SPONSORED BY Prologis
Every minute, of every hour, of every day, products are being picked and packed in warehouses across the UK ready for delivery to a house in your neighbourhood, to your home or to your place of work. A fine-tuned, just-in-time logistics industry thrives in the UK, turbocharged by the coronavirus outbreak and an economy driven by consumption. But with the British government poised to prioritise housing over logistics, there’s cause for concern in urban areas.
“The pandemic saw supply chains flex their muscles. For some it was like trying to deliver Christmas every day. The sector experienced a decade of growth in a few months. The lack of toilet rolls or pasta on shelves highlighted how vital logistics is to keeping the country running. Delivery drivers are now considered key workers,” says Robin Woodbridge, head of capital deployment in the UK for Prologis, the world’s largest provider of logistics buildings.
“Yet sadly ours is the Cinderella industry. A rising star that’s shown incredible resilience, yet often overlooked by government and taken for granted by the public. This attitude needs to change if we’re to keep the UK economy running efficiently.”
Prologis has £4.6 billion of assets under management in the UK, located on 22 Prologis parks, and more than $2 trillion flowing through its distribution centres in 19 countries. Its logistics buildings in the UK see the equivalent of 2.6 per cent of UK GDP flowing through them each year.
“Supply chain logistics won’t thrive unless companies have buildings in the right places. These need to be strategically located to supply goods to people’s doors quickly and sustainably. The customers who occupy our buildings don’t just supply the latest gadgets, but vital medicines or groceries to the elderly or those who are shielding. Industrial sites cannot be located many miles away from the homes they need to serve,” says Woodbridge.
“The sector’s ability to deliver goods on time will be severely compromised if government fails to understand and prioritise its needs. We’re facing the greatest pressure on logistics space in living memory.”
The UK government’s recent white paper entitled Planning for the Future, represents the most fundamental change in England’s planning system since 1947 yet fails to mention logistics once in all of its 84 pages. Housing is mentioned 95 times. This lack of recognition has huge implications for supply chains up and down the country.
“To be honest, it’s shocking and I don’t think online retailers and logistics companies have fully grasped the significance of this white paper and its implications for the future of urban logistics. A lack of strategically located land on which to build facilities means companies won’t be able to store goods close enough to where people live and work, let alone meet the demand for same-day or next-day deliveries,” says Woodbridge.
“We understand the priorities for residential housing, but it needs a holistic approach. More homes means more logistics fulfilment, especially with the rate of growth in online shopping. They are interconnected. The government needs to have a joined-up approach on planning that includes the vital logistics sector. Given that Whitehall suffered its own supply chain issues around personal protective equipment, you’d think they would be acutely aware of the need to prioritise logistics.”
Logistics is also one of the only sectors currently creating local employment opportunities. Hardly a day seems to go by when there isn’t a media headline about another online retail or ecommerce business recruiting for its logistics operations. Tesco, Iceland and Ao.com are just some of the household names looking to boost their supply chains with thousands of new workers. This is at a time when the economy is shedding jobs; nearly 700,000 have been lost since lockdown began.
Industry does not have sufficient building land in some cities, particularly London. Competition for uses other than building supply chain resilience is increasingly intense, but there’s not enough allocated sites to meet existing or anticipated demand for urban warehousing.
Yet for every extra £1 billion spent by British consumers online, an additional 900,000 square feet of logistics space is needed. Other figures astound: if you build 300,000 new homes you need 280 football pitches of new warehouse space to support the goods and services these households demand.
“If government continues to underestimate the real value of or need for logistics space, local people and the environment will suffer. You cannot push all your industrial warehousing outside the M25 or beyond city green belts. We need strategic sites close to where demand is. They already exist in most places, but are at risk of being sold off for residential developments. We need to safeguard land use for logistics,” says Woodbridge.
“There’s a climate change dimension to this as well. If we’re to meet our self-proclaimed target in the UK of zero net emissions by 2050, we need logistics hubs to be located close to where residential demand is, deploying short-range electric vehicles that are energy efficient. It’s the only solution.”
In the long-term the answer could be multi-storey warehouses, which are popular in Japan, South Korea and Singapore, where dense populations and limited land availability have made them a necessity. These come with their own issues concerning planning and the sheer size and height of the warehousing needed.
“The current housing crisis could be a logistics crisis in the making”
Then there is Brexit, the transition period is ending at the end of 2020. This could create further issues for supply chains. With so much uncertainty, near-shoring is already being put in place, where companies keep more stock in UK warehouses to ensure continuity of supply; again this requires more space.
“Everyone wants a robust 21st-century logistics network in the UK, one that’s fit for a post-COVID-19 and post-Brexit world. Businesses need to respond to the white paper with their concerns before October 29. If not, the current housing crisis could be a logistics crisis in the making. It’s time we all took action,” Woodbridge urges.
For more information please visit www.prologis.co.uk