A desire to reduce road miles, logistics costs and warehousing overheads could see a structural shift to port-centric logistics in the UK.
According to a new report by Savills, when comparing a central 500,000 sq ft distribution centre in a traditional location, with two sites of 250,000 sq ft at both London Gateway and the Port of Hull, an occupier on a like-for-like basis would yield a 1.72% rent and rates saving. Over the course of a 20-year lease this would deliver a saving of close to £2 million.
The firm notes that being located port-side makes it possible to reach 85.4% of the population within 170 miles, between London Gateway and the Port of Hull, saving occupiers both time and money, while also being up to four times more sustainable.
The report notes that historically, occupiers have typically taken warehouse space in the middle of England, where the majority of the population can be reached within a four hour drive time. However it states that the evolution of online retail and more mature manufacturing supply chains has seen a switch in focus from delivery to major retail outlets to a low volume, multiple drop solution straight to the consumer.
As a result, it says, retailers and logistics companies are now looking at creating the right supply chains for the right products. This means that some product will still flow through the existing networks, while for some fast moving goods a port-centric option may be more cost effective and efficient.
The report quotes data from the Department for Transport which shows that 53% of imported goods land in the south of England, yet half of freight imported through southern ports is moved by road to a final destination north of Birmingham.
Kevin Mofid, head of industrial research at Savills, said: “Ultimately, port-centric logistics allows you to store your shipment near the port thus reducing the number of handling stages throughout your storage and distribution process, in theory saving both time and money. What’s more, as a result of both Covid-19 and Brexit, supply chain resilience has become critical and near-shoring and increasing the role of short sea shipping has further accelerated this trend.”
Earlier this week DHL Supply Chain said it was to build a 482,000 sq ft warehouse at DP World London Gateway.
