The on-demand logistics sector may have the best potential to handle inventory supply chains and demand disruptions caused by the spread of COVID – 19. We may see a rise in long-term occupancy contracts, and retailers are likely to shift to more regional supply chains in the future, which will boost interest in on-demand warehouses.
In this blog, we examine several reports that came out during the last three weeks that underline the changes we are going through right now.
IBIS World Report
The report notes that non-essential UK high street retailers started closing their doors on customers during the third week of March. This led to a build-up of inventory, and retailers of non-essentials were left scrambling for warehouse and storage space for their inventory.
Data from recruitment website Indeed.com shows that supermarkets and warehouse operators ramped up their recruitment efforts to hire additional warehouse workers and delivery drivers to cope with the surge in online demand. On-demand warehouses that are equipped with advanced delivery mechanisms will be able to meet demands more efficiently.
The report also notes that despite the fall in the demand for non-essential items, certain products will see a surge in demand. Retailers and manufacturers of food supplies and hygiene products like soap, toilet paper, and cleaning products are looking to work with dedicated logistics companies to expand their sales.
Prologis Research Special Report
The report notes that the disruptions caused to the global supply chain were not as severe in the UK as they were elsewhere around the world. This was largely because shippers were already importing and filling up warehouses in the UK to get ahead of the anticipated US tariffs on China and Brexit-related trade slowdowns with the EU.
Prologis predicts the warehousing sector would see a large growth trend once supply chains and consumer demand normalizes and inventory backlogged by warehouses begins to move forward.
This would potentially cause warehouses to carry a higher level of inventory, which would become an industry standard. The report anticipates e-commerce would also surge in the UK, which was already growing at roughly 16% around the world in 2019. The growth of on-line shopping and on-demand warehouses would largely be driven by consumers who become accustomed to shopping on-line during their social distancing practice.
CBRE Examines interest in On-Demand Warehousing
Finally, we look internationally at a report published by LA-based real estate firm CBRE. This research explains that the interest in on-demand warehouses is characterized by short-term leases for SME business segments.
The main driver for this rising demand is the uncertainty surrounding corona virus. Retailers simply do not have the ability to maintain necessary inventory levels in-house to match uneven consumer demand.
The report concluded that on-demand, flexible warehouse space is becoming more popular as a response to the increasing number of supply chain challenges for the retail sector.
Need Warehouse Space?
You can find dozens of efficient on-demand warehouses all over the UK on our warehousing site. Our warehousing partners can help improve your logistics and keep sales going during the COVID – 19 pandemic. Get in touch with our support team to find out more.