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Sheds in the city: the future of urban logistics

by | Feb 14, 2017

Urban areas around the world are evolving rapidly as city logistics comes into play. This has in fact become the single largest disrupter to the logistics industry, creating a supply chain arms race, now that companies have started to use logistics real estate as a strategic differentiator.

Cities are increasingly important to the logistics sector, as they tend to be inhabited by active, demanding and trend-setting consumers with growing incomes – especially millennials. Logistics is servicing not only their homes, but also the many shops, restaurants and leisure facilities that they are visiting. This means that supply chains are under increasing pressure to deliver consumer products and perishables into the cities, often within narrow timeframes. Moreover, cities throughout Europe are likely to implement regulation on goods transport in the near term, in order to alleviate the congestion caused by parcel deliveries. All of this is causing a need to establish an adequate network of delivery sites on the periphery of urban cores.

However, due to population growth and urbanization, land suited and zoned for industrial use is becoming increasingly scarce. Enter the multi-layered warehouse, where extra (mezzanine) floors in a distribution facility are used to create a multi-level operation. Vertical logistics facilities are already well known in Asian markets, but also in Europe densely populated cities and lack of available land are starting to make them a viable option. Another solution is the reuse of secondhand industrial property at urban infill sites. This way, the rise of city logistics can provide a new use for light industrial and multi-let properties in the cities, some of which are currently labeled as obsolete.

The search for efficiency within the so-called last mile will continue to evolve as innovative strategies take shape to meet growing consumer demands. Now that big data has come into play, technological innovation allows retailers and logistics service providers to better understand the needs of their consumers.

City logistics to become an even more critical component in the supply chain in the future. Retail chains and logistics operators that find the right balance between supply and demand fundamentals will have taken a closer look at these trends to create a multi-faceted last-mile strategy that keeps their customers happy and delivery costs low.

To this end, multi-story warehouses and infill service centres will be followed by more intricate solutions within the dense urban structure. For example it is not hard to imagine retail stores to again take up a key role as logistics facilities, as soon as evolving IT solutions make it possible to fully integrate the inventories in a supply chain. When inventories will be fully accessible from retail shops in the city, they will become the most logical points for customer contact and customized distribution. Next to their traditional roles, we will see them being used as small facilities (warehouses) from which e-fulfilment can be done and where returns can be processed.

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