With 2024 just around the corner, throughout December we are getting our crystal ball out to decipher what is in store across different industries. This week, Warehousing and Logistics takes the spotlight.
In June 2023, the value of internet retail sales in Great Britain reached a value of over £2.22 billion. The UK has the most advanced e-commerce market in Europe. In 2023, the country is expected to have nearly 60 million e-commerce users — leaving only a minority of the population as non-digital buyers. With all this huge spending it’s easy to underestimate the important part that the ‘behind the scenes’ world of warehousing and logistics companies play.
What’s in store?
Warehousing is one of the fastest growing, yet least understood industries in the UK, despite millions of products being processed each day.
Warehousing is changing rapidly as traditional High Street tasks are being forced back up the supply chain by ecommerce, whilst quasi-manufacturing activities like assembling gift-packs or printing T-shirts are pushed downstream. Warehouses have also become hubs for returns management, recycling, upcycling and repairs, helping reduce waste as part of the circular economy.
As a result of this, warehouse buildings are becoming larger and higher to accommodate this additional activity. 1% of the 4000 largest warehouses in the UK are so-called ‘mega-sheds’ of over 1 million sq. ft. and this trend is set to continue. Automation and robotics are being adopted increasingly, improving productivity, and supporting workforce wellbeing, while sustainability is baked into new buildings to reduce emissions and control costs.
That being said, warehouse rooftops offer huge potential for generating clean, affordable solar power. This will place intense focus firmly on the sector as the government looks towards industrial rooftop installations to contribute a third of its 2035 target to increase solar capacity by nearly fivefold. Many warehouse operators have already embarked on this journey, making sustainability less of a buzz topic and more of a policy.
According to Statista, the global e-commerce logistics market is booming, and projected to reach £666.65 billion by 2026. This burst in growth leads to increased demand for specialised 3PL partners.
Challenges as we head into 2024…
Logistics underpins every sector of the UK economy and in addition to the employment directly provided within the logistics sector, supports 890,000 employees working in logistics occupations across all other sectors, such as retail, construction, manufacturing.
In total, there were a total of 2.7 million logistics jobs across the UK economy in Q3 of 2022, accounting for around 8.2% of total UK employment. Despite this, due to the rapidly changing needs in business, an ageing population, and a precariously dwindling EU pool of workers means that there are still recruitment challenges. Rising to the recruitment challenge requires assessing a number of factors: flexible working patterns, review your employer brand to make sure it is attractive to potential talent, and how you communicate that externally to increase likelihood of loyal talent. Demonstrating a strong safety culture and low accident rate is also highly attractive.
Improving productivity to meet customer demand. Solutions like mobile workstations can improve productivity by cutting down unnecessary walking, lowering worker exhaustion, boosting labelling precision, and providing instant access to up-to-date data everywhere. Digitisation and automation across logistics and warehousing businesses creates much needed transparency and efficiency across all departments which, in turn, cultivates improved productivity.
It's worth noting that sea-freight operators have their own set of unique challenges, in particular surrounding data-driven intuitive decisions. In the shipping industry, companies are increasingly leaning on vast data reservoirs to guide their every move. From streamlining cargo handling processes to elevating customer service standards, data-driven insights are at the heart of modern sea freight operations. The need to have this data secure, useable, and accurate will be high on warehousing’s operational priority lists to ensure strategic overarching business objective decisions are met.
And finally…
There may be additional uncertainty around economic factors such as the likelihood of warehouse rent increases, high demand for warehouse space resulting in vacant logistics properties (the rate being stuck below 2% for the last five years), and interest rates still at an all-time high.
However, forward thinking warehousing and logistics providers that put agility at the top of their to-do lists can be better prepared to respond to most challenges in this ever-evolving landscape. Being agile operationally with the right IT with robust integrational capabilities underpins the agility that is needed.
To all our Logistics and Warehousing readers and customers alike, we wish you a wonderful Festive Period and a prosperous 2024 from all of us here at Innov8!