Industry is Waking Up to the Need for More and Bigger Warehouses

UK – This morning the BBC woke up to the fact that the demand for warehousing in the country has probably never been greater when it ran an interview with Senior Vice President, Head of Capital Deployment UK at industrial property specialist, Prologis, Robin Woodbridge.

The nature of the supply chain is changing quite radically and the interview quotes from the recent survey from property agents Savills, actually commissioned by the United Kingdom Warehousing Association (UKWA) and detailed in our own coverage of the shortage of space last month.

Mr Woodbridge says that the demand for useable storage space is at a height he has never before witnessed in the three decades he has worked in the industry. Prologis, and its competitors, are routinely building speculatively at the moment with units sold before they are even finished. The sudden upsurge in interest sparked the following comments from John Perry, Managing Director at supply chain and logistics consultancy SCALA, explaining the reasons for the demand:

“Many companies have adapted well to the shift in the retail landscape over the last year, but they are now having to look at how they can build long-term capability into their supply chains to efficiently meet ongoing customer expectations. The future is still uncertain and we do not know how quickly consumers’ confidence and sales will pick up, and how supply chains in the UK will change as the impact of Brexit starts to be realised.

”This, alongside the issue of driver shortages across the sector, and the expectation that online sales will continue to soar at higher levels than pre-Covid, is a challenge many retailers must now navigate. To meet these uncertainties, some companies continue to hold more stocks in warehouses than they would in a more predictable situation. If stock exceeds the capacity of a company’s warehouse, it is possible that we see the shelves going empty and a shortage of perishable goods.

“Companies are therefore realising that if they are going to meet the growing demands of their consumers, the optimisation of warehouse space and agile operations are crucial to their success. We are subsequently starting to see an increasing number of companies investing in warehouse design and operational improvement to meet this demand and drive their future growth.

“Whilst for some companies redesigning their operations within existing warehouses has been possible, for many companies the rise in online purchasing means they need new warehouses that are better designed to meet the requirements of individual item picking and then despatched to their customers. For businesses to build a long-term capability to meet the growing demands of their consumers, warehouse operations, design and capacity should be a key area of focus for manufacturers and retailers alike”.

Photo: An aerial view of part of Daventry International Rail Freight Terminal (DIRFT) courtesy of Prologis.