The WEF presented a report on the future of real estate. In recent years, industrial portfolios have been dominated by logistics facilities as the double-digit growth of e-commerce (both B2C and B2B), coupled with the steady increase in consumer spending, has driven demand in the asset class ‘industrial and logistics’.
This growth is accompanied by increasing demands concerning the performance of logistics facilities. E-commerce-related logistics is three times more labour intensive than traditional operations and online sales are twice as volatile as those from brick-and-mortar stores. Consumers are demanding shorter and shorter delivery times – typically overnight and same day – and are three times more likely to return items purchased online than those bought at a physical store. In addition, the reverse logistics supply chain requires an average of up to 20% more space and labour capacity compared with forward logistics.
To ensure healthy margins for retailers, the increasingly complex logistics ecosystem will require transformation: fully automated, cost-effective supply chains integrating last-mile delivery centres in urban areas, sustainability at both the building level and in freight operations and liveability by prioritizing employee health to prevent accidents and illness.
Fully automated, cost-effective supply chains integrating last-mile delivery
Fully automated, cost-effective supply chains integrating last-mile delivery centres in urban areas: to achieve a cost-effective supply chain, the logistic footprint must be well optimized with an end-to-end approach, which means leveraging technology and automation to gain efficiency by eliminating non-moving time and improve workers’ safety, reinventing last-mile delivery by integrating logistic centres into cities to achieve ambitious delivery times, adopting more efficient delivery modes and establishing smooth reverse logistics.
With the needed increase in automation, logistics real estate will experience several changes regarding not only layout and site amenities but also location. The new sites designed to accommodate automation will need to include a few key features:
- Structure: Automation requires structurally strong roofs – as fixed automation sometimes requires connection to the roof – and robust building foundations with sturdy floors that support the weight of machines.
- Space: Automation also requires sufficient ceiling height. To avoid inventory build-up on the floor, sorting and delivery processes must be smooth, which will increase the need for dock doors. Wider office spaces are necessary to control operations and ensure the optimal functioning of automation structures.
- Technology: Advanced modular telecommunications solutions (i.e. connectivity) can not only provide enough speed to manage great volumes of information but can also be upgraded as technology evolves. In addition, power capacity requirements may increase by up to four times depending on the level and type of automation that the site integrates, increasing the importance of sourcing clean energy.
To deliver orders under extremely short lead times – typically same-day delivery or even two-hour and one-hour delivery services – operators must be near the end customer and vertical facilities are one of the most economical and feasible solutions. Multistorey facilities are becoming more common, especially in densely populated cities, and are mainly powered by automation; racks, conveyor belts, lifts, etc. High real estate costs, the absence of available space, and zoning all present hurdles.
Sustainability at both the building level and in freight operations
Advances in technology can help ensure sustainability in facility operations. Renewables, efficient design and energy demand–supply optimization are key levers. Cutting-edge systems for cold storage include carbon dioxide cascade refrigeration systems, energy efficiency evaporator and condenser design, highly reflective white thermoplastic roof membranes, high-speed bi-parting freezer doors and high frequency and opportunity battery charging.
First-mile mega distribution centres that distribute regionally should ideally be multimodal. Ports should be linked to an efficient inland transportation network, preferably dominated by rail, to minimize reliance on trucking. When possible, barges can be used as they can transport more cargo than trucks and help reduce road congestion. Even though barges are relatively energy-efficient, the use of electric barges could help to reduce emissions even more.
The sustainability of last-mile deliveries can be fostered by the electrification of transportation (deploying the infrastructure required to allow ultra-fast van charging should enable the shift to electric deliveries, as e-mobility has cost advantages over traditional fossil-fuel-powered vehicles). and cargo bike and on-foot deliveries.
Liveability by prioritizing employee health to prevent accidents and illness
Guaranteeing optimal building conditions, including adequate temperature, internal air quality and lighting, to ensure health and safety are crucial.