Global Tectonic Shifts in Logistics Now Being Driven by E-commerce

Global Tectonic Shifts in Logistics Now Being Driven by E-commerce

Commercial News » Los Angeles Edition | By Michael Gerrity | February 7, 2017 10:00 AM ET

According to the newly released Last Mile / City Logistics Report from CBRE, the rapid rise of e-commerce has driven the most disruptive movement to the industrial & logistics industry, transforming the way we think about industrial real estate and restructuring the supply landscape forever.

The growing population of cities, mixed with new age consumer behaviours--driven by the millennial generation--has put supply chains under increasing pressure to deliver products and perishables into cities under narrow time frames. In order to meet this demand, urban areas around the world are evolving towards a more dynamic level of transportation as city logistics and the last mile come into play.

Over the past years, consumer expectations have drastically changed, and supply chains are being forced to adapt accordingly. According to research from CBRE, UK millennials do more than a third of their non-food shopping online, and half are expected to do over 50% of their non-food shopping online by 2019. The UK is one of the leading countries on online consumption, which can be attributed to its high-speed Internet connectivity and smartphone adoption. CBRE's Last Mile / City Logistics report predicts that as internet speed and tech development progresses further afield, we will witness mirrored behaviour from consumers across the globe.

The demand for instant delivery services (one-hour, one-day delivery) is increasing across global cities and has generated significant needs for optimizing the supply chain.

To meet this demand, innovative strategies have taken shape within the last-mile schema, which include multi-story warehouses in dense hubs in APAC and EMEA, locker/pick-up locations, and infill service centres in the Americas and EMEA.

In Europe, the restructuring of supply chains has led to a growing need for efficiency, resulting in a smaller warehouse network with larger but fewer facilities. Due to population growth and urbanization, land suited and zoned for industrial use is becoming increasingly scarce. For example, the amount of industrial land use in Greater London has declined from 8.3 thousand hectares in 2001 to 7 thousand hectares in 2015. Vertical logistics facilities are already well known in East-Asian markets, where densely populated cities and lack of available land make them a viable solution. As e-commerce grows and continues to impact the market, the use of vertically structured warehouses will become a virtually inevitable factor for the growth of city logistics in dense European hubs and heavily populated US cities.

Machiel Wolters, Head of Industrial & Logistics Research of CBRE EMEA commented, "the consumer landscape as a whole has expanded rapidly with the help of e-commerce, and this will undoubtedly continue at an accelerated pace across the globe. The millennial generation is a driving factor of this change and as they continue to populate urban areas, industrial operators will need to adapt with the evolving landscape in order to survive in this competitive business. Securing strategic sites in and around cities is key, and besides spurring vertical building solutions, this will bring opportunities for light industrial property and even retail stores to act as last mile facilities."

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