, regional and national distribution centres will need greater space and more cubic capacity, with an increased use of racking, to enable a higher level of mechanisation and automation. Over the next few years, it is expected that consumers will remain the driving force in the industry as innovations move forward and demand remains robust. The key for developers, agents, landlords, town planners and occupiers to embrace these changes to ensure the industrial and logistics sectors can continue to meet the needs of the evolving consumer landscape.
FedEx is Reshaping Last Mile with Autonomous Vehicles
FedEx is embarking on an expanded test of autonomous, driver-less delivery vehicles to develop its last-mile logistics.
The US logistics firm piloted autonomous vehicles from Nuro in April this year, and the pair will now explore that further in a multi-year partnership. Cosimo Leipold, Nuro’s head of partnerships, said the collaboration "will enable innovative, industry-first product offerings that will better everyday life and help make communities safer and greener".
FedEx will explore a variety of on-road use cases for the autonomous fleet, including multi-stop and appointment-based deliveries, going beyond more traditional applications of the technology in single-route movement of goods from A-B. Exponential growth in ecommerce is spurring its broader experimentation in new autonomy solutions, Fed-Ex says, both in-warehouse and on-road.
“FedEx was built on innovation, and it continues to be an integral part of our culture and business strategy,” said Rebecca Yeung, Vice President, Advanced Technology and Innovation, FedEx Corporation. “We are excited to collaborate with an industry leader like Nuro as we continue to explore the use of autonomous technologies within our operations.”
The changing role of couriers
Unlike structured delivery networks, operating under long-term partnerships and contracts, agility is where couriers deliver true value - and their ability to deftly solve last-mile fulfilment has most acutely been felt during the pandemic. For the billions of people around the world forced to stay at home to protect themselves and their communities from the spreading COVID-19 virus, couriers have been a constant. They may have been the only knock at the door some people experienced for weeks or months at a time.
But the last-mile has been uprooted by a boom in ecommerce, a shift that has been most apparent in the UK, US, China and Japan, according to the Global Parcel Delivery Market Insight Report 2021 by Apex Insight. These are markets with dominant economies and populations used to running their lives with a tap of a screen or double-click of a mouse.
“Getting last mile delivery right has long been a challenge for retailers,” says Kees Jacobs, Vice President, Consumer Goods and Retail at Capgemini. “In 2019, 97% of retail organisations felt their last-mile delivery models were not sustainable for full-scale implementation across all locations. Despite increasing demand from customers, companies were struggling to make the last mile profitable and efficient.”
Jacobs says that the pandemic alleviated some of these stresses in the short term. With no other option, consumers were understanding and tolerant, if not entirely happy, with longer delivery times and less transparent tracking. “But, as extremely high delivery demand continues to be normal, customers will expect brands to contract their delivery times,” he adds.
Last mile's role in ESG
Demand and volume weren’t the only things that have changed during the pandemic - businesses looked closer to home and as a result became more sustainable. Bricks and mortar stores were transformed from mini-showrooms to quasi-fulfilment centres. Online retailers and other businesses sought local solutions to ship more faster. In densely populated London, UK alone, Accenture found that delivery van emissions dropped by 17%, while Chicago, USA and Sydney, Australia saw similar emissions savings.