Consumer needs for greater choice and delivery services, present ever-changing challenges for the logistics sector. Industrial expert, Ian Brebner explores the issues affecting the sector and assesses the associated costs.
As consumers are moving away from shopping at bricks-and-mortar stores and towards more online shopping, this has had a big impact in the way the logistics sector must respond. Technological advancements and consumer expectations mean that the supply chain is required to adapt to meet this shift.
The future of logistics will increasingly become digitally powered and interwoven with how consumers interact with personal technology. The challenge is ensuring that any change is cost effective for the sector.
All areas of the supply chain are affected by technological changes, but there are three main categories which will see the biggest shift:
Non-food retail – Continued development of omnichannel initiatives is forecast, particularly in the non-food retail segment – developing delivery options from multiple source locations and delivery methods for the customer.
Food retail – A number of different methods are being explored to overcome the balancing act of what works for the retail in terms of food storage and what meets customer needs. Even large experienced retailers are struggling to overcome some of these challenges.
Air cargo – A continued drive to digital transformation, to reduce regulatory cross-border, paper-based processes. This is leading to larger airside hubs, which develop surrounding land.
Considerations for changing logistics centres
There are evolving real-estate requirements for the different segments of the logistics business. For the first time there are likely to be many similarities across medium-and-larger hubs. Whereas in retail, the future path is still to be confirmed; the rebalance of the physical high street and online retail is not yet cemented.
The cost associated with changes in logistics facilities will play a large part in what future shifts occur. In many urban areas, land is limited therefore multi-level or underground structures could be the answer to high land cost. Likewise the need for sustainable cost effective structures will drive the direction of development.
Logistics developments can benefit from a number of tax relief opportunities making large cost savings in a number of areas. This can be from mechanical and electrical installations to land remediation relief for building on brownfield sites. For example, UK companies carrying out site remediation works for brownfield sites may be able to benefit from land remediation relief, providing a 150% super-deduction against corporation tax.
We have explored the areas above in more detail within our cost model and focused on specific costs for consideration when building an air cargo handling facility and created an example that helps ensure efficient and cost-effective delivery of the development. It is based on a single-storey, rectangular-shaped hub facility on a brownfield site.
View and download the cost model here