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Global Warehousing & Logistics Networks 2016 - SampleThe report examines the shifting landscape of supply chain real estate and the changing patterns of distribution on a global basis.

About Ti

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permission of the copyright owner, Transport Intelligence Limited.

This report is based upon factual information obtained from a number of sources. Whilst every effort is made to ensure that the information is accurate, Transport

Intelligence Limited accepts no responsibility for any loss or damage caused by reliance upon the information in this report.

Ti’s Origin and Development

Ti is a leading logistics and supply chain market analysis company

developed around five pillars of growth:

• Logistics Briefing

• Ti Market Research Reports

• Ti Insight portals

• Ti Consulting

• Ti Conferences and Training

Ti acts as advisors to the World Economic Forum, World Bank, UN

and European Commission and have 14 years worth of providing

expert analysis to the worlds leading manufacturers, retailers,

banks, consultancies, shipping lines and logistics providers.

What Sets Ti Apart?

• Globally recognised and trusted brand

• Global Associate Network provides a multi-country, multi-

disciplinary and multi-lingual extension to Ti’s in-house

capabilities

• More than fourteen years of knowledge delivery to global

manufacturers, retailers, banks, consultancies, shipping lines

and logistics providers

• Unique web-based intelligence portals

• Interactive dashboard

• On-going and comprehensive programmes of primary and

secondary research

About Logistics Executive!

© September 2016 Transport Intelligence! Global Warehousing and Logistics Networks 2016! 3!

Global Expertise with Local Focus.!

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Logistics Executive Group is the acknowledged industry leader providing a suite of whole-of-lifecycle business services including Corporate Advisory, Executive Search and specialist Supply Chain and Logistics Training.!

Since 1999, clients have trusted us to help recruit, build world-class leadership and drive business performance with integrated Corporate Advisory services.!

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Today, we are a single source for leadership development, talent & recruitment services and business consulting to empower businesses and leaders to reach their goals. Offering a full suite of solutions designed and executed to position our clients from growth and overall improved performance, our service pillars include;!

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» Executive Search & Leadership Recruitment!

» Corporate Advisory & Business Performance Consulting!

» Accredited Training & Education Programs for the Supply Chain and Logistics sector!

Table of Contents

© September 2016 Transport Intelligence Global Warehousing and Logistics Networks 2016 - Sample 3

Table of Contents (continued)


About the Authors

As Managing Consultant, Nick works with Ti’s global client base to deliver bespoke research projects which

offer both strategic and operational insight. Nick leads projects from conception to delivery, ensuring clients

receive the highest quality analysis and actionable outcomes, with specialisms in e-commerce, the road

freight market and emerging market logistics. Prior to joining Ti in 2013, Nick spent several successful years

working in international trade and foreign direct investment.

Having obtained a Masters in Economics David is now Ti’s resident Economist. David manages one of Ti’s

core strengths, that of quantitative analysis of a range of logistics markets, including sizing and forecasting.

David contributes to the GSCi portal, Ti Reports and consultancy projects. He also is author of many briefs for

Ti’s Logistics Briefing service. His key interests are the economics of the logistics sector, emerging markets

and statistical modelling.

As a graduate in International Relations, Alex brings a variety of knowledge and interest to his role as an

Analyst at Ti. Alex’s drive to constantly provide quality analysis for the logistics industry has led him to

increase his area of responsibilities to include investigating the potential for new products, training new

recruits, and scanning the horizon for the next big thing.


1.0 Introduction

2.0 The Economics of Global Warehousing

3.0 The Role of the Warehouse in the Supply Chain

4.0 Warehousing Dynamics by Vertical Sector

5.0 Green Warehousing and Distribution

6.0 Regional Warehousing Trends

7.0 Warehousing Developer Profiles

8.0 Global Warehousing and Logistics Networks 2016

Report

Sam

ple

1.1 Foreword by Managing Consultant and Lead Author, Nick Bailey

Global Warehousing & Logistics Networks 2016 is Ti’s first

report to explicitly cover the role of warehousing in logistics

since 2009. Both warehousing operations and the global

market for logistics real estate have been subjected to some

fairly radical forces over the last seven years, which this report

explores in detail. The Great Recession of 2008, booming e-

commerce sales and the growth in consumer spending in

emerging markets have highlighted the changing nature of

warehousing and highlighted a dynamic mismatch between

demand and supply.

This has consequences for a range of stakeholders, but is also

creating a number of significant opportunities. Logistics service

providers racing to secure their share of the booming e-

commerce market will gain an advantage if their network

provides warehousing in the correct locations, and with the

capabilities retailers themselves require to succeed. Across

many industries, meanwhile, shippers faced with ever

increasing competition are leaning on the advantages networks

and warehousing operations can unlock. As significantly, real

estate developers and investors have come to view logistics

property as an increasingly attractive investment-class asset;

knowledge of the sector’s emergent trends holds vast upside

potential.

More than ever, LSPs must understand the role their networks

and warehousing capability plays in creating and capturing

value for their clients. This means adaptable facilities which

create competitive advantages for shippers, in locations which

increase the speed to customer, and operations that enhance

efficiency. For LSPs, networks should be treated and

developed as tactical differentiators.


1.2 Key Findings

• The evolution of global networks of interrelated and

interdependent systems, processes and actions is behind the

shifting landscape on which logistics networks are built. Supply

chains have to manage complexity and operate in uncertainty,

both internal and external, while also facilitating competitive

advantage for their clients.

• As such, LSPs should expect further pressure for productivity,

utilisation and other efficiency gains from across their client

base. This will be particularly true of e-fulfilment, where

improvements in cycle times will only gain in importance as e-

fulfilment operations are increasingly lent on to produce

competitive advantage

• Both LSPs and shippers tend to operate a patchwork of

technology, including WMS, throughout their networks. This is a

result of a result of legacy purchases in different areas, as well

as M&A integration. This patchwork approach is currently the

norm, however, the adoption of cloud-based systems and rapid

deployment they offer may change this dynamic.

• Warehousing and logistics networks are very much in the

process of formalising in emerging markets, with some doing so

from an extremely low base. Levels of warehousing provision

vary greatly, but demand is likely to rise significantly as the

spending power of consumers rises and the need for more

sophisticated supply chains develops.

• Drivers in the warehousing market across developed markets

are vastly different. The rapid rise of e-commerce and

consumer buying habits are significant drivers on the demand

side, while warehouse obsolescence is an important driver of

market change on the supply-side. Obsolescence implies a

reduction in the supply of industrial real estate, which puts

upward pressure on rental rates. However, it should really be

viewed as a structural driver of demand for new facilities owing

to the need to upgrade.

• The underlying architecture of world trade has changed

dramatically following the rise of ‘global value chains’ as firms

and countries now increasingly specialise in ‘stages of

production’ rather than specific final goods.

• As a result of seasonality warehouse networks can be both

under-utilised for much of the year and stretched at peak times:

to accommodate the peaks and troughs, warehousing practises

are becoming more dynamic

• New technologies, the cloud and start-ups all have the potential

to disrupt how real estate developers, LSPs, manufacturers,

and retailers manage and operate their warehouses and

logistics networks.

• Complexity, efficiency and pace are competitive advantages in

the supply chain. As shippers look to differentiate themselves

from the competition, the focus will increasingly be placed on

LSPs to deliver services that enhance their clients’ capabilities.

The Effects of e-commerce

• The growth of e-commerce has prompted a fundamental

change in the operations that take place within facilities, driving

the need for both operational and cost-efficiency across

logistics networks.


1.2 Key Findings (continued)

• E-fulfilment operations are vastly different from store-based

fulfilment operations, and LSPs require a different set of

competencies if they are to be successful in the field. E-

fulfilment is a more labour intensive operation with an enhanced

focus on service, but one in which speed and efficiency are

vital. Customer experience is to a large degree defined by the

quality of the fulfilment operation – retailers know this and will

expect all supply chain players to enhance the service

customers receive.

• The standard logistics facility is evolving slowly, despite the

rapid pace of change seen in the operations that take place

within. Overall, there is trend towards lower coverage ratios,

with facilities taking up less space in the across whole the site,

while ceiling heights and other factors are unchanged. This

means facilities can accommodate today’s requirements, and

are adaptable as demands change, as well as to other clients

and sectors as business needs require.

• Flexibility is prized due to uncertainty regarding the

development of e-fulfilment best practice over time. A labour

intensive pick and pack operation is currently the most widely

adopted operating model, but technological and commercial

developments are likely to alter this, potentially significantly,

over the medium-term. As such, a best fit approach has been

taken, with retailers and LSPs configuring existing real estate to

meet e-fulfilment needs in the near-term.

• Across fulfilment networks, facilities are being located closer to

consumers in large population centres. This is to reduce the

time it takes to get products to customers, a key competitive

measure in e-commerce. In the last mile, there is also a trend

that such facilities be smaller and more numerous than in the

past. On the fulfilment side, however, there is less of a trend

towards smaller facilities, with scale still a significant component

of the business model.

Global Warehousing and Logistics Networks Survey 2016 Findings

• There is a clear preference for property investments or leases

to cover a 3-5 year period, the same period over which real

estate strategy is planned. Short-term and on-demand

warehousing provision shows signs of becoming an attractive

proposition.

• There is a clear priority in ensuring warehouses are in the right

location to meet the LSPs’ and their clients’ needs, as well as

the in ensuring that operations are at least cost effective and

sustainable, if not profitable in their own right.

• While the addition of smaller facilities to networks is highly

attractive to certain players in certain sectors, the benefits of

smaller network facilities may not be so readily realisable in all

areas of logistics.

• Transportation and real estate costs are the primary concerns in

warehouse location decisions for LSPs, suggesting their

interaction as substitutes is a key balance in LSPs being able to

operate profitable facilities. Notable secondary factors are

proximity to customers and access to both major domestic and

major international infrastructure.

• In terms of warehouse facilities, the adaptability of the building

to higher volumes and greater velocity is the most important

selection criteria.

• Respondents showcased the intention to introduce a range of

operational enhancements, including value-added services,

automation and technology, and consolidation and fulfilment

services.


Contact us!

© September 2016 Transport Intelligence! Global Warehousing and Logistics Networks 2016! 199!

For further information please contact: South East Asia Keng Pang, [email protected] North Asia Cassandra Lee, [email protected] Greater China Jay Han, [email protected] Australia/New Zealand/Middle East/ Africa/Europe Kim Winter, [email protected] All other enquires Darryl Judd, [email protected]

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