Will 2014 Be The Year Of The Distribution Center?

English: Pantos Logistics - Warehouse

Exploding demand for online shopping is the driver behind a Jones Lang LaSalle finding that sophisticated warehousing and logistics space will see a big bump in 2014 according to today’s Craig Meyer piece in REJournals: 


“2014 is starting off with high demand from e-commerce and other users who are in the market for large, sophisticated space, and lots of it,” said Craig Meyer, president of industrial brokerage at JLL. “This will make 2014 the ‘year of the distribution center.’  Modern space with proximity to population centers and a robust logistics infrastructure will dominate the industrial real estate sector in 2014.” JLL anticipates the overall national vacancy rate will settle at a cyclical low of 7.5 percent in 2014. 


3PL Set To Take Off


Increasingly, traditional warehouse space and portfolios of owned facilities don’t offer what e-commerce needs: build-to-suit of third-party logistics (3PL) facilities are springing up in secondary and tertiary markets stronger than ever, locations hugging rail lines to avoid the rising costs of trucking.  In a new report from CapGemini, the revenues for 3PL across the entire US market are shown at $170 billion in 2012, up 6.7% from the previous year. Outsourcing is a major driver of the trend.  Cost reductions for inventory and logistics are reshaping the warehousing start picture across the US as facilities are suiting an outsourced operations profile.


Collaborating With Competition


How much outsourcing is sought might be explained by one alarming trend identified by CapGemini: in the hunt for efficiencies and savings, shippers are collaborating with competitors to improve service and cut costs in logistics.


Interest in collaborating with other companies, even competitors, to achieve
logistics cost and service improvements:  Slightly more shippers (48% compared
with 41% last year) express interest in  collaborating with other companies, even
competitors, to achieve logistics cost and  service improvements. Substantially more
3PLs (70%) indicate they are engaging in this  type of collaboration. As with gainsharing, it
is likely that this approach is more suitable  in certain types of shipper-3PL relationships
than in others.


Read the entire CapGemini report on 3PLs here.

Photo Credit: Wikipedia


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