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  October 28th, 2015 | Written by

Ecommerce and New Delivery Paradigms Shaping Future of Global Logistics

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  • Report: Ecommerce and evolving delivery methods are the primary factors driving the shape of logistics.
  • Report: China will require 170 million square feet of logistics space per year from 2016 to 2020.
  • Ecommerce retailers are including smaller urban warehouses in their logistics networks, to shorten delivery times.

Leading global commercial real estate services firm Colliers International Group Inc. issued a global logistics report examining factors that will impact the global pattern of warehousing and logistics over the next generation, as well as the elements already shifting global trade flows and retail formats.

In Asia Pacific, as global giants such as China and India develop their port-centric facilities and link these to a developing rail infrastructure, the growth in Asia Pacific intermodal logistics is set to become very big, according to the report.

“Our analysis finds that ecommerce and evolving delivery methods are the primary factors driving the shape of the logistics sector both today and in the future as e-retailing is slated to increase significantly in cities and towns across the globe,” said Dwight Hotchkiss, president of brokerage services, U.S., at Colliers. “This will result in the creation of new and innovative space at the initial first mile level, including mega distribution centers, and the last mile, where there is already a proliferation of e-fulfillment distribution centers on the edge of urban areas.”

“In Asia, our research suggests China will come out on top by far the biggest leader of logistics demand in the order of over 170 million square feet per year from 2016 to 2020,” added Simon Lo, executive director of Asia research and advisory at Colliers. “One of the most interesting trends is that growing demand for more sophisticated warehousing and distribution facilities will foster the logistics real market evolution into a stage of alliance where a significant number of joint ventures are formed between retailers, freight and logistics providers, developers, and institutional real estate investors.”

Population and consumption patterns will influences future logistics development, according to the report. Increases in urbanization will create more concentrated consumer markets. “Generations X, Y and the millennials will increasingly comprise the majority of the population, bringing a complete change in consumer behavior and logistics/warehousing needs,” said the report.

Since 2000, there has been dramatic growth in containerized traffic around the world, with total shipments increasing by 290 percent in 2013. “Because of the pressures of this demand, trade routes have changed to better meet capacity in North American markets, with activity shifting away from the traditional ports, such as LA/Long Beach in Southern California,” said the report.

Due to the growth of e-retailing and the corresponding space requirements to install more sophisticated facilities, such as automated picking and sortation systems, there is a noticeable trend of the total floor area getting larger, with modern first-mile distribution facilities comprising a floor area of over one million square feet.

Since the essential element in improving urban logistics is to limit deliveries to the shortest route, ecommerce retailers have started to include smaller urban warehouses in their logistics networks, to shorten delivery routes and provide quick delivery services to online customers. “These smaller urban facilities within urban community catchment areas,” said the report, “as well as a variety of click-and-collect options for immediate pick up or same-delivery options are coming to the forefront.”