11 FMCG/F&B SPECIAL FOCUS Materials handling solutions staying ahead of the trend £12 | May 2021 www.logisticsmanager.com
Revolution and resilience How the pandemic is testing supply chains and accelerating innovation 19 Extended 36 Big Sheds 16 Sourcing & Supply Chains With a shortage Procurement Can manufacturers of space, can you Choosing the and retailers give afford to wait for right suppliers in up the benefits something better an era of digital of globalisation? to come along? transformation STORAGE PROBLEMS? We’ve heard it all. Better yet, we’ve solved it all.
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11 FMCG/F&B SPECIAL FOCUS Materials handling £12 | May 2021 www.logisticsmanager.com solutions staying ahead of the trend Regulars 19 leader 04 Revolution and resilience How the pandemic is news 06 testing supply chains and accelerating innovation
19 EXTENDED 36 SUPPLY CHAINS BIG SHEDS Can manufacturers 16 l With a shortage SOURCING & and retailers give of space, can you PROCUREMENT Complete Turnaround? Alan up the benefits afford to wait for Choosing the of globalisation? something better right suppliers in
to come along? an era of digital Penhale from Boots discusses how transformation he converted a DC for store fulfilment into a responsive e-commerce hub… in three weeks during the pandemic l MALORY DAVIES: If only the chain wasn’t broken.... Coping with the volatility of the market l Opportunity bots? There has never been a better time to optimise your operations following super-deduction l ALAN MCKINNON: Why academia and industry need to come together l Handle with care: materials handling in the fast-moving F&B sector l TECH HUB: Will Shepherd says smart warehouses boost growth behind the shed 50 l Transforming home deliveries l £10,000 to combat stress? l Save the trees… before it’s too late! PROPERTY FEATURES cover story: Supply Big sheds 36 16 Chain Trends in FMCG 23 How can supply meet demand? Disruptive Influences PROPERTY COLUMN 29 Quick thinking, flexibility and The growth of freeports technology are not guarantees to ride the challenges thrown at us in 2020 NEWS 48 2 supply chain; sourcing and l 2.3 million ft ‘Amazon’ procurement 16 warehouse gets go ahead l Prologis lets former Arcadia Informed choices warehouse to Boohoo Find out how data and digitisation are l Planning application submitted critical tools in successful sourcing for major speculative build and procurement operations
GG.007, Metal Box Factory, 30 Great Guildford Street, London SE1 0HS Circulation: 10,376 (ABC Jan to Dec 2019) l EDITORIAL Logistics Manager is a controlled circulation magazine published twelve times a year. Applications for inclusion on our free circulation Editor Nick Bradley (020 8037 1782) [email protected] list will be considered from individuals residing in the UK whose job Senior Reporter Michelle Mooney (020 8037 1784) [email protected] function meets the terms of our controlled circulation. To apply, please complete Contributing Editor, Property Liza Helps (01449 673 952) [email protected] either the reader application card in this issue or our online form at http://www. logisticsmanager.com/apply. Logistics Manager is also available on subscription Art Editor Numa Randall, [email protected] to ‘non-qualified’ readers at £104.99 per year in the UK and £204.99 per year l SALES & EVENTS outside of the UK. Business Development Neill Wightman (020 8065 0464) [email protected] Opinions expressed are those of the individual contributors and do not necessarily Ad Production Katy Holloway [email protected] imply that such opinions are held by the publishers. Although every effort will be made to ensure the accuracy of all information published, the publishers cannot Marketing Manager Daniel Jessop (020 8037 1779) [email protected] accept responsibility for claims made by contributors and advertisers. Senior Marketing Executive Rebecca Crisp (020 8037 1780) [email protected] All rights reserved. No part of this publication may be produced, stored in Managing Director Stephen Brooks (020 8037 1773) [email protected] a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without prior written l Publisher Akabo Media Ltd. l ISSN 1353-5595 l Printer Brown Knight & Truscott permission of the publishers. l Subscriptions Logistics Manager, c/o PO Box 745, East Grinstead, West Sussex, RH19 9BU, © 2021 Akabo Media Ltd. United Kingdom. Tel: 020 8037 1779. Email: [email protected]
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contents cont. Editor’s Leader extended supply chains 19 Revolution... and evolution It only takes a puff of wind Can manufacturers and retailers t’s funny how things turn out. apace. Robotics, automation, afford to give up the benefits of ITwenty-two years ago, I was augmented intelligence, globalisation? taking my first baby steps in autonomous vehicles, AIOT, publishing as an assistant blockchain, digital twins, supply chain special: editor on an industrial handling the list goes on… digital transformation taking visibility strategies 26 and storage magazine and, Covid-19 has turned shape in the supply chain Do (or don’t) believe the hype coincidentally, used to sit consumer spending behaviour – it’s even placing strain on There is room to improve supply opposite former Logistics on its head, potentially the property market, as Liza chains in terms of traceability, Manager editor, Malory Davies. accelerating the shift to Helps discusses in her Big speed of delivery, co-ordination and The term ‘e-logistics’ was e-commerce by an astonishing Sheds article (p36). Quite financing. Could blockchain be only just starting to be five years. The stats globally simply, the pandemic has the missing link? whispered in the aisles of the are astronomic, reaching changed everything, forever. industry’s warehouses back US$4.28 trillion in 2020 – an And we at Akabo Media, then, although my editor and 26 increase of 27.6% compared publisher of Logistics Manager Malory were tremendously to 2019. In the UK, analysts and organiser of the vocal about it. Amazon was say e-commerce now IntraLogisteX exhibition, have solely a books and music accounts for more than a embraced this new digital era, retailer in 1999 and there was huge trumpet-blowing when it achieved annual UK Covid-19 has turned consumer sales of £100m in its first spending behaviour on its head, year on our shores via its ‘Amazon.co.uk’ platform. potentially accelerating the shift Fast-forward more than two to e-commerce by five years decades and Amazon has taken over the world and quarter of all retail sales, and too. One of the highlights of knows what I want to buy this is expected to steadily my first few weeks has been even before I do. And today increase in the years ahead, hosting our fantastic we are in a Covid-19-afflicted reaching a third of all retail webinars, both of which have world and talking about a sales by 2024. focused on Covid-19 and technology revolution in While this has all been Brexit. The good news is that supply chain and logistics brought forward by the need we in the UK appear to be that is necessary to cope with to reduce human interaction making strides with our unprecedented levels of and safeguard public health, vaccinations and the e-commerce orders. it is likely to continue as many excitement building for ‘Revolution’ – a theme of of us have adjusted to (or IntraLogisteX at the Ricoh this May edition – is of course even been conditioned by) the Arena in Coventry on 1st and an overused buzzword for us service and convenience on 2nd of July is now palpable. in the media, but it seems apt offer from companies such as I look forward to meeting to describe what’s going on in Amazon, Asos and Tesco. you there – and I hope you global retail, as well as what Everywhere you look in this enjoy the read! must take place in the May edition, you will read Nick Bradley, Editor industry in order to keep about this revolution and the
QUOTES OF THE month We are seeing a real FMCG covers a wide Executive leadership is Digitalisation and the appetite for RFID and category of goods – foods, starting to recognise the technologies and software IoT-enabled containers in FMCG beverages, cosmetics, over-the- importance of procurement, to support this change are key and the technology is already counter drugs, dry goods, and with more organisations to the future of sourcing and making waves in terms of beyond. How the flow of these prioritising supply chain procurement. The visibility will improved traceability, safety, goods has been impacted by the resilience, unlocking supplier-led enable cost savings and greater efficiency and waste and pandemic differs from product to innovation, sustainability and efficiencies and provide downtime reduction product, as well the impact on identifying new revenue the agility and competitive Jon Walkington, Retail & System supply or on demand Integrator Sales Director, Michiel Veenman – VP Industry opportunities among advantage to enable Schoeller Allibert UK Solutions & Design, Warehouse procurement’s objectives businesses to grow and prosper Automation, Körber Business Area Alex Saric, Smart Procurement Paul Price, Vice Chairman Supply Chain Expert at Ivalua of Lemonpath
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Award for ‘Best Use of Robotics’ at the Supply Complete Chain Excellence Awards last November]. Its Nottingham Stores Service Centre (SSC) – which has a highly automated single-picking operation – is a critical element of the retailer’s turnaround overall supply chain. It ships millions of units Boots’ Supply Chain Director, a day for store delivery from a catalogue of 37,000 SKUs, ranging from cosmetics and Alan Penhale, discusses fragrances to electronics and medicine. Its why (and how) he converted Burton Service Centre, meanwhile, is home of the Boots.com operation and runs a DC designed for store a single-pick automated solution. Packed to perfection logistics into a reactive Quick off the mark ■ E-commerce packing performance has been improved by deploying two Quadient e-commerce hub The organisation was fast to react in the face fit-to-size automated packing machines. An rowth in e-commerce sales before the of the ever-evolving scenario presented by the unforeseen benefit from the investment pandemic was already staggering, virus, and in a mere three weeks at the start of was the capability to respond swiftly and soaring globally 160% between the pandemic it transformed the processes in G efficiently to the doubling of online orders 2014-2019 – around six to eight times the rate its main automated SSC from store logistics following the Covid-19 lockdown. It of growth in traditional retail. Covid-19 has to e-commerce logistics, a project that was constructs bespoke individual cardboard only served to accelerate that digital shift, assisted by long-term partner Witron. boxes to the exact size of an order at as evidenced by ONS stats revealing a 46% Boots’ Supply Chain Director, Alan Penhale, a rate of up to of 500 boxes an hour upsurge in 2020 overall – its strongest showing oversaw the conversion and the results in the for more than a decade. Industry analysts most challenging of years still surprise him suspect this is unlikely to change as the world today. “It was very difficult,” he recalls. “At the begins to remove its protective masks. Indeed, start of the pandemic, our stores were very Flexible friend some retail-recovery surveys predict online’s busy with customers buying lots of products to share will remain 6-13% above pre-virus levels. mitigate the spread – sanitizers, etc – but then ■ The heart of the SSC setup remains The retailers that have pushed toward lockdown came along and people stopped the DPS with its 252 workstations. The omnichannel, ‘bricks-and-clicks’ businesses shopping the way they used to. Of course we highly dynamic and automated picking of in recent years – harmonising the offline and saw a decrease in footfall in our stores, but a small parts in the DPS is supported by online customer experience – will undoubtedly huge increase in dotcom; in the final quarter a pick-by-light system; the system works be best positioned to weather the storm that of the last financial year, we reported a 151% according to both goods-to-person and rolled onto our shores in March 2020. increase. We’re currently at 100% up and the person-to-goods principle Retailer Boots UK is one such company. It when you’re comparing peak on peak, that operates a highly sophisticated supply chain, equates to a huge supply chain challenge.” delivering through centralised distribution Boots has been using an order management to its 2,510 Boots stores across the UK and system for several months, which is set up Robotic manoeuvres Ireland [it scooped the Unipart Logistics above the warehouse management system. ■ When the virus hit, Boots had to scale-up from relatively normal volumes to more than double volume, going from off peak to Black Friday output. LocusBots are a boon in this regard, which easily and seamlessly scale to manage peak volumes at a moment’s notice
■ (Far left) Witron’s Jack Kuypers, Vice President North-West Europe and Boots’ Alan Penhale (Left) The team transformed a hub originally designed exclusively for store delivery, the SSC, into an omnichannel logistics centre, at record speed (Main, above) Regardless of the picking type, the picker is always guided by a pick-by-light system VISIT OUR SITE FOR EXClUSIVE NEWS, FEATURES, OPINION & BROADCAST CONTENT
■ DFDS: ferry freight ■ Kinaxia signs five-year ■ Gregory Distribution extends ■ Air cargo demand up by 9% volumes up 12% in March contract with toy retailer partnership with Michelin compared to pre-virus levels FREIGHT According to DFDS, WAREHOUSING Kinaxia Logistics Automotive Michelin will continue AIR FREIGHT The International total volumes in March 2021 has agreed a five-year to manufacture and supply tyres Air Transport Association (IATA) were 11.8% above 2020. Net warehousing contract with toy for Gregory Distribution. Fitting has reported that air freight adjustments for structural route company James Galt & Co. Galt and maintenance will be carried demand is continuing to changes reduced growth by 0.2% has signed up for the sole use out on Michelin’s behalf by outperform pre-Covid-19 levels. to 11.6%. Volumes for routes of a 100,000ft2 warehouse in national service partner Tructyre, Global demand − measured in calling the UK were up 10%. The Warrington, Cheshire, at the alongside some independent cargo tonne-kilometres (CTKs) increase in February continued headquarters of Kinaxia Michelin Service Pro dealers. − was up 9% compared to in March for the North Sea and company Mark Thompson February 2019 and up by 1.5% Mediterranean volumes; Channel Transport. compared to January 2021. volumes were also above 2020.
May 2021 www.logisticsmanager.com NEWS & ANALYSIS 07
Malory Davies If only the chain wasn’t broken… alk down a city street that it was “juggling like Wand there is a good crazy” to keep production chance you will have more moving because more than than one close encounter with one million parts had been a cyclist. The streets (and too delayed by problems at UK often pavements) are full of ports. Currently the only And by March, “Cycling has Penhale and his colleagues simply riders for Deliveroo, Uber Eats bikes available for sale on its seen like-for-like growth rates ‘redefined’ the SSC as a store, albeit a very or one of the host of other website are electric versions, improve as supply disruption large store with a huge inventory of stock. “We cycle courier companies costing some £3,000. has eased, although overall had to think creatively from an IT, systems that have benefited from Halfords, which has supply remains sub-optimal,” and fulfilment perspective,” he reveals. “With the boom in home deliveries about 20% of the UK’s £2bn the company said. our shops much quieter and dotcom orders retail cycle market, used its Now this might be seen through the roof, we thought we would utilise that has resulted from the January trading update to as a short-term problem the latent capacity in the SSC. That involved Covid-19 lockdown. highlight the fact that its that will solve itself as the using our Dynamic Picking System (DPS) to The irony is that Covid-19 Cycling division had seen pandemic recedes, but it start picking e-commerce orders as well as has also caused a crisis in is worth noting that the store stock – tote into tote, from pallet into the supply chain for bicycles like-for-like growth of 35.4% tote, from tote into the shipping carton, etc and their components – a in the third quarter, driven by global market for bicycles – and that’s subsequently going to a new mix of high demand and packing section we’ve created, from where supply problems. Retailers have been complaining that they we’re despatching to customers’ houses as The Bicycle Association simply can’t get supplies, and there are concerns that well as to stores. We also implemented other produced a report in solutions outside of the SSC, creating manual December which showed suppliers are simply not geared to deal with the level micro fulfilment centres, small warehouses that retailers had seen sales and dark stores. We’re picking dotcom orders of volatility that the market has seen in the past year grow by 60% since March in what we now refer to us our ‘hybrid’ stores, which are still open to the public. 2020, with sales of electric − estimated at £37 billion “If somebody had said to me a year ago bikes doubling. last year − is predicted to that we would be sending more than 6,000 Not only that, the grow by about 7% a year over e-commerce orders a day from the SSC, government’s £50 Fix Your the next few years, with the I wouldn’t have said it was possible from Bike Vouchers have proved e-bike sector growing at up a systems nor a capacity perspective, but we extremely popular in getting to 12% a year. made it happen,” reflects Penhale, a Boots bikes back on the road. But that growth can only veteran. “When you’re faced with a crisis, But retailers have been happen if there is adequate it’s amazing how creative people can get.” complaining that they simply supply, and at the moment We’re not out of the Covid-19 woods yet, can’t get supplies, and there there are dark mutterings but, at the time of press, the UK is getting are concerns that suppliers that shortages could there. Penhale believes this pandemic has are simply not geared up to simply accelerated what was already on the continue further into this deal with the level of volatility horizon. “Yes, people are shopping in stores “strength in adult mechanical, year and possibly into again, but e-commerce will continue to grow.” that the market has seen e-bikes and e-scooters, next year as well. He also thinks that cost-efficient and in the past year. despite global container The weather is improving, flexible omnichannel processes as well as the In December, Brompton shortages and port and it would be great to get supply of different distribution channels from Bicycle, which assembles its congestion impacting out on my bike. If only the one logistics centre will become a “must have” bikes in the UK, told the BBC availability”. chain wasn’t broken… feature of any retail business in the future. ■ Read more online at www.logisticsmanager.com
■ CEVA launches healthcare ■ Gist converts to 100% ■ Electrical retailer extends ■ Ocado partners with logistics business renewable electricity UK-wide contract with ArrowXL Oxbotica in driverless tech supply chain CEVA Logistics has sustainability Logistics provider last mile Electrical retailer ROBOTICS Ocado will partner with launched a healthcare-focused Gist has converted to 100% Hughes has extended its contract Oxbotica to develop a range of sub-brand, FourPatients, to renewable electricity across with two-person delivery specialist autonomous vehicles, with use provide temperature-sensitive the UK to reduce its carbon ArrowXL for a 24-hour service. cases ranging from vehicles operations. In healthcare and emissions in 2021. This change The companies have been that operate within Ocado’s pharmaceutical markets, CEVA forms part of ongoing efforts to partnered for nine years, and Customer Fulfilment Centre already serves more than 500 reduce the environmental impact the new contract extension will buildings and the yard areas that healthcare and life science of its operations and is set to see ArrowXL continue to provide surround them, all the way to companies globally. The new reduce emissions by around a range of home delivery last-mile deliveries. The initial offering will begin service in 6,000 tonnes of CO2 each year. services for customers. work will focus on UK operations the second quarter of 2021. before moving further afield.
www.logisticsmanager.com May 2021 08 NEWS & ANALYSIS
Opportunity bots? There has never been a better time to modernise your operational systems, following the Budget’s tax boost for capital investment In layman’s terms n the face of it, Rishi Sunak’s super- ■ (Above) Rishi deduction tax break, announced by Sunak presents ■ For most business equipment, there his case to boost Othe Chancellor in the 3rd March Spring UK investment will be a super-deduction of 130% of Budget, was a welcome news story for (Left) Automation the expenditure incurred. This means companies involved in logistics and the is part of the on a spend of £100,000, the super-deduction’s corporation tax deduction will be supply chain – suppliers and buyers alike. list of ‘eligible’ Sunak called it “the biggest business tax cut equipment £130,000, giving tax relief at 19% in modern history” while others are referring on £130,000, equivalen to £24,700 to it as the business equivalent of ‘Eat Out to Help Out’. Essentially, the super-deduction “It also offers the logistics sector a golden these organisations perhaps faring better allows businesses to claim 130% of opportunity to invest in performance- than most during the enforced lockdowns. expenditure for new business equipment enhancing automation, giving fulfilment Dr Adam Marshall, Director General of the against their taxable profits: for every £1 that operations the boost to productivity needed British Chambers of Commerce, welcomed a company invests, its tax bill is cut by 25p. to cope with the surge in e-commerce orders,” the scheme, albeit he acknowledged the Only purchases of notes Tim Wright, sting in the tail that is the impending hike in new equipment are Managing Director, corporation tax to 25%. “This responds directly eligible – used It’s an Invar Systems. “It’s an to our call to encourage those businesses, that equipment and plant opportunity not opportunity not to be can, to invest and grow,” Marshall comments. intended for lease is missed.” “While no business will relish paying higher not. Also, the new to be missed rates of corporation tax in future, the impact of incentive is only for Tim Wright, Managing Biggest winners the Chancellor’s tough decision is blunted by expenditure incurred Director, Invar Systems The savings for a the big new incentives for investment, lower from 1st April 2021 company such as rates for smaller firms, and the extension of until the end of March 2023, and only Amazon – which has invested heavily in Covid-19 support measures in the short term.” companies that pay corporation tax qualify. warehousing and logistics to cope with the The Finance & Leasing Association (FLA) For readers of Logistics Manager, eligible extra demand caused by Covid-19 – could and the British Vehicle Rental and Leasing equipment might include warehouse be significant. Royal Mail is also reportedly Association, though, would also like to see the machinery, data centres and forklifts, fleet planning to spend £500m in the next few measure to include leasing and plant hire. vehicles, and even IT systems such as a WMS. years in a shift towards more parcel services. “The decision to restrict the scope of the Overall, the logistics sector has seen super-deduction amounts to a serious missed revenues increase, with more and more opportunity to boost investment,” believes Payback time? parcels moving around the country as a Stephen Haddrill, Director General of the FLA. consequence of the explosion in e-commerce. Whether or not this is the best use of public ■ Businesses will need to be careful if they According to UK charity, TaxWatch, Amazon, money to stimulate post-pandemic recovery, use the super-deduction and then sell the Royal Mail, DPD, Hermes and the like could only time will tell. At the very least, if you were asset a few years later, as the extra tax see substantial reductions in their pre-tax planning on investing in your warehouse perk will need to be paid back to HMRC profits over the next two years by taking infrastructure – if on the eligible list – there advantage of the super-deduction, despite has never been a better time to do so. ■ NEWS, FEATURES, OPINION & BROADCAST AT www.logisticsmanager.com
■ Bristol wine warehouse ■ M&S to build a new ■ Virgin Atlantic to launch ■ Schuh and New Look latest sells for £90 million automated online warehouse a new cargo service to offer InPost return service warehousing Such is the WAREHOUSING Work has begun at AIR CARGO Virgin Atlantic has retail Schuh and New Look demand for well let warehouses M&S’s Bradford DC so that it announced the addition of have signed up to InPost’s new in the UK that Tritax Big Box has becomes an online warehouse cargo-only services to Frankfurt QR code returns service, to help paid £90 million in an off-market for M&S.com. The company is from its London Heathrow hub. remove the waste created by deal for a wine warehouse in setting itself up to best digitally The service will operate on the traditional printed returns labels. Bristol. The 872,000ft2 DC is let serve shoppers in the future, airline’s Boeing 787 aircraft, ‘Instant Returns’ was launched to Accolade Wines and is a key including reflecting the shift to which will offer up to 55 tonnes to streamline the returns process component of the company’s online shopping driven by the of cargo capacity, bolstering its for consumers, who scan their supply chain used for receiving, pandemic. The build is currently existing daily trucking offering. QR code at an InPost locker then bottling wine for sale into underway with the aim to be The airline will fly three times and drop the parcel off, the UK and European markets. operational for Christmas 2021. a week from 1st May. without the use of labels.
May 2021 www.logisticsmanager.com NEWS & ANALYSIS 09 Europe’s No. 1 for doors and loading technology Alan McKinnon Bridging the divide… n my 42 years as an academic weighting. Logistics managers Iresearcher in logistics, I’ve who have been collaborating with always tried to study topics of universities over the past few relevance to industry. So much years may recently have been so, my colleagues used to refer asked to complete an impact to me as the ‘professor of lorries’ statement for REF2021. – a scholarly Eddie Stobart. No The EU’s Horizon 2020 ● Functional industrial door solutions doubt a few of them considered programme has invested huge with more than 80 years of experience the title a bit derogatory as they sums in logistics-related research preferred their own research to since 2014. For a couple of be a bit more highbrow. A lot of years, I chaired its Transport academic research, after all, is Advisory Group which gave the motivated more by a desire to EC recommendations on priority publish journal papers and areas for future research. This impress one’s peers than to Group placed strong emphasis produce results of real value on the likely value of the research to the economy and society. to industry and public policy. The Recruitment and promotion, EU obviously wanted to maximise particularly in business schools, now depends heavily on your ability to publish in top-rated Much innovative journals. This is problematic for thinking in logistics is a practical subject like logistics, as its journals get relatively low never disseminated to rankings in the league tables. those who could ● Energy-efficient high-speed doors The premier journals also tend to implement and for optimised operations more theoretical, mathematical and less accessible to non- commercialise it academic readers. But then very few practitioners the economic return on its huge would ever contemplate reading investment in transport and a journal paper, despite many logistics research. being available online on an Hence the recent launch of ‘open-access’ basis. Hence, a new project called ‘Boostlog’, the main outlets of academic designed to boost the impact of research are rarely consulted by EU-funded research on logistics. managers. As a result, much Among other things, it will review innovative thinking in logistics 150 EU research projects in is never disseminated to those freight transport and logistics who could implement and conducted over the past 20 commercialise it. Clearly logistics years to see what impact they researchers need to publicise had and what lessons can be their work through other learned for future research. channels, such as this one, to My bet is on so-called ‘action ● Loading technology solutions reach an industrial audience. research’ coming out top, where for efficient logistics For the big funders of researchers and managers work university research a lack of together on a project, sharing engagement with practitioners ideas and testing and refining the has been a long-running concern. results as they emerge. For a To incentivise academics to find great UK logistics example of this 01530 516868 practical applications for their convergence of academic and [email protected] work, the UK government’s business expertise I, as a mere Research Excellence Framework ‘professor of lorries’, would urge (REF) includes an ‘impact’ you to check out the Centre for criterion that carries a 25% Sustainable Road Freight.
www.logisticsmanager.com May 2021
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Handle Automated for the people utonomous mobile When these technologies or less freely roam through Arobots are becoming are combined with automatic the entire storage area. This with care more common and are lifts and autonomous makes these solutions even being used to streamline satellites, “it becomes more scalable and flexible. Michelle Mooney reports operations in the warehouse possible to build very dense, “We are seeing a growing on the pitfalls of materials and this trend is set to deep-lane storage solutions interest in automated layer handling in the food and continue. Michiel Veenman, that are still able to deliver picking solutions. Most Vice President Industry a very high throughput,” FMCG companies see an drink industry Solutions & Design, Veenman suggests. increase in the number oving products such as food and drink Warehouse Automation for These sorts of of different products they quickly to the consumer is essential in Körber Business Area Supply technologies fit in well have in their portfolio the world of Fast Moving Consumer Chain, believes these with the world of FMCG, as (SKU proliferation). On M driverless, safer forklifts industries that involve food top of this comes a demand Goods, (FMCG). Food spoilage is already a real problem in the world, as consumers often are a must. “They are easy and drink often have a high to supply more frequently purchase items only to throw them away. to implement and work turnover and high inventory and in smaller quantities.” An efficient FMCG operation is therefore well in traditional FMCG levels, however a low The effects of the necessary to prevent further waste. warehouses with a lot of number of SKUs. “On top Covid-19 pandemic on With shelf lives generally fairly short for full pallet movements of this, we now see a new businesses have, according fresh produce such as fruit and vegetables, “When more case picking generation of pallet shuttles to Veenman, led to some the clock begins ticking as soon as items are is required, AMRs can also emerging,” he continues. interesting conversations packed, until the final consumer buys it. help to support pickers by “Here, the shuttles can more regarding materials handling. “When fast moving consumer goods sell a reducing the time required And trade restrictions fraction slower, stocks in the supply chain for walking and searching.” have also impacted supply. can put at risk of spoilage and write-off,” says Veenman adds that, “Lockdowns in China, for Mathew Simpson, Sales Manager for UK & “high-density pallet storage example, have impacted Ireland at CSB-System. That’s why having systems such as AS/RS both the manufacturing and sophisticated materials handling systems systems based on stacker shipping capacity for several in place is an absolute must. Here are cranes have been around for months, although that some latest trends and developments. ■ a long time. In the past few seems to be stabilizing now.” years, we have also seen And as levels continue to go an increase in solutions back to normal, the lessons based on pallet shuttles.” learned will remain.
When more case picking is required, AMRs can also help to support pickers by reducing the time required for walking and searching Michiel Veenman, Vice President Industry Solutions & Design, Warehouse Automation, Körber Business Area Supply Chain
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s the world’s population ■ Schoeller the effective flow of goods monitoring of inventory as it is continues to grow, putting a Allibert’s Jon along the supply chain.” stored in warehouses and in A Walkington strain on not only the natural As part of moves towards transit along the supply chain, world, but also the supply chain, more visibility – therefore better alerting operatives to any issues logistics managers in the food efficiency and possibly less waste before they can become and drinks industry are seeing – in-warehouse technology such expensive losses.” a need for faster systems. as hand-held devices can be used Another factor to consider as “Manufacturers, brands and to help improve traceability. “We the pandemic continues to unfold, retailers have had to increase The key to success here is are seeing a real appetite for RFID is that of hygiene. “This remains speed to market and speed to automation in the warehouse, to and IoT-enabled containers in as important as ever as we start consumer to achieve and maintain deliver better results. “Central FMCG and the technology is to emerge from the Covid-19 competitive advantage,” states to this change has been the already making waves in terms pandemic,” Wilkinson stresses. Jon Walkington, Retail & System development of new automated of improved traceability, safety, “Returnable transit packaging Integrator Sales Director, Schoeller warehousing technologies efficiency and waste and can be designed with antibacterial Allibert UK. “As a result, the and greater digitalisation of downtime reduction. and antimicrobial features to supply chain from manufacturer WMS that are designed to “Sensor technology that protect products, keep food to consumer is becoming shorter keep warehouses and logistics detects changes in temperature supplies fresh and prevent and more concentrated.” operators responsive and ensure or humidity enables real-time bacterial proliferation.”
www.logisticsmanager.com May 2021 12 news & ANALYSIS
Change in the time of Covid-19 efore the pandemic, useful, is that of voice- Bwarehouse operatives enabled technologies, had more freedom to do although such devices do what they wanted in the come with an increased warehouse – within reason. price – sometimes four But now, as the pandemic times more expensive than has transformed almost “Pick-and-pass handling standard mobile devices,” every logistics operation is much more common and Carter reveals. “But the in the world so, too, has technology is helping to business case and return on it changed materials create pre-set pick walk investment is much higher.” Utilising the handling in FMCG. sequences around set For F&B companies, “Previously, warehouses events and automatically in particular, ‘voice’ digital world would be designed manage safe working is especially suited to around the 80:20 rule and distances. Systems can be cold-chain environments, isibility is becoming ever more important have fast-moving lines pre-configured to guarantee where gloves are needed, Vin the world of materials handling concentrated in one area. operatives are not in close and it is difficult to work with in FMCG and improved communication is These are now distributed proximity with one another, mobile devices. Voice makes one thing that has been evolving throughout around the warehouse to working on set locations operations faster because the pandemic. “Real time data is key,” keep workers separated,” only. Another solution that the employee does not suggests Josephine Coombe, Managing reports Eric Carter, Solutions has been around for a while, need to constantly pick up Director, Europe for Nulogy. “Visibility makes Architect at Indigo Software. yet has continued to be a hand-held mobile device. businesses far better equipped to respond with agility to volatile demand, order changes, rush orders and more from their retail customers. As such, with greater collaboration comes speed to market, and the capability to build sales opportunities and drive growth, while reducing waste and cost across the supply chain.” The FMCG sector is also continuing to use digitisation to track materials and goods at batch-and- code level, and traceability can help to isolate stock in a matter of minutes, rather than days or weeks- which invariably helps to reduce losses.
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Joined-up Tech Hub approach Get smart and future-proof John Thornton digs into your business growth Asda’s industry-first for arehouse management – representing a 50% growth. Wis experiencing a Retailers are increasingly intelligent sorting paradigm shift. UK online recognising that automation eek+ and AMH Material Handling have sales are forecast to rise by reduces risk – both by based on their requirements, launched an intelligent sorting system up to £67 billion over the next minimising capacity problems only paying for what they use, Gat Asda Logistics Services’ (ALS’s) five years, with e-commerce but also service issues that and therefore ensuring a National Sortation Centre in the UK. driving an additional result from needing to flex flexible service. 2 Some 60 autonomous mobile robots requirement of 92 million ft up staff numbers at peak Another technology being (AMRs) have been placed into the of warehouse space. But this periods. By augmenting hailed for its productivity supermarket’s distribution facility in isn’t the only challenge facing the human workforce and benefits is warehouse South Elmsall, West Yorkshire, allowing 2,000 organisations, with faster removing manual processes wearables. No longer parcels to be sorted each hour with 99.99% delivery high on the agenda. from operations with robotics constrained to handheld accuracy through its Asda ‘toyou’ parcel In the past 12 months, and other automated scanners, today’s wearables collection and returns business. warehouses have also had to solutions, retailers can are geared around increasing According to Geek+, the installation marks pivot from fulfilling bulk orders operational efficiency. the first time the technology has been used in prevent congestion in their for stores to individual orders Solutions such as smart this way in the UK, supporting an increase in for customers shopping from capacity for Asda toyou’s services as demand glasses and smart gloves home. The latter is more No longer for parcel collection and returns services has allow workers to quickly scan process-intensive and grown in the past 12 months. constrained to handheld barcodes without picking time-consuming – meaning “By letting a network of AMRs transfer scanners, today’s up packages, allowing for a incoming parcels from workstations to cages a huge increase in per-unit more ergonomic process and of corresponding destinations, we can improve fulfilment costs for retailers. wearables are geared more seamless reporting. accuracy and efficiency while also making the Warehouse management around increasing In short, warehouse process more ergonomic for warehouse stakeholders will need to stakeholders need to not only employees,” says Lit Fung, Vice President and leverage technology such operational efficiency adapt to today’s changing Managing Director of Geek+ APAC, UK and as automation and robotics consumer requirements but Americas. “With no need for fixed platform to task management and fulfillment centres and keep prepare for future challenges development, it makes it easy for Asda to scale warehouse devices to orders flowing seamlessly, far beyond the pandemic. This operations in line with business growth. All meet these challenges. reducing costs to ensure relies on them embracing they have to do is Automation is already profitability. digital transformation and adjust the number well-established within A new era of robotics new technologies to gain an of robots and warehouses, with data from is also providing a flexible advantage in a fast-changing, destination chutes.” Blue Yonder showing that disruptive and highly Asda’s toyou and cost-effective alternative can now respond 14% of retailers already have to the huge investment competitive landscape. to changes in order automation across their associated with fixed volume and continue fulfilment locations, with 21% automation in the warehouse. ■ Will Shepherd is Managing to provide high expecting full automation Many now operate on a Partner – Supply Chain, at REPL service levels during in the next 12 months consumption model and scale Group, Part of Accenture peak periods. ■
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As we look forward to the 25th Supply Chain Excellence Awards taking place on 8th November 2021, the Supply Chain conference will bring insight from 2020 winners alongside key thought leaders from throughout the supply chain industry to discuss the latest hot topics surrounding the logistics and supply chain industry.
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Informed choices capabilities to do so, resulting in issues further down the supply Michelle Mooney discovers how chain. Preventing these issues should be an absolute priority. Without this valuable information, Saric says, companies data and digitalisation are critical will have difficulties making informed and correct decisions. “By digitising procurement, organisations can create an tools in a successful sourcing all-encompassing view of suppliers and procurement processes. With this, they will have the solid data foundation and procurement operation needed to identify the most suitable supplier.” Simon Geale, Senior Vice President Client Solutions at n (Main) Going uccess in the world of sourcing and procurement Proxima, believes that “partners should be selected on the digital is essential begins with choosing the right suppliers, but that’s ‘balance of value’”. For businesses, “the definition of value is for simplifying and improving where there is room for a multitude of problems likely to vary for several reasons, and it’s normal to use variables the lengthy and and where the supply chain could be opened up to including price, cost, return on investment, quality, speed, complex process of costly mistakes. “All too often, organisations have performance, and risk in the purchasing decision process.” procurement (Right) Supply chains are Slimited visibility into suppliers, which can leave choosing the Trying to cut corners could have an adverse effect along making headlines right partner down to guesswork or predominantly cost,” begins the chain, so it is vital to invest in suppliers that bring value to around the world Alex Saric, Smart Procurement Expert at Ivalua. “This is an an operation. However, the process will be different for every for all the wrong reasons, such as industry-wide problem, with 93% of UK businesses saying company. “For a basic example, where specification is common Brexit and Covid-19 that it is challenging to view and track their suppliers.” and supply plentiful, a business might double-down on price. Tracking suppliers should be an essential goal for every But where innovation, agility and speed are required, the buyer company that procures goods yet many do not even have the should focus more on ROI and speed in relation to value.”
By digitising procurement, organisations can create an all- encompassing view of suppliers and procurement processes Alex Saric, Smart Procurement Expert, Ivalua
May 2021 www.logisticsmanager.com SOURCING & PROCUREMENT 17
Possible risk in the supply chain should also be factored The role of procurement in, Geale advises. “For critical goods or services, there might in a business is undeniably be an additional focus on risk or even dual sourcing. It’s also important, so it makes sense becoming standard to look at suppliers more thoroughly and that companies would want analyse how they measure up to other business and customer to invest in it. The good news values, such as culture, carbon and social value.” is that it is never too late to invest in new technologies. Risk, change and innovation “More organisations recognise Supply chain resilience is the latest must in procurement, as procurement’s role in restoring being able to withstand the effects of unprecedented global or growth and ensuring resilience regional events, such as a pandemic, has become a necessity. after the disruption of “Risk and flexibility are getting a lot more attention,” confirms Covid-19, so we are seeing BRIDGING THE Emile Naus, Partner at BearingPoint. “Recent challenges around more investment,” says Saric. PHYSICAL AND Covid, Brexit – and the current issues with container traffic “In particular, organisations – have highlighted that supply chains can be fragile, and that are turning more and more to THE DIGITAL cost advantages can very quickly disappear in the case of major cloud-based technologies, to n emerging tech that BearingPoint’s supply disruption.” Bouncing back from challenges will allow enable collaboration, identify A Emile Naus feels we should keep an a company to avoid unnecessary losses down the line. revenue opportunities, eye on is the ‘digital twin’. “This is an Saric is in agreement, suggesting that “Covid-19 exposed improve resilience, and drive up-to-date representation of your supply blind-spots in procurement for many organisations – most were sustainability measures.” chain that can be used to provide early unprepared to tackle this crisis. Inflexible procurement tools The digital age is here and warning of supply or demand issues and and poor-quality data meant that supplier visibility issues companies appreciate how bottlenecks, but also to simulate how were common, which limited effective decision-making when vital data is in ensuring a secure the supply chain can react to events,” he they needed it most and didn’t allow for collaboration with and robust supply chain. As explains. And there are several different suppliers.” A lack of visibility will undoubtably lead to issues, objectives in procurement supply chain risk technologies such which is why thorough planning for potential risks is critical. change – becoming more as this that will help monitor primary “As we begin to recover from the pandemic, procurement’s efficient and scalable – suppliers and those in their critical focus is rapidly shifting and becoming more strategic,” Saric collaboration with internal supply chains across a range of factors. says. “Leaders are recognising the importance of procurement, stakeholders and suppliers with more organisations prioritising resilience, unlocking is key, according to Saric. “New supplier-led innovation, sustainability, and identifying new capabilities that enable efficient collaboration across processes revenue opportunities among procurement’s objectives.” – rather than just digitise a specific one – are growing in To support this “growing responsibility”, Saric believes that importance, from new product introduction planning to supply chain leaders are implementing more digitisation and more accurate forecasting.” automation to “improve data quality and access to insights “Digitalisation and the technologies and software to and to enable scalable, effective collaboration with internal support this change are critical to the future of sourcing and stakeholders and suppliers”. procurement,” concludes Price. “The added visibility will enable cost savings and greater efficiencies and offer the agility and The competitive edge? competitive advantage to help businesses grow and prosper.” n Negotiating goods is risky business at the best of times and getting it right will ensure the best price for the best quality. Recent challenges have highlighted “There are number of different styles of negotiating and cost-modelling that can be deployed,” Geale reports. “There that supply chains can be fragile, and that are also several emerging technologies in play that use bots cost advantages can very quickly disappear to analyse data points and negotiate on your behalf.” He also highglights that “traditional negotiations can be quite a in the case of major supply disruption subjective experience” if done without preparation and facts. Emile Naus, Partner, BearingPoint “We can believe in triumph through emotional outcomes, such as a price movement, rather than logical reasons, such as understanding market prices or real speed-to-business value.” “Having facts and data to hand are key,” concurs Paul Price, Empower for the people Vice Chairman of Lemonpath. “In any price negotiation, a company must have the evidence that can support its exact ichael Chrisment, CEO of Farmer data-led approach for traceability, requirements and within this understand the total cost MConnect, believes that leaders as it has traditionally been highly involved rather than just the price per item.” in sourcing and procurement are as challenging and fragmented.” Buyer-supplier negotiation is in a constant state of flux, important as growing equity. “Today’s Chrisment suggests that which is why keeping an eye on trends is important. “Suppliers conscious consumers want to be able technologies such as blockchain are increasingly gaining leverage and more factors are being to make informed decisions about and artificial intelligence will considered during negotiations,” Saric says. “In years gone the products they buy,” Chrisment “bring all parties in the supply chain by, negotiation was a one-way street with competitive suggests. “As a result, brands big together, simplifying the exchange advantage perceived as being achieved by driving the lowest and small are deploying the latest and tracking of information and possible price. This was hugely unsustainable. Not only are technologies that provide traceability, payments, as well as enabling there limits to how much margin can be taken from suppliers, ESG and SDG tracking, carbon greater trust. This, in turn, empowers but the increase in supply disruptions has demonstrated that footprint tracking, and further smallholder farmers, reduces reliability of supply can be more of an advantage than cost.” task automation. inefficiencies for global enterprises, Supply chain leaders are constantly finding ways to adapt, In particular, the agricultural and informs people about how and with consumer demand changing frequently, negotiations supply chain is crying out for a their products were produced.” are going to have to change also.
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o now we know what it takes to cause havoc in Another problem for manufacturing supply chains over n (Main) Ever Given’s the critically important supply chain linking the the past few months has been a shortage of semiconductors, blockage of the Suez Canal manufacturing powerhouse of the Far East to driven in part by the pandemic but also a cold-snap in Texas international the markets of Europe – just a puff of wind. in February 2020 that brought production to a halt at a number waterway focused Images of the Ever Given jammed across the Suez of chip fabrication plants. attention on the vulnerabilities of Canal went around the world at the end of March as more and S supply chains more ships were forced to sit and wait while desperate attempts Automotive supply pains were made to free it. “Gusting winds of 30 knots caused the The auto sector has been particularly hit by the shortage with container ship to deviate from its course, suspectedly leading several manufacturers being forced to halt production. Last to the grounding,” the ship’s operator, Evergreen, commented. month, General Motors said it was building some vehicles A 20,000-teu ship the length of four football pitches is not without certain modules on the basis that they could be the easiest thing to shift and it took a week of struggle to get it completed as soon as more semiconductors became available. moving again. But by then an estimated 370 ships carrying Faced with these problems, it is unsurprising that companies some £6.6 billion worth of goods had been brought to a halt. are questioning their reliance on such extended supply chains. “The full impact of this traffic jam will be felt in the coming two There has been talk in the past of on-shoring and near-shoring, months and we expect it will not be fully sorted out before but it has taken on a new impetus in light of recent events. Q3 this year,” DHL Global Forwarding warned customers. Problems, problems, everywhere Boom time for air cargo This is on top of the problems created for the global shipping industry by Covid-19, with congestion at ports, a shortage of ir cargo has been gaining share empty containers, and service reliability hitting all-time lows. Aof the global goods trade over According to Sea-Intelligence, liner shipping schedule other modes of transport. The latest reliability in February was 30% lower than in February last year, figures from the International Air Transport Association (IATA) show a n Last year, British Airways increased the number while the average delay for late vessel arrivals was 6.76 days. of cargo-only flights from China to the UK, including Not surprisingly, the problems of ocean freight have proved substantial increase in air cargo with putting cargo in the passenger cabin cargo tonne-kilometres in February to be a boon for the airlines, but air cargo can only handle of 2020, cargo revenue was up a fraction of the goods moved by sea. up 9% on the same month in 2019 36% on pre-crisis 2019, “supported Manufacturers and retailers have been able to move – pre-crisis. Month-on-month, cargo by elevated yields and improving production out of Europe and the USA to the low-wage volumes rose by 1.5%. IATA says economies of the Far East precisely because liner shipping has demand is being driven by a cargo demand”. been able to offer reliable and low-cost transport of goods back. ‘V-shaped’ recovery. This describes However, passenger revenue The impact was highlighted when Nike unveiled its the rapid fall in traffic due to was down 73%. Given the relative third-quarter results in March. “Our Q3 revenue performance Covid-19 followed by an equally size of the two markets, it is hardly was impacted by disruption related to Covid-19, particularly in rapid rise as companies started surprising that overall airline revenue North America and EMEA. Inventories for Nike Inc were US$6.7 to get a measure of the problem. was down by more than 60%. In fact, billion, up 15% compared to the prior year period, largely Cargo has become a vital lifeline IATA reckons that total losses in driven by higher in-transit inventory in North America due to for the airlines. In the fourth quarter 2020 amounted to US$118 billion. US port congestion and temporary store closures in EMEA.”
www.logisticsmanager.com May 2021 20 EXTENDED SUPPLY CHAINS
Labour costs drive Average monthly income 2019 Real wage growth extended supply chains 2008 and 2017 (%) (£) (US$) ower labour costs have been real wage growth in China over China 8.2 L a driving factor in persuading the past 10 years. In Europe China 677 928 companies to source product and the USA, real wages (ignoring India 5.5 India 129 177 in the Far East, and as the first inflation) have barely moved Turkey 4.1 table shows, average monthly – and in the case of the Turkey 589 808 Germany 1.0 incomes in the developing UK have actually declined. Germany 2,952 4,048 economies are a fraction of Nevertheless, at these rates USA 0.6 USA 4,003 5,488 those in Europe and the USA. of growth, it will still take many UK -0.5 UK 2,566 3,518 However, this economic years for real wages in the Source: International Labour Organisation success is driving wages up and developing economies to Source: World Data Info the second table highlights the match Europe and the USA.
product is currently sourced in Bangladesh and is brought to One area where efficiency gains the UK. From there it might be sent on to other markets such are possible is removing the amount of as the USA. That is a lot of mileage and there are more efficient movement of goods around the world approaches, says Hosegood. Louisa Hosegood, Digital & Strategy Director, Continental shift? Bis Henderson Consulting In February, JD Sports chief Peter Cowgill hit the headlines when he said the group was looking to open a huge distribution Academics such as Professor Richard Wilding of Cranfield centre on the Continent to side-step tariffs and disruption and Professor Alan McKinnon of Kuehne Logistics University, resulting from Brexit. Part of the logic of that move is to avoid are on record highlighting the importance of increasing the bringing goods into the UK before shipping to stores on the resilience of supply chains. This could include on-shoring, Continent, as this now attracts tariffs. near-shoring and multi-shoring, though sourcing within a Some companies, of course, have already done that. Online single country also has risks. But sourcing in multiple locations fashion retailer ASOS, for instance, already handles its and using multiple carriers could be used to reduce risk. continental distribution from a fulfilment centre in Germany. However, no-one is predicting that globalisation will In fact, the Netherland Foreign Investment Agency says suddenly go into reverse. it is speaking with 550 companies affected by Brexit about Cost is a critical factor in the global market, and the labour relocation or expansion to the Netherlands. This includes UK cost differentials between the Far East and Europe and the firms, but also US and Asian ones that are reconsidering their USA could proved decisive for many organisations (see above current European structure due to the uncertainty caused sidebar). The balance might tilt but not to a major degree. by Brexit. Since the referendum in June 2016, 218 Brexit From a retail perspective, the lockdowns of the past year companies have opted to open facilities in the Netherlands. have hit the high street’s big names particularly hard. Multi-sourcing was identified as a key trend in the DHL Retail specialist Louisa Hosegood, Digital & Strategy Director Logistics Trend Radar report published last autumn. “Sourcing of Bis Henderson Consulting, points out that high street from multiple suppliers along a supply chain, from raw retailers need to change the balance of their business away materials to last-mile delivery, can effectively mitigate risk from bricks and mortar to online. That’s a costly process at by adding regional flexibility and build competiveness a time when their revenue is weak, so they will be looking for logistics players on the global stage,” it noted. for savings and the supply chain is in the spotlight. However, there are challenges with this approach primarily One area where efficiency gains are possible is removing the as a result of the added complexity of managing a larger amount of movement of goods around the world. For example, network of suppliers and logistics hubs. Major manufacturers have worked hard to achieve visibility of their Tier 1 suppliers and some have visibility of operations in UK manufacturers look Tier 2 or even Tier 3 suppliers. But, there is little visibility further along the chain, leaving the possibility of an entire industry to globaL exports sector being dependent on one supplier without being aware anufacturers in the UK are hoping to expand into new markets as part of of the fact. There is still work to be done on improving visibility. Mtheir efforts to build agility and resilience into their supply chains following Companies are also looking to move at least some Brexit. A survey by MAKE, the manufacturers’ organisation, found companies are production from East Asia to countries such as Turkey where optimistic about prospects for their own industries in the coming year, although production costs are relatively low. they are much less confident about prospects for theU K economy as a whole. Retailers are also now looking for more flexibility from suppliers: smaller quantities more often. But this means Manufacturers’ expectations for 2021 shifting cost, risk and complexity onto suppliers: persuading Improve (%) No change (%) Deteriorate (%) the suppliers that this a good idea could be a challenge. Extended supply chains are here to stay, but the emphasis Own industry 48 28 24 is likely to shift to more regional activity over the coming UK market 29 15 56 years focused on three centres of activity: North America, Europe and East Asia. Global market 33 21 45 As intra-regional growth takes on a greater importance, Source: MAKE – the manufacturers organisation. Executive survey 2021 a slowdown in growth in truly global worldwide trade is likely and it is even possible that it could decline. n
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Disruptive influences Quick thinking, flexibility and technology are not guarantees to ride the challenges thrown at us in 2020, finds Maria Highland, but they’re a huge headstart to shoring up operations resilience
isruptions are never welcomed with open arms. The2021 Waitrose Food & Drink Report confirms this, noting n (Main) Unlike its rivals, Primark had Supply chains consistently deal with changing that a quarter of UK adults bought food online for the first-time no online presence consumer trends and fluctuating product demands, in the past year. Unaspiringly, more than three-quarters of to shift stock when which all disrupt operations to a certain extent. people in the UK now do at least some of their grocery shopping stores closed, so its 12 April reopening When they occur often enough, businesses begin online, compared to 61% in 2019. Likewise, 69% of those who was keenly Dto get a better handle on them. But when you are hit with a shopped for food online in the crisis plan to continue doing so. anticipated ‘black swan’ event, the whole playbook goes out the window. “In the past year, we can readily identify two events that have severely impacted and tested the resilience of supply chains – Covid-19 and Brexit,” says Mark Croxton, Symphony RetailAI Demand and dark stores Vice President of Customer Support. Many businesses, aitrose has opened its third particularly sectors in FMCG and F&B, had the rug pulled from Wcustomer fulfilment centre under their feet in 2020 and had to react quickly to widespread or ‘dark store’ in Greenford, disruption. Consequently, businesses now have a better West London. It has partnered understanding of how to cope with these major tests. Likewise, with Wincanton to fast-track the technologies have evolved to assist businesses in future- development of the centre in order proofing their operations. The result is faster, more resilient to respond to continuing demand supply chains backed by some impressive technology. for online shopping slots – especially from the elderly, disabled and Adapting to demand vulnerable customers. “2020 was the year the online shift across the grocery sector “Dark stores will play a huge role accelerated rapidly,” says James Hurrell, Wincanton Managing in helping supply chains adapt to Waitrose.com orders each week, Director for Grocery & Consumer. “According to Kantar, more meet a new set of expectations as helping to offer five times more than six million UK households bought from a grocer via their more retail purchases are made online slots each week in London online channels throughout November 2020, which was a online and they will better enable than before the pandemic. record high. Grocers more than doubled their online capacity businesses to serve customers, Existing sites in Coulsdon and to meet customer demand,” he explains. at scale,” said Wincanton chief Enfield help to meet high demand “Although the COVID-19 pandemic has influenced this executive, James Wroath. in London, while a network of evolution, going online for groceries isn’t a trend that will be When fully running later in the Waitrose shops cover 90% of going away. As a result of this, grocers are continuing to adapt year, the centre will deliver 25,000 postcodes across the rest of the UK. at pace to meet increasing consumer demand,” Hurrell adds.
www.logisticsmanager.com May 2021 24 SUPPLY CHAIN TRENDS: FMCG/F&B
Retailers with advanced and precise forecasting systems can get ahead of the competition on sourcing and contracting, data to build a thereby derisking unforeseen events compelling story and ensuring priority of supply any manufacturers task for a data scientist, James Smith, Managing Director, AutoStore UK Mare trying to reduce but if you want to convert the complexity of the insights into actions, “If the pandemic has demonstrated one thing within supply manufacturing process by you need a compelling, chains, it is the need for rapid adaptability and scalability to simplifying their portfolio easy-to-understand story. meet the ever-changing demands of consumers,” states James and by focusing on “We leverage a lot of data Smith, Managing Director, AutoStore UK. “The ability to rapidly specific areas of strategic sources including Nielsen, shift from bricks-and-mortar retail to online – and then to a importance. “It’s a trend IRI, internal financial and hybrid – is the difference between exceeding or under- right across the consumer promotional data, etc. delivering on customer experience and will ultimately have goods sector,” reports “It is critical for us to an impact on future customer retention and decision-making.” Deepak Jose, Head of build an accurate picture of As a result of this, we can expect “an even greater move Business Strategy and the ‘current single source towards online fulfilment centres,” Hurrell predicts, “and the Advanced Analytics at Mars. of truth’, accounting for all repurposing of existing stores and property to better serve “We, too, have a data- and these different factors the e-commerce market. Both are interesting approaches to analytics-driven portfolio- and a constantly evolving address the challenges of scaling up operations quickly. An simplification strategy, picture. Tableau gives us important consideration will be the delivery of customer and and enabling agility and powerful visualisations that brand experience through new and fast-growing channels.” transparency is a vital democratise data and make part of that. Reducing the decision-making easier. the complexity helps not It makes taking the right Make data your best friend only Mars and our retail action much faster.” When it come to disruptions, time is of the essence. Having customers but, most an insight into your operations and accurately forecasting importantly, it gives demand is therefore crucial. Digital technologies offer help the right choice to the in this department by helping businesses plan accordingly consumer without any and make smart decisions based on intelligent data insights. disruption in supply.” Croxton believes one way to achieve a robust supply chain is Converting data to to improve the accuracy of forecasting demand. “Retailers with insights is a relatively easy advanced and precise forecasting systems can get ahead of the competition on sourcing and contracting, thereby derisking unforeseen events and ensuring priority of supply,” he suggests. ways. Analytics can help the FMCG companies achieve a Essentially “resilience comes through careful planning and a deeper understanding of their customer data and offer deep understanding of the ecosystem you already have in place, insights to transform a market laggard into a leader.” and where the weaknesses in that ecosystem are,” continues We can classify 2020 as the year of the worker. Many AutoStore’s Smith. “Technology can be a great asset in building companies functioning with a reduced workforce really felt the resilience into your operations. Once you know what the pinch in their operations. When there are labour shortages, existing or future problem is that you’re trying to solve, you can automation comes in handy. This can range from automating use technology strategically to pick it apart and ensure your tedious processes in order to better utilise worker labour to supply chain is not exposed to any disruption.” investing in robotics to pick up the slack and speed-up your This is especially true since “FMCG analytics is changing the operations when product demand gets high. way data is operated in organisations – the focus from ‘product’ Likewise, as automation helps to speed-up operations, it n (Below) The is shifting rapidly towards ‘consumers’”, according to Ali Kidwai, makes responding to changes much quicker. “Companies that pandemic has Senior Content Analyst, Polestar. By “having data analytics have already invested in automating part of their supply chain significantly changed how we techniques in place, FMCG companies can move beyond have been able to rapidly switch channel according to customer shop, with many simple reactive operations and take proactive decisions. demand, whether that is increased delivery slot availability, of us now relying “Factors such as marketing, inventory, seasonal changes, faster delivery times or increased inventory availability,” says on online food deliveries rather returns, out-of-stock, raw material availability, localised pricing, Smith. “Conversely, those relying on aged systems have seen than visiting stores and so on, drive the FMCG industry,” Kidwai adds. “In these their capacity stretched to its limit and sometimes beyond.” unstable times, the FMCG He explains that as “non-essential retail shops begin to industry can depend on data re-open, one guarantee is that consumers with greater spending analytics to identify trends, gaps power will expect the same speed, choice and convenience in and opportunities in customer the physical retail environment as they have grown accustomed behaviour and supply chains.” to online. Businesses with supply chains agile enough to Therefore, Kidwai goes on to manage these expectations will see greater wallet share explains, “to maintain a and the longer-term benefits of customer retention.” competitive edge in a fast-growing This trend is worth remembering as automation, robotics marketplace, it is becoming and AI are set to “play an ever more important role in increasing increasingly necessary for FMCG efficiency, resilience and capacity”, Hurrell concludes. “These companies to look for proactive capabilities will enable grocers to keep speed with changing methods of harnessing new and consumer demand and enhance their abilities to make better, extensive data sources in unique more informed supply chain decisions.” n
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n (Main) lockchain is more commonly associated with Another advantage is that blockchain is a peer-to-peer Blockchain cryptocurrency than supply chains. Nonetheless, it is network, meaning there is no need for third-party involvement, could make the transaction- full of promise for logistics and other sectors, vowing making processes more efficient and transparent, which verification to bring a whole new level of transparency. But, as also mitigates the risk of errors. And since it is encrypted, it is process more with any new technology trend, we can’t but help additionally hard to hack – this is very important for businesses efficient and help achieve a Bbut exercise caution. Is blockchain a new benchmark in supply in a time when IoT and Big Data are centre stage. quick delivery chain visibility or merely the latest high-tech fad? of goods and On the outside, blockchain appears to boasts a lot of benefits, What makes blockchain the ‘big boss’? services via mutual such as faster processes, data privacy and is an enabler for One could argue that providing visibility and transparency can trust among automation. However, the advantages that stand out among be achieved without investing in blockchain – think tracking participants the rest is its capability to ensure transparency and enable and tracking telematics, ERP and CRM systems – but the real-time collaboration across supply chains. difference is the level of privacy and the type of data created. Data within a blockchain can be viewed by all participants “Transparency and visibility are great for supply chains, but but cannot be altered. This ‘fixed’ nature of blockchain data only if they provide the participants privacy and control over means that provenance or tracking and tracing in a complex who they are providing transparency and visibility to,” suggests supply chain becomes a piece of cake. It also means that errors Carl Wegner, CEO, Contour. “This is the central premise of and risk are significantly reduced as no one can tamper with permissioned blockchain technologies. the information, which also builds trust between partners. “All parties in a transaction can share relevant information with a clear and auditable data trail without sharing any data to unrelated parties or even the network operator itself,” Realising the potential says Venkatraman Panchapakesan, HSBC Global Trade and Receivables Finance Product Director. “This allows users to DC FutureScape: Worldwide blockchain to create transparent, have access to real-time status updates, notifications when they IBlockchain 2021 Predictions auditable records of entities in need to act, and moreover without having to worry about their highlights increased interest in ‘know-your-customer’ compliance. sensitive data being shared with competitors or vendors.” blockchain within healthcare, digital “Blockchain and distributed Likewise, Panchapakesan adds, “no one party or database ID, supply chains and global shipping. ledger technology, as a distinct holds all of the network’s data, so it is increasingly difficult to IDC predicts that 15% of supply chain discipline, has evolved rapidly in the attack an entire network. Security also goes beyond these core transactions will use blockchain to past two years,” says James Wester, principles and provides businesses assurance that their data is increase digital trust within ethical Worldwide Blockchain Strategies immutable and auditable, meaning that any changes can be and sustainable practices. Research Director. “There is no traced and tracked in real-time, decreasing risk of fraud.” It also predicts that, by 2023, doubt there is still considerable In its article, Blockchain technology for supply chains – A must 65% of transcontinental shipping will development that must take place or a maybe?, McKinsey points out that “many of today’s supply use blockchain for goods origination for it to reach its potential, but chains have good data, which they are able to transfer across data, fuel sourcing and crew health these predictions are a good supply chain tiers at close to real-time speed”, and that information. Likewise, by 2025, 10% indication of just how big − when “well-managed central databases with good data management, of financial institutions will use fully realised − that potential is.” combined with supply-chain visualisation and analytical prowess, can be achieved at scale today”.
May 2021 www.logisticsmanager.com SUPPLY CHAIN VISIBILITY: BLOCkCHAIN 27
BASELINE PROTOCOL Y and ConsenSys in businesses is costly so the Ecollaboration with Microsoft baseline approach employs the have established the ‘Baseline public Ethereum Mainnet as a Protocol’ − an open-source common frame of reference. It is traditional systems,” explains initiative that combines advances always on, companies can’t be John Wolpert, ConsenSy Group in cryptography, messaging and locked out or restricted from using Executive for Enterprise Mainnet blockchain to deliver secure and it, and only pay for what they use. (pictured above). private business processes at “The protocol will support “It’s hoped that the providers low cost. It enables complex ‘tokenisation’ and decentralised of ERP, CRM and other enterprise collaboration between enterprises financial services on the Mainnet systems will optimise their without leaving any sensitive in a way that doesn’t reveal products for the protocol over data on-chain. corporate assets or activities time, but baselining works without Synchronising internal systems to unauthorised parties, and it requiring any modification to such as CRM and ERP between leaves enterprise data safely in legacy systems.”
More importantly, the report states, “these solutions do not carry the additional burden of some of the technical Transparency and visibility are great complexities that blockchain can raise”. Therefore, “when for supply chains, but only if they provide all parties in extended supply chains are known and trusted, a blockchain solution is probably not needed, as these the privacy and control over who they are known and trusted parties can be relied upon to provide providing transparency and visibility to a single, real-time version of the truth. In such a situation, centralised solutions such as a cloud portal or decentralised Carl Wegner, CEO, Contour peer-to-peer connections would suffice.” That said, supply chains have evolved and now require some extra horsepower. “They involve numerous parties “It is useful in situations where there is a trust issue, and some and can be complex, which has traditionally limited the scope kind of transaction takes place,” he says. For supply chains, it’s for new technologies that focus on providing value to a sole of interest as multiple organisations often require a trusted participant in the value chain,” says Panchapakesan. “With environment to perform transactions. “However, if one of the blockchain, the industry is able to come together onto a two is not present, blockchain is not the solution.” common, decentralised network and provide value-added Likewise, blockchain doesn’t work in isolation and is best services throughout the value chain. The seemingly simple used in scenarios where “multiple organisations need to concept of enabling everyone to synchronise data across all achieve a common goal,” Rijmenam adds. “When transactions transaction participants, in real-time, is a game-changer.” need to take place within one organisation, not involving any external stakeholders, a (private) decentralised network is not Is it right for you? the solution. Trust can be achieved through different means.” “Blockchain is a fundamental technology that will bring a Finally, blockchain is not for those who want snappy results. paradigm shift in how organisations collaborate,” believes Dr Even if you need to collaborate with multiple organisations, Mark van Rijmenam, Founder, Datafloq. “However, it is not a it might not be the right solution if speed is crucial. “Existing solution to all of your problems. If you wish to benefit from relational database solutions have proven to be capable of blockchain, it is important to have a clear understanding of how running trillions of queries in a short timeframe,” Rijmenam this technology could help you solve your business problems.” says. “One of the challenges of blockchain is it is slow in Van Rijmenam believes every organisation can benefit from terms of transactions per second.” This may eventually change blockchain, but it cannot be used in every process or situation. “but for now, it is better to stick with centralised databases.” Considering all this, Panchapakesan recommends that companies “consider the end business objective before they make a decision about implementing blockchain, and evaluate if the technology addresses the end-state solution and how it simple and cost efficient it could be to adopt and scale up. “It is not about choosing blockchain as a technology but rather choosing what is the best technology to solve a specific business problem,” Panchapakesan says. For example, “HSBC sees the potential of blockchain in solving certain n (Left) areas of business problems by connecting numerous parties Blockchain to facilitate data exchange and communication on a secured could solve key challenges by network, while keeping the ownership on our data.” creating an “Through facilitating various transactions with our clients, encrypted digital HSBC has proved the commercial viability of blockchain record that tracks goods at technology as part of the future of trade finance, but this every stage in may not be the case for all business problems.” n the supply chain
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property contents 29 contents Big Sheds Leader Pandemic change 31 and “The pandemic has been a little bit of a VAT. dry run for the rather bigger problem we are facing, which is that we have a major How freeports can boost Storage and warehousing climate problem. This is not a UK, US or activities can store a large a China issue – this is a global issue and UK competitiveness quantity of goods or raw we need to work together and be more materials to use them in s part of post-Brexit trade radical, be more aggressive to deal with production inside a freeport policy, the UK government some of these big macro challenges that A area. The presence of we are facing” announced the establishment of eight freeports locations to knowledge spill-over across Please, sir, I want some boost international trade, businesses operating from more 36 increase competitiveness and concentrated zones help achieve the Prime sizeable, but even smaller There are also real-estate “Internet retail sales have gone from a Minister’s ambition of operators could expect to see implications. Freeports would ‘levelling-up’ the UK economy. fifth of all retail sales to over a third in improved competitiveness. create extra demand for real The locations of England’s the space of 12 months and this has had There are other benefits, estate premises in a relatively eight new freeports are East a profound effect on the demand for too. A freeport creates small area (e.g. ports and logistics space” Midlands Airport, Felixstowe industrial clusters and airports), as it decreases the and Harwich, Humber Region, facilitates greater economies variable cost of manufacturing Chinese whispers 37 Liverpool City Region, of scale. According to several and handling of a product. Plymouth, Solent, Thames These deals are just the tip of the iceberg. academic studies done in the Some of the potential There has been a plethora of units (including London Gateway benefits to the real estate Port and the Port of Tilbury), USA, a job multiplier slightly snapped up over the past 12-24 months sector are an increase in and Teesside. greater than two and a capital by logistics firms hailing from China inward investments from There are circa 80 investment multiplier of global businesses, greater Land: they’re just not freeports in the EU and the around two have been found demand for real estate making it anymore 41 UK needed to create similar when observing the economic free-trade areas to be able to benefits of a Free Trade Zone. premises, and the creation of “Any developments that come forward offer similar terms when it They encourage an increase clusters that will generate that are oven-ready are hotly contested” comes to assembling and of trade flows – when trading greater level of industry then exporting goods globally. includes import and export, specialisation which would A freeport area is classified traders have benefits of not otherwise be created. All as a specific class of special working with companies of the above may create a economic zone. It is a operating in a freeport area. structural break in terms of geographic area where goods The promote an increase of capital and rental growth may be stored, handled, goods traffic which would not performance for assets manufactured and re-exported necessarily be directed to the located in those areas. under specific customs subject country. Producers ■ Len Rosso (right) is Head of regulation and are generally can import raw materials and Industrial, Colliers, while not subject to customs duty. components from other Andrea Ferranti (above on the They are often found around countries. They will not be left) is Head of Industrial busy transport hubs such as bound to pay customs taxes Research, Colliers major seaports, airports, and other locations with strong Business operations that would transportation links. Businesses and take place within a UK freeport area manufacturers located in would also be exempt from some Unstoppable Amazon 45 those areas will be exempt taxation and custom rules According to Savills, in the decade from from the wider custom and 2009, Amazon has seen its warehouse taxation framework that would space grow by as much as 1,700%, otherwise apply under occupying up to 23.4 million ft2 by the international trade rules. Not end of 2018. (It is astonishing to note that only that, business operations in the two years since, to the end of 2020, that would take place within a it has increased its floor space by nearly UK freeport area, would also 80%) be exempt from some taxation and custom rules Big Sheds News 48 currently existing in the UK. For larger operators, the Behind the Shed 50 potential returns could be
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WEBINAR REPORT 31
It was obvious from the start All of our supply chain that the logistics sector keeps our operations have business continuity cities, societies and economies plans but we have never had to put moving – so stopping during a all 400 in place at the same time lockdown was not an option Philip Roe, Chief Customer Officer, Alan Holland, Managing Director, DHL Supply Chain Greater London, SEGRO
Will Butler-Adams, Managing Director of folding-bike maker and retailer, Brompton Bicycle, also got a heads-up from colleagues working in Shanghai and while the UK government dithered, he implemented a work-from-home rule for the vulnerable – as did DHL and DPD. “From monitoring the virus Pandemic closely, it was clear the risks to the young and healthy were low,” says Butler-Adams, “but for a lot of my staff, the risk of losing their jobs going into a recession post-pandemic would have had a far bigger impact on their lives than the virus itself.” Preventative measures For all of the panelists, their first thought was to secure the change safety and well-being of their staff. “We closed all our offices – we did not wait for the instructions,” continues DHL’s Roe. Covid-19 has challenged modern “But it was not until we saw the extent of the lockdown measures that we could really start to go into the level of detail global supply chains like never needed for the different supply chains that we service.” “It was obvious from the start that the logistics sector before. Liza Helps explores how keeps our cities, societies and economies moving – so stopping during a lockdown was not an option,” suggests some in the sector adapted to Alan Holland, Managing Director, Greater London, SEGRO. “In those first two weeks, we saw volumes fall away,” adds the hugely altered landscape Mark Wilkes, DPD’s Director of Infrastructure & Sustainability. “In fact, between 2018-2019, our growth was around 4% he past year feels like a decade for Philip Roe, DHL year-on-year. By the end of the second week, it was the Supply Chain’s Chief Customer Officer – a sentiment opposite: by the first peak we had gone to 45% growth and by shared by all of the panelists who took part in our the time we got to peak two with Black Friday and Cyber week, webinar focusing on logistics and the supply chain it was 65% across the business. How do you manage that?” during the pandemic. So much has happened in the The same was happening at DHL. “Pre-lockdown we saw Tpast 12 months – and of course we know more now than we did changes in customer buying patterns,” Roe says. “In fact, we were – but right back at the beginning there were a lot of unknowns… busier in the first week of March in our food business – be that “We had a little bit of an insight from our other regions manufacturing or retailing – than we had been over Christmas – particularly Asia-Pacific – but there was a lot we did not know,” and it just got busier. We had 39 Christmas weeks last year! But recalls Roe. “How much was this going to affect our people? we also had parts of the business that completely died away. How much of the disease would we see? What was going to “In normal circumstances,” stresses Roe, “you would respond happen at a local level? What should we put in place to try to within the individual supply chain that you manage. All of our minimise the spread? But the biggest unknown was what the supply chain operations have business continuity plans but government was going to do. We did not know if they were we have never had to put all 400 in place at the same time.” going to do anything, something or a lot!” To the outside eye, it seemed that despite a few shortages in the supermarkets at the outset, the logistics sector just ran as normal. Butler-Adams, though, disabuses that notion. “There is this myth that this is all some organised, super-professional Drive to digitization response but that is not the reality – particularly when thrown usinesses have had to show lives, working from home – everyone something like this. You have to think on your feet and be Btremendous resilience and is embracing digital. It was already prepared to take calculated risks. You have to be very strong at adaptability over the course of the there but it’s just been put on communicating with your staff as people are fearful. Here is past year or so, according to SEGRO’s steroids: the change in consumer uncertainty; it is not part of the plan but you should not be Alan Holland. “Now, as we come out behaviour and the adoption of online afraid to keep the show on the road. That is what we learned.” of the pandemic and lockdown, what from those who didn’t use it, the For Brompton Bicycle, that meant hiring vans to pick up we’re seeing is that it’s actually demand we have seen in post and inventory from suppliers that had locked down, including the accelerated a lot of the trends that parcels. Businesses are pivoting and machinery so parts could be finished off in the factory prior to were already appearing,” he says. responding and they’re doing their assembly, just to keep going. “You have to innovate, to remain “The digitization of our world – our best to do that in a sustainable way.” professional as best you can, but it isn’t professional – that is my point – it is difficult and uncomfortable. Not perfect.”
www.logisticsmanager.com May 2021
32 WEBINAR REPORT
For a lot of my staff, the risk We took on 9,000 people of losing their jobs going into a between May and the end of the recession post-pandemic would year and where we planned to open have had a far bigger impact on six depots we had to open an their lives than the virus itself additional 10 Will Butler-Adams, Managing Director, Mark Wilkes, Director of Infrastructure Brompton Bicycle & Sustainability, DPD
“I remember us putting together loads of different solutions,” isn’t the only thing he is explains Roe. “We turned sites normally looking after clothing thankful for. “We yanked into food retail, other sites looking after pubs to provisioning Out of the mire on the anchors because prisons. You will never find that written on a plan anywhere!” dversity brings of strong dealer we were worried about Communication was key in enabling each of these businesses Aopportunity, believes relationships around cash but within three to move quickly, to take calculated risk, to be flexible within Brompton Bicycle’s Will the world. We also months sales went the ever-changing environment as the pandemic progressed. Butler-Adams. So when see service as a really through the roof and “Our original plan was based on 4% growth,” states Wilkes. the shops closed their important part of our in the end we couldn’t “By June, we realised we needed to prepare for much more. We doors and people turned proposition.” It was an make enough bikes took on 9,000 people between May and the end of the year and their backs on public unusual conundrum with – we still can’t. But we where we planned to open six depots, we had to open 10. Our transport, they naturally orders plummeting on also couldn’t get the original plan was for 200,000ft2 of extra space – we landed up started looking at other the main sales channel parts. And it’s one of with 440,000ft2 and on top of that we had to buy vehicles. ways to get around. “It’s yet surging demand the few compliments I’ll “It all worked out but without the daily meetings – that hilarious that we have that couldn’t be met. pay to ‘Dear Old Brexit’: communication across the business, the fluidity and flexibility the perfect D2C bike Butler-Adams responded we put £1.5 million into – you would not have had the speed of response you need for – because it folds up by creating a simple stock in preparation for every decision. We could not wait a week to talk to somebody.” and it’s quite small – but Shopify site to, in his the exit, so we munched Roe insists the structures put in place to ease communication we haven’t done D2C own words, “get the through that to get us and speed up the decision-making process were crucial. DHL as our business has flipping bikes to the out of the Covid mire.” instigated a Situations Theory Team to figure out in each one of evolved on the back customers”. And Shopify its 400 sites how busy it was, what resources it had, what was available on a daily basis and, against that, it had a team of “They will also have to have multiple routes to market people redeploying those resources where they were needed. no matter how large or small, national or local,” adds Roe. This, for instance, allowed the company to put in new The way business is run is going to be important, too, adds e-commerce solutions for customers over weekends because the Butler-Adams. “You will need good relationships with your customers needed new and extra routes to market to survive. staff, supply chain and customers to deal with uncertainty Butler-Adams agrees. “Notwithstanding all the other – that is the difference between success and failure.” tragedies we have had to face, the pandemic has given my team This will, of course, put more pressure on logistics, the confidence to make decisions and realise they won’t be especially last-mile and urban logistics. But over the done in for using their initiative and taking calculated risk.” top of all that there is the climate change issue. “The One of the calculated risks taken by Brompton Bicycle was to pandemic has been a little bit of a dry run for the rather bigger open up a Direct-to-Consumer offering. “Originally we had an problem we are facing, which is that we have a major climate amazing strategic plan to do this,” reveals Butler-Adams, “but in problem,” Butler-Adams says. “This is not a UK, US or a the end we ‘Shopified’ it because our orders were falling off a China issue – this is a global issue and we need to work cliff and consumers were desperate for bikes, so we sort of together and be more radical, be more aggressive to deal muddled along for three months but we are now up to speed.” with some of these big macro challenges that we are facing.” SEGRO also had to embrace flexibility, because although Expect to see green transport and electrification. “DPD has the logistics sector suddenly took off as online shopping habits its ‘25-25-25 Vision’ whereby it will deliver 100 million parcels accelerated – going from 19% to 37% – so, too, did the need a year (equating to 25% of parcel volumes) on all-electric for more warehouse space. “The needs were off the scale and vehicles in 25 UK cities by 2025,” Wilkes reveals. changing so fast,” reflects SEGRO’s Holland. “It was about being Butler-Adams points to alternative transport means such as agile and supporting our customers, having that dialogue and cargo bikes for inner-city areas where clean air is a fast-growing interaction to get things done better, smarter – both for the ‘in priority. There will also be a focus on net-zero carbon as well as the now’ moment and for the longer term.” sustainability, health and well-being, particularly in property. SEGRO sees this as fundamental going forward. “As well as Opinions of difference the need and demand for space in itself, another facet is the Looking to the future, with the lessons of the pandemic aspiration for modern space that also looks after the people embedded within their business structures, the consensus of inside,” says Holland. “Wellness is increasingly important and our panellists is that what was normal before is unlikely to be we have all learned that we have a responsibility to support low normal hereafter – from the way people work to the way they carbon growth and our logistics and industrial customers are shop. And according to Wilkes, the business model has supportive here. We all have a part to play in a societal sense.” changed. He cites fashion retailers using stores as distribution “Ultimately, I think the pandemic has taught us to look out warehouses, picking from the shop floor to deliver to customers. for people whether they are our neighbours, our colleagues “Businesses will have to think differently how they operate.” or the community within which we invest.” n
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36 big sheds
Please, sir, I want some more… Industrial space was at a premium even before Covid-19, so the recent e-commerce boom has simply exacerbated the conundrum. Liza Helps dives deep into how supply can possibly meet demand
n (Main) Artist’s he internet doesn’t change everything: it doesn’t other regions or even abandoning the idea altogether as they rendering of Bericote’s change supply and demand, according to Andy are unable to find what they need readily available. Powerhouse450 Grove. The former COO, Chairman and CEO of the Aware of that fact, Ashleigh Hayes, Associate Development at Dartford Intel Corporation – and widely respected Hungarian- Director at Tungsten Properties, says, “Last year saw record take American business guru – is largely right but clearly up in the industrial sector of over 50 million ft2 and as a result, The wasn’t talking about logistics property in the UK in 2021. the UK has a very low vacancy rate, roughly 1.5 years of average It is a sad fact that, in this case, the internet has changed annual take up. Most markets in the UK have little availability, supply and demand to the extent that with demand so high, which is difficult if you have immediate requirements. supply cannot keep up and there is a very real danger that there “As a consequence, numerous occupiers have changed will be a shortage of space for logistics across multiple locations. the geographical focus of their searches in order to find the required space, either due to lack of options or rising rents Finders keepers pricing them out of their initial search areas.” It is already reported that regions such as the North West are so Looking at the first-quarter statistics on industrial and short of supply that some occupiers are having to seek space in logistics take-up and availability figures, Kevin Mofid, Head of Industrial Research at Savills, says, “Warehouse take-up for Q1 reached 8.8 million ft2, 34% above average.” Numerous occupiers have changed Online surge the geographical focus of their searches in And the reason behind the surge in take-up has been squarely order to find the required space, either due put at the door of changing consumer habits which sees the latest Office for National Statistics retail spending report to lack of options or rising rents pricing reveal that the proportion spent online increased to 36.1% them out of their initial search areas in February 2021, the highest on record. This compares to 35.2% in January 2021 and 20% reported in February 2020. Ashleigh Hayes, Associate Development Director, “This transformational retail shift is not going to slow down,” Tungsten Properties assesses Jason Print of Gerald Eve, before noting that John
May 2021 www.logisticsmanager.com
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Chinese whispers n (Left) SF is one of a number of nternational e-logistics company two distinct areas: direct internet Chinese companies MS Star is the latest in a growing retailers such as Alibaba and setting up shop I in the UK number of Chinese logistics and JD.com; and more active (Below) Baytree e-fulfilment companies setting up e-fulfilment for the likes of Developments’ in the UK following the surge in eBay with Super Smart Service, speculative warehouse in internet shopping worldwide. Winit and 4PX,” adds Willmer. Dunstable, which It is believed to have taken “Goods will come from China was let to UPS a 226,000ft2 speculative to the UK and be broken down warehouse at Peterborough and repackaged in the DCs unit at Prologis Park Dunstable in Gateway, owned by US investor before being delivered via last- such will be fitted out to a very 2016. 4PX provides cross-border BentallGreenOak, and is also mile fulfilment parcel companies high standard,” says Simon Truss, e-commerce services and works being linked to the city’s former such as the Royal Mail or UPS.” General Manager for Western with companies such as eBay, 774,000ft2 Debenhams unit. Super Smart Service has Europe at SF Express. These deals are just the tip targeted modern high-bay The Chinese delivery services Amazon and Alibaba. of the iceberg. There has been warehouse units with 10m company is based in Shenzhen, JD.com is a different beast a plethora of units snapped up eaves, mostly in the Midlands. Guangdong and is the second- altogether: it is China’s largest over the past 12-24 months by Rival company Winit took a largest courier in China, providing online retailer and biggest overall logistics firms hailing from China. small unit of 70,000ft2 at Bardon domestic and international express retailer, as well as the country’s One of the biggest and most and was the mystery occupier delivery. It has a fleet of 60 cargo biggest internet company by acquisitive of players is Super behind St. Modwen’s letting of its aircraft, and at the time of writing revenue. It is thought to have a 2 warehouse under offer Smart Service, which took some largest-ever speculatively built unit operates six flights per week from 124,000ft in the Midlands, its first in the UK. 400,000ft2 of space in 2020 at St. Modwen Park Tamworth. Germany and Belgium to China and has secured a further The 321,204ft2 warehouse was using B747s owned by its Another new entrant to the UK 2 let on a 15-year lease. It totals subsidiary SF Airlines. market is Rexville Solutions. It 300,000ft so far this year. 2 2 requirement “We have a number of active 321,204ft and has 15m eaves, SF Express (Europe) is the has a 150,000ft for a warehouse in the Midlands. requirements in the Midlands for 23 dock and four-level access company’s European subsidiary 2 This is just the start in terms of additional space this year and doors as well as a 50Kn/m floor and provides express, logistics, space taken by the Chinese, driven I suspect they could anticipate at loading, 38 lorry parking bays and supply chain and e-commerce by the change in shopping habits least another 500,000ft2,” reveals has a 1.5MvA power availability. services from its own offices in David Willmer of Avison Young, T321 is close to Junction 10 of the UK, Germany, the Netherlands, accelerated by Covid-19. So far, who is acting for the firm. the M42 motorway. Joint letting Belgium and partners across the they have not looked at securing Its most recent deal saw the agents were Savills and Colliers. continent. GLP has delivered more space on a design-and-build 2 of logistics company take a 15-year lease on a Winit has warehouses in than 5.4 million ft basis, preferring instead to secure space for SF Express in China. 103,947ft2 speculative warehouse China, the UK, USA, Germany space that has been available on Phase 3 of St. Modwen’s and Australia and has more than One of the most established immediately. Most have been 50-acre St. Modwen Park Burton 700 employees worldwide. It Chinese logistics players in the UK focused on the Midlands with 2 scheme in Burton upon Trent. is not thought to be looking for is 4PX, which took a 240,000ft new modern high warehousing. The facility boasts 10 dock further space at this time. levellers (including 2 euro-docks), a Another recent entrant from 50m-deep yard and Grade A office China to the UK has been SF space. It prominently fronts the Express, China’s second-largest A38 to the south of Burton upon courier, which took a 90,000ft2 Trent. The joint letting agents warehouse at GLP’s G-Park were Knight Frank and Savills. Northampton site. The company currently operates The leasing of Unit 2 is SF nine sites across the West Express’ first UK DC and will form Midlands and Staffordshire, part of its expanding overseas totalling more than 1 million ft2 supply chain strategy. “The facility with more than 500 employees. will focus on national distribution “These Chinese companies serve for our high-value products, and as
Lewis is predicting that online sales will hit 70% with a further Oliver Bertram, Development Director of industrial and 30% in the next five years. “That’s a pretty good indicator of logistics development specialist Panattoni agrees. “The past 12 where retail is going,” he notes. months has meant the strength and relevance of e-commerce “Internet retail sales have gone from a fifth of all retail sales has never been bigger, and looks set to continue, especially to over a third in the space of 12 months and this has had a within the UK. Online shopping has seen a massive growth profound effect on the demand for logistics space,” adds due to the stay-at-home restrictions as a result of the pandemic. Print’s Gerald Eve colleague, Jon Ryan Gill. “This is more so than any other European market, and it’s The growth in e-commerce as a share of the retail market was the infrastructure within the UK that has allowed this already well established but accelerated fast last year, according substantial growth,” Bertram offers. to Charles Crossland, Managing Director, Goodman UK. “While on a daily basis the consumer has been saving on “Changing consumption habits across the physical and digital travel costs and going out, this spend has been overtaken by retail space is fundamentally and permanently impacting clothes, food and home gadgets that can all be found – and the volume and nature of demand from our customers.” purchased – at the click of a button.
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Land: they’re just not making it anymore… ccording to Robert Rae, Managing Director n (Main) Properties A consequence of the shortage of supply at Avison Young, “a lot of developers have are getting larger, is the increased competition for it. “Any A such as the aptly been building speculatively” and “have gone named Goliath, and developments that come forward that are through their immediate land bank and are hence taking up oven-ready are hotly contested,” reveals Charles looking to replace it”. The problem is that more land. This is Binks, Head of Logistics & Industrial Agency at adding to the space there isn’t much of it about. conundrum facing Knight Frank. “Every time something is sold it is “It is more challenging than ever to acquire the sector setting a new benchmark − in a lot of instances new sites,” agrees Ashleigh Hayes, Associate with developers projecting rental growth on Development Director at Tungsten Properties. which they base the land price. Basically, they One of the reasons for this is that the bear for Tritax Symmetry’s Development Director are saying, ‘This market might have been at ‘x’ average size of units has got much bigger Tom Leeming. “A local plan timetable takes pound per square foot for new space but we and, as a consequence, land is being taken up some 5-7 seven years for the allocation of will set new levels’, in order to stand a chance more quickly. “What we have seen recently is employment land; it is a long process and it is at securing those sites.” where planning authorities think they have a just is not responsive enough. A lot of the land “The market has become very competitive,” 5-10 year land supply, it is actually going in allocated in 2015-2016 is gone so developers agrees Hayes. “We have seen land values three years or even less as requirements and occupiers have to take planning risk on almost triple in Yorkshire in three years.” have got larger and larger, and more and unallocated land to get the supply they need.” There has definitely been inflationary more land-hungry,” Rae suggests. Leeming also feels many local authorities pressure, notes Andrea Ferranti, Head of For Myles Hartley, Managing Director at erroneously believe they have enough land Industrial and Logistics at Colliers. “It is now Caddick Developments, “The size of units − the problem is that it is in small plots of an established trend that land values across has increased over the past 10 years and anything from 2-12 acres, which is not viable the country are breaking new records: £1m that is accelerating land take-up. for those looking for plots of 40-60 acres to an acre in the Midlands and North West and “The land supply coming through the system accommodate their large DC requirements. approaching £700,000 an acre in Yorkshire.” is struggling to keep pace with structural “Frankly, if the local authorities don’t deliver The Goliath building near Coventry is currently changes,” Hartley states. “There is a challenge the land, the jobs and local economy growth up for sale. The 40-acre site has a price tag of to bring consented sites through to meet that goes with it will go elsewhere and some £50m, which is £1.25m an acre – and it has occupational and investor demand and part of of these companies will look to go abroad,” gone to best bids above that figure. the reason for this is that when local authorities Leeming adds. “The UK needs to be open for Sites in the South East and London, looked, 5-10 years ago, at what land needed to business and planning is not ready for that.” of course, seem stratospheric even compared be released, it was well before these changes The pandemic has not helped either, to that should a developer or fund be able to bedded in. The impact of the new world order according to Trebor Developments’ Managing acquire some: a 2.27-acre site in Park Royal is has taken over and the planning system has Partner Bob Tattrie. “We are trying to meet thought to have best bids at £20m. not been equipped to deal with this. The biggest demand for space and bringing it forward but it “These high values,” concludes Gordon challenge is trying to keep pace with that is not always easy with planning departments Reynolds, International Partner at Cushman demand, to keep good-quality sustainable under-resourced and remote working. & Wakefield, “are creating upwards pressure consented land flowing through.” “We brought forward 3.5 million ft2 of space on rent, which in turn drives investor interest The planning system and its inability to keep last year and we’d like to get to those levels this and a further increase in capital values and up with change in the logistics sector is a bug year, but it’s dependent on planning timescales.” that does not seem to be abating.”
Great expectations “The speed of deliveries hasn’t changed either since the first Changing consumption habits across lockdown, as many retailers worked quickly to improve their delivery service. The expectation is still that if we buy it one the physical and digital retail space is day, it will be delivered the next. Consumer expectation fundamentally and permanently impacting has never been higher. “As restrictions are lifted within the UK,” Bertram continues, the volume and nature of demand from “we believe that while there will be an influx of people going into towns and cities, stores will be used more as a retail our customers window, before many of us order items online. Therefore, Charles Crossland, Managing Director, Goodman UK the upward trajectory of e-commerce looks set to continue, and will mean the relevance and importance of the big shed seems even stronger now,” reveals Trebor Developments’ market will be stronger than ever.” Managing Partner Bob Tattrie. Because of this, many [logistics] businesses have been For Rebecca Schofield, Partner at Knight Frank, “Enquiries operating at peak for the past 12 months and that adds a are up 200% on this time last year.” As a result of the spike in certain amount of strain. “They have been able to adapt and requirements, it is hardly surprising that there has been a accommodate the demand of online but as we come out of corresponding increase in take-up. the pandemic, there has been no let up there – businesses need more space,” says Wayne Porter, Director of Customer Breaking all records Relationships and Experience at developer investor St. Modwen. According to the latest statistics form CBRE, a record amount It is not just the logistics companies that have been running of UK logistics space was under offer at the end of Q1 2021, at peak – the developers, landlords and agents in the logistics totalling 16 million ft2 across 55 units. This represents a 40% property sector have, too, states Chris Webb of Firethorn. increase compared to Q1 2020, which saw 11.5 million ft2 “The market did not stop – it has barely paused for breath.” under offer over 23 units. Total take-up for Q1 2021 was 5.2 And it continues to do so. “Enquiries have been very, very million ft2, compared with 6.4 million ft2 in Q1 2020. However, strong; we thought it was strong up to the end of 2020 but it a total of 25 deals have completed in Q1 2021, more than
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As restrictions are lifted within the UK, we believe that while there will be an influx of New Property, people going into towns and cities, stores will be used more as a retail window, before many of us ordering items online Old Floor? Oliver Bertram, Development Director, Panattoni double that in Q1 2020, signalling a higher volume of transactions across smaller units throughout the quarter. At sector level, pure online retail continues to account for the largest proportion of take-up at 48.2%, with some new players also taking logistics space for the first time. This reflects the response from the sector to the change in shopping trends brought about by the pandemic. The North West led the regional take-up levels at 21.7%. The South East, East Midlands and Yorkshire closely followed at 18.9%, 18.5% and 18.3%, respectively. In Q1 2021, speculative take-up primarily drove demand, representing 53.6% of take-up, while second-hand space accounted for 29.9% of take-up. However, build-to-suit units dropped to the lowest level since 2011, accounting for just 16.4%. This shows that occupiers continue to concentrate on securing readily available space in line with their somewhat disrupted expansion plans. “Although total take-up was lower this quarter, the appetite for quality, well-located logistics sites has not halted and the record number of units under offer suggests there will be a strong Q2 ahead,” predicts Jonathan Compton, Senior Director, UK Industrial & Logistics at CBRE. “The acceleration in speculative space under construction confirms the response from the supply side to meet this demand.” “The bigger story, I feel, is the fact that supply has fallen to 30.8 million ft2 and vacancy to 5.4%, the lowest level since 2016,” Mofid adds. Supply-constrained market Floor Jonathan Priestley, Head of A&T Occupier Services, UK Industrial & Logistics at CBRE agrees: “Vacant space that is ready to occupy is at a Consultancy historical low. We have seen many schemes coming to the market that have occupiers already committed and waiting ahead of completion in Services anticipation of the continued disparity between supply and demand.” • Structural Design & Detailing For Anthony McCluskie, Director UK Asset Management at Logicor, it is a “supply-constrained market” and there is “not much product • Design Reviews to play with”. Logicor has let some 2 million ft2 and according to • On Site QA / Supervision McCluskie, the firm has pretty much run out of vacant assets. The company secured some 4.25 million ft2 of additional assets • Problem Diagnosis following the acquisition of Prologis’s UK logistics estate by Logicor • Load Capacity Checks shareholder Blackstone for £473m in October 2020. Within that, there were four vacant properties. One has now let and two are under • Expert Witness offer from e-commerce companies on long leases. The last unit, • Due Diligence in Willenhall, is second-hand and is set to be refurbished – it, too, has strong occupier interest. • Dilapidation Surveys “The lack-of-supply story is driving the market,” McCluskie confirms. “We were expecting a tenant Eddie Stobart to give back a 616,000ft2 warehouse with Nestlé moving its contract to East Midlands Gateway, then Eddie Stobart decided to keep the space as it could see there was Specialists in Floors for so little supply in the market. It secured an NHS contract and we restructured the lease.” Robotics and Automation S ense of urgency Anecdotally, this is a common tale for Myles Hartley, Managing Director at Caddick Developments. “Across the board, 3PLs are taking this approach, looking more on multi-user basis – ‘build it and they To find out more call will come’ rather than secure contract first and building second, as has been the case for many years.” +44 (0) 1484 600090 or email This sense of urgency to secure space is seeping beyond immediately available space. Webb says that one of Firethorn’s latest developments [email protected]
www.face-consultants.comwww.logisticsmanager.com May 2021
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The appetite for quality, well-located logistics sites has not halted and the record number of units under offer suggests there will be a strong Q2 ahead Jonathan Compton, Senior Director − UK & Industrial Logistics, CBRE
n (Main) Artist’s on 40 acres at Ellesmere Port in the North West has garnered impression of “occupier interest without planning – it far exceeds what we Firethorn’s Ellesmere Port were expecting but is symptomatic of what is happening.” development in the Hartley agrees. “It’s a trend we are increasingly seeing, with North West (Below) direct approaches from occupiers sometimes before we have Logicor’s Bardon 616 where Eddie even submitted planning, as they look to try to secure a land Stobart has just pipeline to insure against future demand. Occupiers are looking restructured its to get in earlier and earlier to mitigate against future growth.” lease (Inset, opposite) First speculative Running a big-box portfolio with 0% vacancy, Andrew warehouse at Pilsworth, Business Unit Director, National Logistics at SEGRO’s East developer investor SEGRO, says: “Some occupiers are looking Midlands Gateway way ahead now and being very strategic about it. While we have East Midlands Gateway and Kettering under way, we are getting potential occupiers in discussion concerning our Coventry and Northampton sites for future deals – it seems that the conversations we are having are further out in time than they have been before.” According to Tom Leeming, Development Director at Tritax Symmetry, “Wherever we are doing a scheme, we have at least one unit under offer on a pre-let basis. If an occupier needs space now, they want the unit ready to go – they cannot wait.” Firethorn’s Webb concurs. “If a scheme or development is not within six months of being completed, then often it is too Oven-ready property far away – that is the window within which occupiers seem It is this urgency of demand that developers are responding to operate at the moment.” to, adds Knight Frank’s Schofield. “There are a number of The sentiment holds true for mid-box developer oven-ready sites along the M18 corridor in South Yorkshire that Chancerygate as well. “We are building speculatively and we anticipate will come forward speculatively – the key is how clearly there are a few pre-lets,” reveals the company’s quickly developers can respond in terms of speed of delivery.” Managing Director, Richard Bains. “On our Sutton Coldfield Andrea Ferranti, head of Industrial and Logistics Research scheme, in the Midlands, where we start on site next month, at Colliers, is of the same opinion. “Developers and funds have we have 40% of the scheme under offer to occupiers already. been trying to capture the upside of the sector by being quick I would say that is fairly typical.” to provide space – preferably quicker than the competition.” Panattoni has always specialised in speculative development for this very reason, according to Bertram. “We believe that this spec development programme is the key to being able If a scheme or development is not to fulfil the demand, and we have already noticed a trend within six months of being completed, that our spaces are being filled quicker than ever before.” The developer committed to developing 3 million ft2 of then often it is too far away – that is the speculative space in January this year but with rumours that window within which occupiers seem to at least one of its two plus-500,000ft2 units is under offer, it may push forward with more. operate at the moment Not to be outdone, investor developer GLP also announced 2 Chris Webb, Founding Partner, Firethorn in January that it would start a 1 million ft speculative warehouse programme on seven units, across four sites in Bedfordshire, Northamptonshire and Milton Keynes, following the grant of planning permission. The development programme followed the practical completion of 1.25 million ft2 of speculative development at Magna Park South Lutterworth in December 2020. Now that two of the units on that site, including the 745,000 ft2 mega shed, are under offer, the company last week announced a further plus-1 million ft2 of speculative development subject to planning on its Magna Park Lutterworth North site in three units of 200,102ft2, 297,194ft2 and 503,216ft2. Developers are also looking to bring forward speculative development on sites that were aimed at the build-to-suit market. SEGRO is to build its first speculative development at its 700-acre East Midlands Gateway scheme in Leicestershire.
May 2021 www.logisticsmanager.com Face Testing advert HP 297 X 100 Jan 2021 copy.pdf 1 15/01/2021 12:28
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The developer investor will create more than 220,000ft2 of modern warehousing which SEGRO will market to potential or existing customers. The building is scheduled to be ready for occupation in October 2021. The facility at EMG will be developed to high sustainability standards, with the building achieving a BREEAM ‘Excellent’ rating and it will be a net-carbon-zero building. Floor Permission granted Testing Not far away, industrial developer Tritax Symmetry has secured detailed planning permission for two warehouses totalling 320,000ft2 • Testing for G2P Robotics, ASRS and AMR’s at the 111-acre Symmetry Park Rugby scheme in the Midlands, • Flatness Surveys to UK & International which it will develop speculatively. The units measuring 186,000ft2 and 134,000ft2 will be built to Standards net-zero-carbon in construction • Profileograph Surveys for VNA “Rugby is a highly desirable location for distribution and manufacturing companies and, with high-quality stock at an all- • Slip & Skid Resistance Testing time low, the intention is to speculatively develop the two consented buildings alongside the site-wide infrastructure,” comments Joseph • Gloss and Friction Testing Skinner, Associate Development Director at Tritax Symmetry. “The • Abrasion Resistance Testing upfront delivery of the site-wide strategic infrastructure also allows us to quickly respond to design-and-build requirements ranging in between 100,000ft2 up to 1 million ft2.” The scheme has an outline planning permission to deliver up Testing Floors for Robotics to 2 million ft2 of logistics floor space. Situated on the M45/A45 strategic highway link, the site is located at the heart of the logistics ‘Golden Triangle’. The buildings will be ready to occupy in 2022 and Automation (Colliers, Avison Young and M1 Agency are joint agents). In London, Bericote is sinking £25 million into the speculative development of a 450,000ft2 cross-dock warehouse in Dartford, East London. The developer is constructing the unit, known as Powerhouse450, on Plot 1 of the former Littlebrook Power Station To find out more call site next door to where Amazon has pre-let a 2.3 million ft2 DC. Construction of the site is underway with completion expected +44 (0) 1484 600090 or email in July this year. Potential occupiers could secure early access for fit out as early as May. [email protected] www.face-consultants.com
46 big sheds
UNSTOPPABLE AMAZON t comes as no surprise that the occupier Ibehind a recent planning decision for a 2.3 million ft2 multi-level warehouse in Basingstoke is Amazon. The internet giant has been on an acquisitions streak since last year and shows no signs of slowing down. In 2020, Logistics Manager recorded deals totalling nearly 15 million ft2 associated with Amazon − more than four times its take-up in 2019 and almost twice as much as its 2 previous annual high of 7.9 million ft in 2016. n (Above and left) − a warehouse and office component and Across the 24 deals recorded by this Amazon is one of then the separate MSVSS. A canopy to the publication, a total of 14,856,962ft2 of the world’s leading market disruptors southern elevation of the main building warehouse space was leased, pre-let or and its ambitious provides some weather protection for delivery bought by the company − ranging from a delivery plans are vehicles. The building will be built to BREEAM 43,056ft2 building in Redruth, Cornwall (to be set to expand further in the UK ‘Very Good’ and have an EPC ‘A’ rating. (CBRE, used as one of Amazon’s network of delivery Avison Young and JLL are joint letting agents.) 2 stations) to the 2.3 million ft mega shed Amazon has several types of warehouse at Tritax Big Box REIT’s 97-acre Littlebrook requirements from small delivery stations sub Dartford development in the South East. In addition, Amazon is still using 3PLs 100,000ft2 to its new-style delivery depots According to Savills, in the decade from and parcel delivery companies to service with their distinctive MSVSS, as well as its 2009, Amazon has seen its warehouse space its customers – making it complicated to more traditional distribution centres and mega grow by as much as 1,700%, occupying up comprehend its full impact on the market. DCs ranging from 800,000ft2 to 2.3 million ft2. 2 to 23.4 million ft by the end of 2018. (It is It is thought that UPS’s latest warehouse The recent planning decision at Basingstoke astonishing to note that in the two years acquisition in Dunstable is to service a five- was for one of two new mega DCs that since, to the end of 2020, it has increased year contract with Amazon. The retailer is Logistics Manager knows about that Amazon its floor space by nearly 80%!) also rumoured to have secured a design-and- has under offer (subject to planning). There are rumours that it is set on acquiring build option on the adjacent building to serve The second is located at IM Properties’ at least 40 buildings across all size ranges as one of its new-style delivery depots. Peddimore scheme near Birmingham. At during 2021. So far this year, Logistics Manager UPS has taken Baytree Development’s present, the developer is revising the original has reported eight deals with two others as speculatively built 267,000ft2 warehouse application for Zone 1A to accommodate yet not quite confirmed, which − should all to fulfil a storage and delivery contract with its new end user – known to be Amazon. go through − brings its total take-up in 2021 Amazon. The building has an eaves height Originally, the total floor space for the entire 2 to some 6.76 million ft . of 15m as well as 26 dock and three-level scheme was put at 2.67 million ft2, although The majority of the space seems to be a access doors. It has 180 car and 34 HGV Unit B alone would provide 2.325 million ft2 mixture of build-to-suit or pre-lets requiring some parking spaces and a 53m yard depth. – 90% of the allowable floor space. However, kind of modification with smaller immediately It has been given an EPC rating of ‘A’ and as Unit B will in fact have a smaller footplate available warehousing being taken up as a BREEAM rating of ‘Excellent’. than previously imagined, the developer is delivery depots. Plans have been submitted to Central hoping to persuade the council to increase With strict non-disclosure agreements in Bedfordshire Council for a 387,802ft2 the total space allowed upwards to 4.16 place and Amazon unwilling to comment on any build-to-suit facility on the adjacent site million ft2, some 1.49 million ft2 bigger. deal − unless it is strictly signed, sealed and and these include a multi-storey van storage It is envisioned that Unit B will have a delivered − it is hard to actually pinpoint how structure (MSVSS), only used by Amazon. ground floor footplate totalling 624,210ft2 much space it has taken up or reserved. The site consists of two main elements with three mezzanines totalling 1.7 million ft2.
The pandemic has moved things on The property boasts a 427,490ft2 warehouse with 22,510ft2 hugely [especially in e-commerce] and three-storey office and welfare space. It has a 21m eaves height with up to 5MvA of power available. There are 68 dock and coupled with a change in supply chain five-level access doors as well as 144 trailer and 436 car parking strategy from just-in-time to just-in-case, spaces. It will be built to a BREEAM ‘Excellent’ rating. Joint letting agents are DTRE, Colliers and JLL. this has led to huge volumes of take up So while there is a shortage of supply in the UK at present, Jonathan Maher, Director, Bericote there is a determined effort by developers to fill that void. Developments that were exclusively build-to-suit only are “The pandemic has moved things on hugely [especially now seeing select speculative development; land that was in e-commerce] and coupled with a change in supply chain waiting oven-ready is now being brought forward for strategy from just-in-time to just-in-case, this has led to huge speculative development. However, there is likely to be volumes of take up – the long and the short of it is there is good a pause in the next few months as the machine that was demand for space in this location,” says Jonathan Maher of stopped due to the pandemic is kickstarted back into life. Bericote. “The very fact that we are funding the construction The general feeling for occupiers, though, is that if you do find of this building ourselves shows the confidence we have a suitable space, don’t hang around waiting for something in this building and the market.” better to come along – the chances are that it won’t. n
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2.3 million ft2 IN BRIEF
‘Amazon’ 500,000ft2 warehouse MP, the Mayor of Basingstoke, While there is no official notice and office scheme for warehouse numerous councillors, as well that the site is for Amazon, an Market Harborough as residents – objected to the inopportune file name on a Plans for a plus-500,000ft2 gets go ahead proposals, with one councillor planning document submitted logistics and office scheme big sheds Despite not going as far as saying that “a to the council had the name have been submitted to being ‘part of the vision’ for distribution centre is not part ‘Amazon ARS Basingstoke’. Harborough Council with the Basingstoke, as reported by of the vision for the town of In its approval statement, potential to create hundreds Logistics Manager last year, Basingstoke”. the council said proposed of new jobs for Market Newlands Developments The plans for the £120 million development would deliver Harborough. Wellington has secured planning for distribution centre – on a 41-acre employment opportunities and Business Park is located a controversial ‘Amazon’ plot on the 111-acre site just off while it would have an impact to the north-west of the warehouse on the outskirts Junction 7 of the M3 motorway on the surrounding countryside, town on a 25-acre site of the town, which could in Hampshire – will see a facility “…it is considered that the impact within one mile of the A6. provide up to 1,400 jobs. with a 625,000ft2 footplate can be accepted under Policy Approval was eventually won and three further mezzanine EP1 when balanced against the Green light for two new by six votes to four at Basingstoke floors of 547,000ft2. The facility benefits of the development, speculative warehouses Council’s development control will be run 24/7 and be highly including the creation of job at Symmetry Park Rugby committee in April. More than automated (65%). It will also opportunities and delivery of a Industrial developer Tritax 250 people – including the local have 20m clear internal eaves. site for storage and distribution”. Symmetry has secured detailed planning permission for two warehouses totalling 320,000ft2 Prologis lets former Arcadia warehouse to Boohoo at the 111-acre Symmetry Park Rugby scheme in the after snapping up warehouse in ‘best bid’ deal Midlands, which it will develop east midlands Developer investor million from the administrators freehold of the site at the speculatively. The units Prologis has snapped up the Deloitte in a ‘best bid’ battle. Daventry International Rail measuring 186,000ft2 and former Arcadia warehouse in In the same breath, it has Freight Terminal (DIRFT) 134,000ft2 will be built to net Daventry, from under the noses already let the 1.2 million ft2 scheme in 2016. zero carbon in construction. of the likes of eBay, Amazon facility to Boohoo on a long Prologis built the facility for and JDSports, for more than £60 lease thought to be around a reported £29.4m. The state- Aintree urban logistics 15 years at a rent believed of-the-art warehouse totals 1.2 scheme construction to be close to £7/ft2. million ft2 with a base floor starts The sale of the property print of 404,000ft2, a number Mid-box and urban logistics means that Sir Philip Green of mezzanines and 40,000ft2 developer Chancerygate has will be repaid the £50m loan he of three-storey offices. started construction work on personally advanced to Arcadia UK online fashion phase two of its Mersey Reach against the property in 2019 retailer Boohoo has said that development in Aintree to as part of an emergency it expects to invest a further deliver a further 12 new-build restructuring of the Arcadia £50m into the facility, which units totalling 102,485ft2. Group. Arcadia originally will help boost its sales capacity Units will range from 4,000ft2 paid Prologis £40m for the to more than £4 billion. to 30,000ft2. Phase two is being built by Triton Construction, which won a Trebor Developments and Hillwood submit competitive tender for the £6.2m construction contract. planning application for major speculative build Funding secured for South west Trebor and partner and look forward to working will deliver new industrial first development at Hillwood have submitted a with the authority to secure accommodation and new £200m Redditch planning application for a consent to allow construction jobs to the area”. Gateway scheme two-unit speculative industrial to commence later this year,” Trebor and Hillwood are Stoford has agreed a deal scheme, located to the east of said James Drew, Development represented by Knight Frank with Royal London Asset Northampton town centre. Director for Trebor. “The scheme and Drake Commercial. Management to fund the Immediately adjacent to the delivery of the first unit of a A45 dual carriageway – which £200 million logistics and links to the M1 at Junction 15 manufacturing scheme near – the units of 90,014ft2 and Redditch. The developer is 57,834ft2 will be developed constructing a new 366,000ft2 as a single phase and available warehouse building to the to lease in 2022. The scheme north of the 78-acre Redditch will be known as ‘Gateway 45’. Gateway site, near Junction “We are excited to be 3 of the M42. submitting plans for this high-quality industrial scheme
May 2021 www.logisticsmanager.com 37455_Prologis_Essentials_UK_FP_Logistics Manager_AW2 OL.indd 1 12/04/2021 15:07 50 BEHIND THE SHED
EVENTS Transforming home deliveries 23rd & 24th June 2021 HelloDone is partnering with DHL Parcel UK to to be updated throughout the ‘last mile’. Using Robotics & Innovation transform home deliveries for customers with HelloDone’s conversational AI technology, customers disabilities. The new accessibility options mean that receiving a delivery through DHL Parcel UK can now Conference customers will be able to integrate WhatsApp and update their driver about accessibility requirements MK-7 Red Bull Racing, other social media platforms with DHL’s in-flight for pick-up and drop-offs (PUDOs). Milton Keynes, UK parcel tracking, enabling DHL Parcel UK drivers This includes a ‘Just A Minute’ (JAM) option which The Robotics & Innovation alerts drivers that they may need to wait longer than Conference 2021 builds on usual at a drop-off point, so customers with the pedigree and success disabilities have time to get to their front doors. of Robotics & Innovation The new integration also enables customers to Magazine and the Robotics and message their driver instructions directly, to leave Automation Exhibition, both their parcel in an accessible ‘safe place’ if they’re of which launched in 2017. not going to be at home. Common problems that This two-day international the new system aims to ease include parcels being event brings together leading left in inaccessible places, customers not having professionals and practitioners enough time to answer their doors, and goods not interested in learning how being delivered on time, or even at all. It is hoped real-world implementation of that the new system will help seven million cutting-edge robotics solutions customers with disabilities. and state-of-the-art innovation technologies are transforming businesses and industries £10,000 to combat Ride for Freedom everywhere. stress? Biffa is working with Ride for Providing unrivalled, Pall-Ex Group is celebrating by Freedom, the social enterprise insightful, exclusive case raising more than £10,000 for that undertakes cycling challenges studies and thought-provoking Combat Stress, a veterans’ mental to raise awareness for modern debate on current trends, health charity, during its ‘March in slavery. The podium partnership technologies and future March’ challenge. The team, made for Ride for Freedom 2021 will challenges, the Robotics & up of Pall-Ex Group staff and enable Biffa to continue raising Innovation Conference provides members, completed the annual awareness of human trafficking as a unique and unparalleled challenge which tasks participants well as sharing the psychological forum for key decision-makers, to march, run, or walk a minimum and physical benefits that cycling influencers and proposers to of 10 miles during March. Combat can have in supporting people come together to exchange Stress is Pall-Ex’s charity partner who have previously been victims information, share best and the money raised by the of modern slavery. practices and uncover Group will support the charity in new opportunities. its life-saving work, supporting Save the trees… before www.roboticsandinnovation.co.uk veterans with complex mental it’s too late! health problems, including Antalis has balanced, through the 1st & 2nd July anxiety, depression and World Land Trust, 7,350 tonnes post-traumatic stress disorder. of CO2, protecting 1,190 acres IntraLogisteX 2021 Overall, the 19 team members of critically threatened tropical Ricoh Arena, Coventry, UK raised more than £5,000 during forest. Over the past five years, IntraLogisteX is the essential the month and the company then the company has developed its intralogistics event for logistics matched this figure, taking the scheme to make it easier for professionals looking for the total to beyond £10,000. customers to participate in carbon latest materials handling balancing. Carbon balancing technologies to full-scale paper and board is achieved warehouse automation options. through the preservation of By attending IntraLogisteX, ecologically important standing you’ll meet industry-leading forests that are under real and providers and see live imminent threat of clearance, demonstrations of the latest locking in carbon that would intralogistics technology. In otherwise be released and 2019, 90% of visitors said securing continued absorption
they would recommend of CO2 from the atmosphere. the show to their peers. Meanwhile, a full conference
programme at IntraLogisteX N Intralogistics Fashion, Retail IntralogisteX will boast practical insight O & Materials & E-commerce Preview on technological innovations ITI D Handling in sessions delivered by Omnichannel and A detailed look at seasoned practitioners. Automation, Picking, reverse logistics what’s in store at www.intralogistex.com JUNE E Sortation & Forklifts! in focus… the Ricoh Arena!
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