Can Supply Meet Demand for B8 Warehousing?

Can Supply Meet Demand for B8 Warehousing?

A View on the Surge in B8 Warehousing and its Impact on Transport

Demand for B8 Warehousing in the UK is experiencing a surge like none ever experienced before. There are concerns within the industry that demand for warehousing will exceed supply and cannot be sustained beyond 2020. According to a study conducted by national property consultancy Lambert Smith Hampton, requirements for logistics warehouses will exceed the UK’s available stock by 25 million sqft by 2020.

B8 Warehousing is both the most popular warehousing land use, and the one at the greatest risk. Shortages in UK storage facilities are already beginning to show, and the problem will escalate unless immediate measures are put in place.

What is having the biggest impact on the B8 Warehouse shortage in the UK?

Changes in the way UK consumers shop has a large part to play in this potential issue. Data from the Office for National Statistics show that online sales rose by 15.3% between July 2017 and July 2018. £1 in every £5 is now spent online; up from £1 in every £10 in 2013.

The shift from town centre retail to online shopping has brought with it a series of challenges. Consumers increasingly expect super-fast delivery. As a retailer, if you are not offering same day delivery or next day delivery, you can be quite sure a competitor is. Additionally, there is the issue of consumers ordering multiple items with the view to returning at least some of those. In place of visiting your favourite shop and taking three pairs of jeans into the changing room to see which pair the best fit is, you can order all three sizes online and return two.

Online shopping has become so quick and easy to use that now you can purchase almost anything you want at the click of a button, without even getting up from your chair. There is also the added advantage of being able to compare 1000s of prices for the best deal.

At the same time, we are seeing a rise in the number of convenience stores in towns, cities, and villages. This can be attributed to the trend away from using large supermarkets for the weekly shop, towards multiple weekly trips to smaller convenience stores. Stores such as Tesco Express and Sainsburys Local require more off-site storage space than their large supermarket counterparts, as they lack space on-site to hold stock. Consequently, convenience stores need more frequent deliveries, typically in smaller vehicles, to regularly replenish stock supplies.

What does Online Shopping mean for the UK warehouse industry?

In a nutshell, online retailers, particularly those that are well-established, need storage facilities.

According to property research firm CBRE, demand for warehouse space has almost doubled over the past decade due to the rise of online shopping. Retailers now account for approximately 60% of all warehouse space, up from 33% just 10 years ago. The overall square footage of warehouse space leased or purchased between 2007 and spring 2018 stood at 235 million sq ft; a huge jump from 130 million sq ft the previous decade.

Location, location, location

The needs of retailers go beyond storage space. They need to facilitate quick delivery and efficiency. This is where location comes in. Logistics plays a huge part in deciding the best location for warehouse construction. Distribution networks are key to the retail industry, particularly the big players who need to fulfil orders at lightning speed.

The East Midlands has become a hub for the likes of DHL Express, Marks & Spencer, Tesco, Asda and Disney, who all have operations here. Its major motorways and new freight railway lines give the East Midlands a huge advantage. It is possible to deliver goods to 90% of the population in England and Wales within a mere four hours! East Midlands Airport is also cashing in on the surge in eCommerce trade - according to Managing Director Karen Smart, the airport has seen “phenomenal growth”. Handling as much freight as passengers, around 20 planes an hour take cargo in or out of the country throughout the night.

What impact is the rapidly growing warehouse industry having on transport?

With the growth of online shopping has come a surge in the number of vans on UK roads. Retailers may favour vans over HGVs for moving goods and making deliveries for several reasons. The main factor behind using smaller vehicles is the sheer number of small deliveries that are now required. Vans are more cost-effective and speedier than HGVs for online shopping deliveries. The lighter restrictions on vans is also a factor, encompassing driver training, the number of hours a driver can work before being legally required to take a break, and vehicle road-worthiness testing.

A report earlier this year by the Urban Transport Group found that there are now 3.8 million vans (goods vehicles below 3.5 tonnes in weight including their cargo) registered in the UK. Vans make up 15% of all motor vehicle traffic; this figure has increased from 10% 20 years ago. This poses a number of challenges for towns and cities that are working to reduce emissions and air pollution, and tackle congestion.

The report highlighted that of 10,800 vans stopped at the roadside, 88.5% were overloaded, with 63% found to have serious mechanical defects, and 50% fail their MOT.

What does the future hold?

There is light at the end of the tunnel, however. With new technology and data on the horizon, efficiency of deliveries can be improved. By cutting fleet mileages, associated emissions will be reduced, and air quality improved.

One such initiative was announced by the government in September 2018, supporting the uptake of e-cargo bikes. The government is giving £2 million funding to help encourage the use of electric delivery bikes. Short deliveries can be made swiftly and easily using e-cargo bikes, reducing the requirement for van deliveries in towns and cities. As 96% of registered vans in the UK are diesel fuelled, this move will not only cut congestion, but also reduce harmful emissions. This funding forms part of the government’s wider review into how transport challenges can be impacted by emerging technologies and services.

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