Welcome to Part 2 of our blog on the Changing Warehouse Marketplace as we continue to report back on the excellent UKWA conference we recently attended. Today we review the presentation of Brandon Wang, Regional Director of Europe at Dimerco. Brandon spoke with authority about global market trends and their impact on warehousing and distribution .
In terms of the business challenges that lie ahead for the logistics sector, Brandon identified the following:
- Brexit and the implications on the exchange rate, trade terms and hub switches from Germany and the Netherlands.
- The surprising collapse of Hanjin Shipping with huge container ships currently marooned at sea with 1000s of tonnes of cargo. There is approximately $12 billion worth of cargo currently on the water across the world. The rumours are that Hanjin will not be the only shipping line to collapse in the coming months. Is an increase in using air freight to import and export cargo - quicker but also a more expensive – a cause or possible consequence of this. Or will rising shipping costs in a market with less players/ supply lead to more focus on markets closer to home, accessible from UK warehouses and by UK/Europe based logistics companies.
- The expansion of the Panama Canal means that the new locks will be able to lift freighters carrying approximately 12,000 TEUs, predominantly from the Far East - three times more than they can currently lift. It was hoped that this expansion would make US east coast ports more competitive for cargo ships carrying products from the Far East. However, it remains to be seen if this expansion is beneficial to the US economy: many ports that could gain are not yet able to accommodate the bigger vessels.
Brandon then went on to discuss the developments that were happening specific to our industry:
- Smarter warehouses with flexible automation solutions and more collaboration of humans with machines robots. As well as the Amazon example already discussed in the first article, Brandon gave us the examples of AliBaba.com and JD.com who have both wholly embraced flexible automation.
- Self-driving vehicles – speak with any 3PL or go onto any of their websites and one of the biggest problems facing the industry is the shortage of drivers. It is both a thankless and a pressurised job, and any post-Brexit migration limitations will only worsen the shortage. Google has been at the forefront of developing driverless cars with legislation being passed in four states in the US allowing these. Driverless lorries are being developed also, particularly with convoy driving in mind (though this has limitations in a country as dense as the UK with crowded motorways with multiple junctions).
- 3D Printing is another hot topic. Brandon believes that this will create new market segments which in turn will enable after-market supply chains. 3D printing will undoubtedly reduce transport costs and reduce lead times.
Another critical factor for our industry is the continued rise in E-commerce, a booming marketplace which shows no signs of abating. Forecasts suggest that by 2020, 48% of all E-commerce will be based in the Asia Pacific region and beyond there is the prospect of a generation of consumers who will have not stepped foot into a physical shop. The demand for consumer goods, shipped through more complex channels that mere store delivery can only deliver growth for the warehouse and distribution industry and higher profits for the most innovative players.
The extent and pace of development of the most forward thinking businesses deserves comment: recent policy changes within the aerospace sector has enabled Airbus and Boeing to sell planes to Iran; returning to the automotive theme, Tesla’s Gigafactory in Nevada became operational earlier this year - it is estimated that Nevada will enjoy $100 billion of economic growth in the next twenty years through the construction and employment generated by it; and Apple is apparently in talks with McLaren about a takeover: Could we soon be seeing the first iCar or even the first driverless iCar?
To conclude the UKWA conference session on ‘The Changing Warehouse Marketplace’, all the speakers were asked for their closing comments. The unanimous conclusion is the warehousing and logistics sectors can only benefit in total, though – as ever – there will be gainers and losers. Factories being built will always needs materials delivering onsite; E-commerce stores will need DCs and regional hubs to store pallets and aerospace companies will continue to need components being manufactured and then exported or imported.
The challenge is to recognise the UK’s role in the global supply chain, of which UK warehousing is a constituent, integral – but not independent - part. Our role at Zupplychain is to offer an online platform that allows more liquidity and flexibility in the UK market for warehouse space and pallet storage that will allow the most nimble and successful players in manufacturing, distribution, warehousing and logistics to grow faster and more profitably than the rest.