Ti’s new report reveals ten key trends in the European distribution property market

by Press Release on 2012-02-11 03:23:43

Ti has revealed ten key trends which you need to know if you work within the European distribution and warehousing market. The trends are included as part of a comprehensive analysis of the industry in its latest report, European Distribution and Warehousing 2012.

1. A focus on the cost and efficiency of production, primarily driven by labour, will continue to support a shift of distribution facilities from northern and western Europe to central, eastern and south eastern Europe.

2. Shifts in transport modes, notably from road to rail, and lower production/distribution costs allowing for quicker, more cost efficient delivery will be the catalyst for this alongside improved road infrastructure.

3. This trend, however, will face a headwind from increasing fuel costs and the requirement for a decrease in CO2 emissions. In order for production to move further south and east, a significant improvement in transportation infrastructure and quality will be essential.

4. There is a move towards sea and rail freight away from air and road freight respectively. This will be more fuel efficient bringing about a reduction in carbon emissions and supply chain costs. In future, a modal shift to sea and rail will support locations which can offer genuine ‘multi-modal’ capabilities. Port-centric distribution models, such as that being developed by London Gateway, will also become more popular.

5. E-commerce is one of the fastest-growing sectors in Europe and the market share of online sales will continue to grow. E-retailer requirements tend to be large central logistics platforms as well as medium and small sized warehouses adjacent to population centres for “last mile” distribution.

6. Although overall growth will be modest, the European property sector will see considerable demand driven by modernisation and re-configuration.

7. Eastern Europe, although displaying strong fundamentals, has significant problems. Russia and the Ukraine are very challenging as there is little market transparency. Even Turkey, which has an increasingly modern logistics sector, is difficult for property companies to operate in.

8. Any increase in GDP per capita and disposable income will increase demand for new warehousing from retailers and associated logistics/3PLs across the region, in particular further south and east where economies are catching up with the rest of Europe.

9. Due to the downturn, retailers have become very selective on the choice of store locations, now favouring larger units located mainly in city centres. This change in focus, particularly in the food sector, impacts supply chains as well as logistics requirements.

10. Future consolidation in manufacturing and retailing sectors, driven by the economic slowdown, may actually be a catalyst for supply chain mergers and re-engineering. Networks will be re-examined and distribution hubs will be re-sited across Europe to take advantage of better locations for both primary and secondary distribution volume flows.

Ti’s Chief Executive, John Manners-Bell, commented, "The economic slowdown in Europe will inevitably impact on investment in distribution facilities overall. But this trend does not totally characterize the market. There are numerous opportunities for investors, especially in fast-growing locations such as Turkey and Poland, in the e-commerce sector and in the development of port-centric/multi-modal facilities. Looking ahead, if the European recession spurs a round of acquisitions amongst manufacturers, merging supply chains will also require the development of facilities at optimally located distribution nodes."

Article Courtesy of Transport Intelligence