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New Logistics Models Are Required to Meet the Growing Challenges of City Logistics

Posted: 25th April 2017 by
Finance Monthly
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JLL has launched ‘More than the last mile’, a research report which examines how smarter logistics will help shape cities in the future. Commenting on JLL’s report, Andy Harding, lead director of JLL’s Industrial & Logistics Group, said: “Spurred by the growth of e-commerce and demand for last-mile fulfilment facilities, there has been increasing interest in urban logistics among property developers and investors. However, this is only a part of the story, as the issues associated with logistics in cities are much wider than servicing e-commerce growth. Cities present many challenges but also significant opportunities for real estate in the future. We believe that environmental and efficiency challenges will transform logistics operations in Europe’s major cities.”

Key JLL research highlights include:

  • Anticipated rise in demand for different types of logistics facilities, including transhipment facilities (where goods can be transferred onto environmentally friendly vehicles); shared-user consolidation centres; local facilities for last mile fulfilment; multi-storey buildings and underground facilities.
  • A need to find new models of city logistics which are sustainable and maximise efficiency while minimising adverse environmental and social impacts, such as air pollution and noise.
  • Developing technologies have the potential to address both efficiency and environmental objectives but there are no immediate quick wins.
  • Old technologies should not be ignored as partial solutions may be found by looking ‘back to the future’, including, for example, the use of rail or bicycles.
  • Increased night-time deliveries in cities would make more effective use of the transport network at times when it has capacity and would cut down peak traffic impacts.
  • Logistical considerations need to be at the forefront of city planning and building design.
  • Warehouses and suitable land for logistics activities will remain critical for efficient city logistics but if these activities are pushed too far out of the cities they service, this will drive up ‘stem distances’ (from warehouse to customers) and potentially emissions.
  • Varying interests of the different stakeholders in city logistics need to be addressed in order to identify new approaches that satisfy all of them.
  • Logistics in cities present big opportunities for real estate developers and investors due to strong demand and supply dynamics.

Jon Sleeman, JLL’s head of EMEA Industrial & Logistics Research, added: “From a property market perspective, city or urban logistics buildings are often considered a separate market segment, distinct from ‘big box’ logistics properties, that are mainly clustered at Europe’s major gateways (seaports and airports), along its strategic transport corridors and around its major cities. This segmentation may be valid from a property market viewpoint, but these different types of property are often part of the same supply chains. This being the case, to understand potential opportunities for change in city logistics, we need to take a wider supply chain perspective.”

(Source: JLL)

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