Back in February, before the UK’s nationwide Covid-19 lockdown, internet sales as a percentage of total retail sales stood at just 18% and few people understood (or cared) how the goods they ordered online, or picked from the supermarket shelf, actually arrived at their final destination.
On 16 March, when the lockdown commenced, all that changed.
As bricks and mortar stores closed their doors, and everyday items such as pasta and toilet roll were cleared from supermarket shelves at an alarming rate, national newspapers began talking of the need for ‘supply chain resilience’.
The logistics and transport sector struggled to cope with a level of demand that many grocers and online retailers described as like ‘trying to deliver Christmas every day’.
In just a few short months, internet sales as a percentage of total retail sales had jumped to 32.8% in May – a growth rate that based on pre-pandemic norms would take a decade to achieve.
Described by some as the ‘Cinderella’ of UK industry, often overlooked or ignored entirely, the importance of the logistics and transport sector to the health and wealth of the nation quickly became clear.
Workers within the sector were given keyworker status, logistics companies and online platforms were drafted in, along with the Army, to solve the government’s PPE supply chain crisis, and home delivery drivers were applauded as they delivered groceries and other essential items to the nation’s locked-down population.
With online sales unlikely to drop back to pre-Covid levels and many companies seeking to store more goods in the UK, due to concerns raised by both the current pandemic and Brexit, the logistics and transport sector must capitalise on this newfound awareness of, and affection for the sector, to ensure its needs are considered by both national and local government going forward.
Although conversations about the future of the logistics sector often revolve around rapidly emerging technologies such as automation, robotics and AI, there is a fundamental asset that all logistics companies will need if they are to meet the growing demand for last-mile delivery in urban areas.
That is space and it will be needed in the right places. The growth in online sales driven by the pandemic and a need to store more goods in the UK, closer to where people live and work, will have a significant impact on market demand, property types and locations.
Close to cities like London, for example, where industrial land competes with fierce demand from different uses, such as residential, finding locations for new logistics buildings is challenging. To give an idea of the scale of this loss, over the past decade, the capital has lost around 100 hectares of industrial land annually, compared to a release benchmark of just 37 hectares per annum in the latest (2016) London Plan.
At Prologis, we’ve invested over £500,000 in London and the Home Counties over the past 18 months to ensure we can provide the urban logistics facilities our customers need and intend to continue investing in this location at the same level.
However, we are concerned that the government’s current proposals for a reform of the planning system in England could pose a serious threat to the future of urban logistics in London (closely followed by other major UK cities) if the need to protect industrial logistics space is overlooked.
Robin Woodbridge, senior vice president and head of capital deployment UK, Prologis
