03 October 2014 | London
On the face of it at least, there seem to be obvious advantages of locating logistics buildings close to ports.
By Alexandra Tornow
Positioning a logistics facility at the point of entry/exit makes sense given that (1) global supply chains rely heavily on several major ports; that (2) so many of the goods that we consume or the constituents thereof come are globally sourced; (3) that the declared intent of most manufacturers is to grow the market for the goods that they produce beyond borders; and (4) one of the key objectives of logistics is to handle goods as little and as fast as possible.
A port location enables transport modes to be switched and goods moved to the warehouse in a single process and at a single location rather than two.
Similarly, although most goods are moved by lorries/trucks using the road network - and there are good reasons why this is the default mode - the twin pressures on logisticians to seek more sustainable and more cost effective means of transport are increasing and demand at the very least that they keep open minds to the alternatives. Although across most of Europe the main alternative is rail, in several countries rivers such as the Rhine, Seine and Danube are already well-used alternatives.
While nobody would pretend that either port-centric or multi-modal logistics facilities are the panacea for all future logistics challenges, the logistics occupier market is nevertheless giving off unexpectedly mixed messages.
JLL survey amongst major occupiers of logistics facilities across Europe carried out in co-operation with Corenet Global indicated surprisingly luke-warm attitudes to port-centric and multi-modal logistics property.
The companies polled were asked to rank
key trends that will drive the logistics sector over the next five years. The growth of e-commerce and
multi-channel retailing was in first place. The increasing significance of emerging markets was second, and implementation of new technology was third - all perfectly logical. In fourth place, respondents identified urban logistics and transport collaboration as another important driver, a natural consequence of the growth of e-commerce.
All of that was in line with JLL's expectations as was the discovery that on the "threats" side of the equation respondents' chief concerns were rising transport and energy costs, shorter order-lead times and increasing supply chain risks. These findings underlined the continued pressure that companies experience to contain costs while improving the service that they provide.
The surprise then was the apparent indifference to intermodal sites and facilities located adjacent to
seaports. Further investigation revealed this reticence could be due to the perception that such property commands premium rents and prices. The opposing view is that any additional cost will be outweighed by additional benefits.
Guy Gueirard | Director of Logistics & Industrial, EMEA
"In our opinion, the importance of these locations will increase over the next few years because they offer significant opportunities to reduce operating costs and increase speed to market" said JLL EMEA director of logistics and industrial Guy Gueirard.
Gueirard expects that logistics occupiers will "see the light" before long. Other responses and attitudes revealed by the poll also help to make that the logical conclusion: respondents already place the greatest importance on minimising transport costs.
"Those locations that will attract the most occupier demand in the future will display a number of key attributes, the main consequence of which will be the reduction of cost and this will put multi-modal transport hubs and gateway locations very firmly in the spotlight," Gueirard said.
And, while logic also suggests that demand for port-centric and multi-modal logistics property will increase in the short to medium term, another key to occupier competitiveness could be the desire to beat the rush that occurs when the light does dawn.
Find out more about JLL's Logistics & Industrial services and Seaports research.