Logistics in cities of increasing interest to property developers
A new research report suggests that factors like the growth of e-commerce due to consumers’ unabated passion for online shopping is transforming logistics in cities, which in turn impacts property markets. Also, the push toward green energy and the need for faster, more efficient delivery will also exert an effect, according to the new research.
“We believe that environmental and efficiency challenges will transform logistics operations in Europe’s major cities,” says Andy Harding, lead director of the Industrial & Logistics Group at JLL, who have just released a report – titled “More than the last mile” – on the future of logistics in cities.
Delivering at night and using bicycles may form part of more efficient, environmentally sustainable models for logistics in cities. Image: pixabay-1214227
Harding says that property developers and investors are becoming increasingly interested in urban logistics – largely because of the growth in e-commerce and the need to address the last-mile problem.
Last mile problem
The last mile problem concerns the challenges posed by the last leg or mile of a delivery journey, which is usually the most difficult and costly to fulfil compared to the much cheaper costs of bulk journeys, which can take advantage of economies of scale.
The pressure to reduce costs and cut delivery times is spurring innovative solutions to the last mile problem. For example, one startup company has secured considerable backing to develop ground-based, autonomous delivery drones for this market.
However, “the issues associated with logistics in cities are much wider than servicing e-commerce growth,” says Harding.
Jon Sleeman, who heads up EMEA Industrial & Logistics Research at JLL says “we need to take a wider supply chain perspective.”
Need for different types of logistics
Sleeman explains that while those interested in property markets may see city or urban logistic buildings as a separate segment to the big logistics buildings and warehouses clustered around seaports and airports – we need to start considering them as part of the same supply chains.
The report – which focuses on Europe – predicts that in order to respond to growing demand for different types of logistics, and the pressure to reduce emissions and improve efficiency, logistics in cities will likely transform in several different ways.
According to a recent report on next-generation supply chains, freight delivery in cities is likely to grow by 40 percent between now and 2050.
Fulfilment systems will have to work smarter to avoid the huge congestion problems that such volume growth could create in cities. It cannot go down the route of “more of the same.”
Space for transhipment facilities
For example, the JLL report forecasts that cities will make greater use of “transhipment” facilities where goods switch over to different modes of transport several times during shipping to meet increasing demand for speed and reliability.
To provide opportunities for such changes means cities will need to offer lots of different kinds of spaces.
“Shared-user consolidation centres,” last-mile fulfilment facilities, underground premises, and multi-storey buildings, will also feature more often in urban logistics solutions, says the report.
Models will need to consider sustainability
The pressure to increase efficiency while reducing environmental impact means the new models will also need to consider sustainability. This could introduce opportunities to revisit “low-tech” modes of transport; for example, we may see a return of rail freight or bicycle couriers.
It is also likely that more deliveries will take place at night, to avoid peak traffic and meet tighter deadlines.
City planners and building designers will have to think about these changes as they consider land development and warehousing needs.