Innovation meets ever-increasing storage demands

The choice of warehousing is often dependent on the cargo to be stored. Credit: fvbriz, CC0
The choice of warehousing is often dependent on the cargo to be stored. Credit: fvbriz, CC0
Temporary storage solutions are popular at US ports. Credit: Mahaffey Fabric Structure
Temporary storage solutions are popular at US ports. Credit: Mahaffey Fabric Structure
Leasing of warehousing can be a cost effective solution. Credit: Mahaffey Fabric Structures
Leasing of warehousing can be a cost effective solution. Credit: Mahaffey Fabric Structures
Industry Database

Traditional warehousing techniques and practices continue to change, as worldwide, different priorities emerge, writes Martin Rushmere.

Temporary vs permanent, leased vs owned and warehousing-on-demand are the main factors stirring the pot as ports, shippers and shipping lines try to come to terms with the pressure to streamline storage and warehousing.

Coming from another direction, industry players are insisting that automation and IT be the overriding consideration, apparently under the illusion that these will somehow solve all problems of instantly matching warehousing supply and demand.

The clamour for automation/IT is unceasing, with one US port official describing the market agitation “a case of unrealistic expectations. There are continual calls for more automation, but this can only go so far.” An example of the response to market pressure is the UK Warehousing Association's online service Marketspace to foster smoother contact between space seekers and available premises.

Association chief executive Peter Ward says that while there is a need for more automation, “it's only part of the answer and we should be looking at bite-sized pieces”.

3PL Central, a provider of cloud-based warehouse management systems, stresses the need for technology and IT to be “fully integrated with their suppliers, customers, clients' websites, and delivery partners. Warehouse processes and operations must be built to provide peak levels of performance at all times, especially when a warehouse may have just taken on a new customer or if they are hit with an unexpected surge in demand.

“Be sure to examine how technology will support any plans for expansion or the purchase of new facilities. This is especially important if you plan to purchase a Warehouse Management System. An on-premise WMS installed on a local server isn't always aligned with growth goals.

“Not only will it require a large up-front investment,” says 3PL Central, “non-SaaS (Software As A Service) or non-cloud-based software will not be accessible to your sales force or customers when they are on the go.”

Temp vs permanent

No consistent consensus applies to the decision to opt for permanent or temporary premises. US-based Mahaffey Fabric Structures says three of the main factors are speed of construction, cost savings and scalability. “Built in 5-metre increments, the modular design of clearspan fabric structures is easily moved and modified to adapt to changing specifications. A properly engineered and constructed fabric structure has a minimum lifespan of 20 years.”

Mahaffey says clear fabric structures are adaptable. “Unlike permanent structures that usually require deep soil preparation — which can become costly and complicated if groundwater issues are involved — fabric shelters are built from the ground up, using a variety of anchoring systems that can accommodate any ground surface.

“From an efficiency standpoint, temporary warehouses are ideal for protecting equipment and vehicles, as well as tools and other supplies. Having these storage areas close to the site also eliminates wasted time traveling to and from storage.”

Noting that bricks-and-mortar buildings take time and are labour intensive, Mahaffey says temporary or semi-permanent structures are relatively quick to construct and often require a minimal team to install. “Reduced labour costs and time spent on-site can yield significant cost-savings for your project. Moreover, the risk of surprise costs and back-charges is significantly reduced because the structure is fabricated off-site. Overall, there are fewer obstacles related to inclement weather, labour challenges and unforeseen costs that can affect the project schedule or budget.”

This translates into a quicker return on investment for the customer. “You'll be able to start using the facility sooner, saving on the average construction cost over the reduced construction period. Even more beneficial is the ability to avoid losing earning potential on existing structures, as temporary structures can be built as an extension to an existing structure while it is still in use.”

Levels of commitment

Developers should consider financing or leasing equipment, says Mahaffey, with the savings used in other areas. “It's important to note that a rental or lease agreement is not a loan. Borrowing reduces lines of credit, and with projects that have tighter budgets, leasing a turnkey temporary structure also ensures you won't be constrained with additional costs associated with ownership (such as maintenance).”

Efficiency is achieved in the use of materials and resources, achieving “levels of design and construction sophistication that exceeds expectations and rivals more conventional counterparts. Waste is eliminated by recycling materials, controlling inventory and protecting building materials during the fabrication process.”

According to Mahaffey, clearspan temporary structures are the best choice when premises are needed within about six weeks and for up to five years. The buildout and lease option is better when premises are needed within about five months and for up to 10 years while a comprehensively planned and owned project is best for anything longer than this.

“Fabric structures can generally be installed without a poured or pieced foundation. A dry, level lot or a paved parking lot are all that is needed for installation. This is a big factor on shortened installation timelines, and also exempts temporary buildings from property taxes in most jurisdictions.”

Survey findings

A statistical survey of differing approaches to warehousing internationally by research and consultancy group Transport Intelligence shows distinct trends. “Shared-user space has been introduced to nearly half of logistics networks globally,” says a whitepaper. “The suggestion is that clients, including manufacturers and retailers, are showing high levels of demand for the format, perhaps driven by the cost and efficiency savings to be found.”

Leasing is easily the most preferred ownership system in the Americas, the survey found. “This is perhaps due to North America's supply of modern logistics facilities being higher than in the other regions, reducing the need for logistics service providers to develop their own facilities to meet their needs. Moreover, for some online retailers, space in shared-user facilities may take the form of a fulfilment platform, such as ‘Fulfilled by Amazon’, allowing access to a much wider market than otherwise possible.”

However, the survey found that globally, one third of respondents showed that their networks are made up of owned facilities. “There is a clear preference for property investments or leases to cover a three to five-year period, although this preference is weaker in the Europe, Middle East and Africa (EMEA) region than other regions. Correspondingly, EMEA has a stronger preference than both the Americas and Asia Pacific for longer-term investments covering between five and 10 years.”

One of the most striking findings is that 20% of respondents in the Americas want on-demand, short-term warehousing. “The inference here is that players able to offer flexible and adaptable warehousing space at short notice could find such services in high demand, particularly during peak times of the year, “says the Transport Intelligence survey.

Green drive

Asia Pacific has the strongest preference to provide a number of different types of facilities. “The strongest of these is ‘properties closer to major domestic infrastructure’.”

And what will surprise some people is that Asia Pacific is most likely to experience a boost in green facilities — possibly because of the lessons learned from the high incidence of natural disasters.

Another surprising outcome “is the relative lack of desire across the sample, in all regions, for smaller facilities,” says Transport Intelligence.

“It appears that while the addition of smaller facilities to networks is highly attractive to certain players in certain sectors — last-mile providers handling e-commerce deliveries, for example — the benefits of smaller network facilities may not be so readily realisable in other areas of logistics. In the last mile, locating facilities closer to populations reduces lead time, but often requires facilities where land and rents are more expensive.”

Transport costs associated with warehouse location are among the major concerns across all regions, along with property costs, although less so in the Americas, says the survey.

“Across regions and globally, the adaptability of warehouse facilities to accommodate higher volumes and velocities is a significant feature.”

The availability of cost-effective labour is rated most highly in Asia Pacific, while the Americas has the biggest emphasis on internal flexibility, “likely to be driven by North America adapting to e-commerce”, says the Transport Intelligence survey. “The survey suggests we are likely to see a fairly different trend emerge in North America, where the availability of cost-effective labour is much less a driver of location than proximity to consumers.”

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