Major developments in logistics and warehousing over the next 5 years
Over the next five years, the logistics industry will be subjected to many developments and changes. Advances in technology is the key driver of these developments, coupled with changes within the economic and political outlook within the UK and EU. There is a continued shortage of warehouse space which is an industry-wide issue to be addressed. All of these developments will impact the industry however, companies need to continue to meet the requirements of customers and expand.
Digitalisation and the Internet of Things (IoT)
Operating in the age of digitalisation has already projected change into the logistics industry, including road distribution, warehousing operations and stock management.
The latest hot topics for digitalisation is the trial of platooning self-driving vehicles. The suggested benefits of this include fuel saving, reduced CO2 emissions and efficiency on the roads. However, there are also some major concerns around safety which will be addressed before this is rolled out across the UK. It is possible we will see this concept implemented over the next five years, however the safety concerns will need to be addressed.
Tesla revealed their electric articulated lorry – the Tesla Semi – which can run 500 miles on a single charge, expected to be in production in 2019. This highlights the developments in electric vehicles, expanding from cars into lorries, and challenging the historical diesel engines. It is expected that further announcements both from Tesla and other vehicle manufacturers will follow.
Digitalisation of warehouse operations is in line with the rise of IoT processes. Stock management, including inventory levels, location of stock etc. is likely to see more developments in becoming an automated, digital process. With developments in areas such as Radio Frequency Identification (RFID), the warehouse can become an automated facility. Robots are already able to pick and pack based on location identification, utilising RFID – and developments in this area point towards this being coupled with other processes. Whilst the initial investment of digitalisation within warehouses is high, the return is visible within a short timeframe, and developments over the next few years will continue to make such processes even quicker.
It is likely that the digitalisation of logistics and warehousing will continue over the next five years, however as the investment is so high we are likely to see the major players in the industry leading the way before this filters down to smaller facilities.
Visibility and traceability of goods
Developments of digitalisation open more opportunities to fully track and trace goods, both within the warehouse and during the distribution process. Utilising operational tools such as Warehouse Management Systems (WMS) and Transport Management Systems (TMS) enable the complete process to be traceable. The WMS is implemented within the warehouse for visibility of goods, including location, stock count and more. This enables the warehouse operations to run smoothly, and provide up to the minute data, both internally to direct to customers. A key benefit of a WMS is an online platform, providing customers with stock check information via a portal system. For the distribution of goods, the TMS provides real-time tracking of vehicles, including location, driving time and fuel usage. Customers can track their deliveries and are provided with an ETA of goods. This is utilised in secure deliveries, coupled with CCTV both internal and external to the vehicle.
Customer expectations have developed in line with ‘real-time’ information being available, therefore requirements for ETA of deliveries and stock count to be sent over have become the norm.
Warehouse space in the UK
There is still a shortage of warehouse space in the UK, however this is primarily for smaller facilities or quantities of palletised goods requiring spaces. Over the next five years demand is set to increase with the supply staying constant. This is an area which needs to be addressed on a larger scale, especially where there is opportunity for development of land.
However, it has now been mused that there is an influx of warehouse spaces of over 100,000sq. ft. yet demand for new facilities of this magnitude is decreasing. Whilst this may be the case for new warehouses, demand of storing goods is not down for those operating from established existing facilities.
A key topic during the negotiations, with a finalised proposal expected in early 2018. There is a lot of uncertainty of what the negotiations will mean for the logistics industry, especially for those operating across borders. Logistics companies must be aware of the outcomes, and be prepared to make changes and amendments where required. The effect of Brexit has been felt worldwide, with many companies now wary of the uncertainty and therefore re-thinking their logistics strategy. The route to market for European companies delivering into the UK is subject to additional customs, which could impact the logistics processes.
Until details of trade agreements are published, we will not know the full extent of the impact that Brexit will have on the industry. This is very much a ‘watch this space’ scenario.
Growth in ecommerce
This trend is not surprising, with a continual growth in ecommerce platforms year on year. The expectations of having goods delivered either on the same day or next day has increased dramatically over the past few years, with many retailers offering end-customers an express service. For logistics, this continued trend will lead to a requirement for flexibility, and increased demand for next day deliveries. Logistics firms will need to be receptive to short notice deliveries and be able to meet the requirements of customers. Such growth impacts deliveries both to Distribution Centres and also on to the end-customer, depending on the logistics offerings of the online seller.
Continued growth of online platforms such as Amazon, with more and more companies selling and therefore requiring deliveries into Amazon Fulfilment Centres. As online demand continues to grow, as does the number of vendors selling online. It is possible there could also be an increase in the number of Amazon Fulfilment Centres in the UK, however there are no official plans to date. Retailers are also increasing their ecommerce platforms, therefore there has been an increase in stock to their Distribution Centres.
Continued expansion of discount retailers
Again, this is a trend year on year, with Aldi overtaking in the polls to be voted best supermarket. Retailers such as Lidl, Aldi and Poundworld continue to go from strength to strength, with market share growing. Naturally, alongside this trend, the demand for both storage and distribution into these retailers is also continuing to grow. The storage and distribution of these products includes high stock rotation, therefore logistics firms welcome the trend of discount retailers, due to an increase in providing the distribution of products.
With developments set to impact the warehouse and logistics industry, companies need to be receptive to flexibility and changes. In the near future, the main developments look to focus on the warehouse shortage in the UK, and waiting for decision regarding Brexit. Due to uncertainties, logistics firms need to be prepared for all outcomes, and plan accordingly.