2018 was a turbulent year for most industries – logistics and supply chain was no exception. With Brexit, stockpiling, supply chain problems for big brands, and big name retailers closing stores left, right and centre, the next year is undoubtedly going to be as eventful, if not more so.
So what’s in store for the next twelve months? Here are five key trends shaping the supply chain in 2019.
Whilst the rest of the world despairs at our ridiculous folly, the warehouse industry is loving it. All the uncertainty over trade agreements has sparked fear and panic amongst the business community. Companies are stockpiling ahead of a doomsday scenario where trade is disrupted and our just-in-time economy grinds to a halt. Every warehouse owner in the country is capitalising on a once in lifetime opportunity.
The average price to store a pallet of goods jumped to £2.10 a week in December from £1.85 in September. It wouldn’t be surprising if it exceeded £3 should a no-deal Brexit become a reality. That would still be relatively cheap compared with the cost of not getting products to the end consumers.
If the gold rush caused by Brexit has taught us anything – it’s that pricing is all over the place. Despite warehouses being in more demand than at any time in history, there is still a race to the bottom when it comes to pricing. The problem? No one knows what their neighbours are charging. The market needs a marketplace, where 3PLs and
2018 saw a wave of high-profile retailers go into administration. When these companies fold they leave their logistics providers exposed to enormous risks that are impossible to hedge against. When publicly traded companies like XPO are left £30m out of pocket when House of Fraser collapsed, shareholders ask questions. With over 2,500 stores affected and 43 retailers failing last year, including big names such as Toys’r’us, PoundWorld and Maplin, the industry will have to start getting tough on payment terms if it is to survive, particularly if the economy goes into a downturn.
With Amazon leading the way with ever shorter delivery times it is inevitable that we will see more and more requirement for urban fulfilment centres. You can’t change where people live, so the only solution is to have product closer to the customers in the first place.
Before the rise of huge distribution centres storage always used to be in city centres close to manufacturing and retail, but as cities expanded and transport improved warehouses moved away from cities. We are now seeing more and more demand for fulfilment centres closer to the end consumers, receiving a constant flow of inventory from larger regional distribution centres to keep up with demand.
There’s a lot of demand for warehouses and logistics services and people have noticed that there’s money to make and that the big players are slow to innovate. There are a lot of inherent inefficiencies in current operating models that represent business opportunities. As more startups look to break into the industry, expect to see a wave of disruption, in warehousing, freight forwarding and fulfilment, shrinking the time it takes to make data-based decisions and to manage human heavy processes – for faster and more agile supply chains.
Charlie Pool began his career in finance. He started in the City at Cazenove then at JPMorgan investing in listed companies, private companies, project finance and derivatives. He then began investing in Startups before actually starting one himself. Charlie is now the CEO of Stowga, the on-demand marketplace for buying and selling warehousing and logistics services.