SHD Logistics is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Unlocking urban logistics

Automation is helping to unlock urban logistics opportunities by reducing the challenges posed by labour cost and availability. Lynn Kerfoot MBE, Managing Director of AMHSA member, Newland Engineering, looks at the issues.

Lynn Kerfoot.jpgThe continuing debate about the solution for the 'last mile' in logistics highlights the fact that many supply chains are outdated. The changing retail and business landscape in recent years has increased the demand for UK warehouse space. According to recent research by property specialist, Savills, the average figure for warehouse space acquired on new leases has more than doubled – from 15 million sq ft per year to 32 million – since 2007. Much of that warehouse capacity has been created in the so-called Golden Triangle in the Midlands, from where 90% of the population can reputedly be reached within a four-hour drive. In 2019, the percentage of all new warehouse leases taken within the Golden Triangle reached a record 39%. However, most of the supply chains emanating from the Golden Triangle have several links before reaching the consumer and it is estimated that some 50% of the UK's population is located to the south of it. 

City living

Demographic trends mean an increasing concentration of last-mile deliveries in urban areas. This is especially true in Europe, where some three quarters of the population live in cities. The need for urban logistics has been fuelled by the continued growth of e-com, which has now been accelerated by the pandemic. Consequently, there is an urgent requirement for urban fulfilment space, as retailers and logistics providers try to move increasing volumes of products closer to consumers. Proximity to the point of delivery enables e-tailers and courier companies to meet high expectations for delivery speed and convenience.

Land use

However, finding logistics opportunities has proven a challenge due to competing uses for urban real estate. Foremost among these have been demands for retail and residential space but shrinkage of traditional bricks-and-mortar retail is driving a change in the economics, with retail and logistics rents beginning to converge. Even if urban rents are higher than for out-of-town warehousing, this can be justified by the enhanced potential to grow market share. Hence there have been some news stories recently of high-profile landowners confirming their intention to convert parts of retail parks into urban logistics hubs.

Automation as an enabler

Acceleration in the growth of e-com – the logistics for which are considerably more labour-intensive than operations for traditional store replenishment – means that more retailers are turning to automation to improve productivity and smooth out their peaks. And this warehouse automation – according to recent research by property provider, Prologis – is proving to be an important enabler in the establishment of urban logistics capacity. In addition to prohibitive rents, labour costs and labour availability have traditionally been challenges for logistics operations in urban areas. Automation can help unlock urban logistics locations that have limited and expensive pools of labour. It is also driving the expansion of the click & collect model through the conversion of parts of bricks-and-mortar stores into micro-fulfilment centres (MFCs). The trend towards modular fixed automation (such as scalable shuttle storage systems) and mobile automation (such as automated mobile robots, or AMRs) is facilitating the re-purposing of brownfield sites in urban locations. As warehouse automation technologies become more flexible, so the physical characteristics of the buildings that house them become less important. The required infrastructure, such as specialist power systems, can generally be retrofitted quite easily.

Retailers and logistics providers are also experimenting with innovative delivery methods for urban areas. Only time will tell whether the practical challenges faced by inventions such as drones, autonomous vehicles and even hyperloop infrastructure can be overcome. The changes that are gaining traction, however, are the expansion of click & collect and collection point networks, including secure delivery lockers. These approaches tackle the problem of the high rate of failed first-attempt delivery, which brings a huge cost burden, as well as unsatisfied customers.

The modular and scalable nature of modern logistics automation is also helpful in the current climate of economic uncertainty thrown up by Covid-19. At Newland, we have seen an uptick in the hire side of our business, demonstrating a need to access logistics automation equipment quickly without the challenge of capital expenditure budgets. We've also seen an increase in activity with 3PLs, indicating an increased reliance on outsourcing models.

Challenges ahead

Developing sufficient urban logistics capacity at the speed at which it is required remains a challenge. There are political hurdles – with land that is available for logistics use limited in many cities – and economic hurdles, with land values keeping the focus on residential development (particularly in the Southeast). There are also social forces that are driving these political and economic challenges, as people have traditionally resisted 'beds and sheds' development (the co-location of residential and logistics buildings) in urban areas.

Positive signs

On the plus side, we are seeing an encouraging trend towards investment in urban logistics real estate. In addition, the end of last year saw the welcome announcement of a major research centre for urban logistics in Amsterdam. This 30-acre campus will enable collaboration between companies, educational institutions and governmental bodies to help reduce vehicle movements, emissions and noise pollution.

Demographic trends mean an increasing concentration of last-mile deliveries in urban areas.”

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.