The logistics sector is undergoing something of a renaissance. While other sectors have struggled, its ongoing expansion in recent months gives further indication of the sector’s resilience to the COVID-19 crisis.
Moderated by Thomas Poulis-Leinberger, head of asset management and development logistics Europe at AEW, ULI Europe’s latest webinar, powered by ULI NEXT, looked at the “new normal” for the urban logistics sector.
Location is key for businesses in the sector, according to Dirk Sosef, European head of research and strategy at Prologis.
To create a viable product, companies need to be able to deliver goods fast on a large scale. Currently, out of town facilities can be significantly cheaper to occupy than central locations. However, without the efficient deployment and delivery that centrality allows, there is little to be gained from cheaper rents.
Zoning is another issue which affects feasibility through site constraints. Therefore, it’s crucial that occupiers of logistics space consider the viability of the product they’re offering and meet the gap between supply and demand.
Yaniv Gelnik, global business development lead of Zipline, is doing just that with his business: a drone delivery system designed to quickly deliver healthcare supplies to hospitals in rural locations.
With four distribution centres in Ghana and two in Rwanda, the company uses fixed-wing aircrafts to send in supplies on demand. The company has the technology to maintain the temperature of the product, to drop it within a three metres radius of the customer and have their own drone traffic management system for liaising with local civil aviation authorities.
Why this model is successful, according to Gelnik, is due to its necessity. Interest in drone delivery is rapidly rising, but the point of the product has to be considered.
He says that drones are necessary because they’re faster than traditional transport methods, which is why transporting healthcare supplies across vast distances in areas with poor infrastructure makes sense. But urban drone deliveries for food or non-essential goods are seen as less viable, particularly when companies such as Amazon and Deliveroo can already deliver within 30 minutes.
For this reason, Gelnick believes the main challenges facing logistics companies are not regulatory or technological, but demand driven.
To meet this challenge, Sosef commented that logistics spaces need to move towards the provision of different functions and amenities to create attractive, mixed-use buildings, combining this use with office space and retail.
The benefit for urban centres under this new model could be significant, says Sosef. With the development and deployment of electric fleets such as drone delivery and Tesla’s hyperloop technology in urban centres, business in the logistics sector could help drive forward efficient, sustainable methods of transportation that release congestion and reduce air and noise pollution.
So far, Sosef pointed out, few public bodies have sought to capitalise on this opportunity. Of the increasing list of priorities for development held by many councils and governmental organisations, logistics is at the bottom. The key task for the industry now, for Sosef, is to advocate for the growing role of logistics and demonstrate its value for town and city centres.
Executive Director /
Head of Asset Management and Developments LOGISTICS Europe