2021 Global Logistics Outlook, Part 1 - Drivers
This week we present our main takeaways in terms of key drivers of growth and their applications to the Belgian logistics sector.
This is the first of a series of three blog posts on Cushman & Wakefield’s 2021 Global Logistics Outlook report. Stay tuned for parts Two (Recent market performance and dynamics) and Three (Industry outlook) over the coming weeks.
The logistics sector is being propelled by a range of drivers which, although are global in nature, have differing levels of impact at the local market level. We examine some key takeaways from the report.
Demographics and urbanisation
In Europe, a key demographics issue revolves around shrinking working-age populations as a result of an ageing population. This is certainly the case in Belgium and threatens to exacerbate a complicated labour situation in the sector.
Bart Vanderhoydonck, Head of Industrial Agency Belgium: "The availability of a skilled and flexible workforce is a key element in the logistic sector. Flexibility around night picking in warehouses, which is extremely important for e-commerce retailers, is not yet fully authorised according to Belgian law and this is one of the main reasons why big players like Amazon of Zalando don’t have an XXL warehouse in Belgium yet."
Cities will continue to play an essential role in the economic fabric in all examined regions and will also therefore most often remain the final links in the supply chain. As a result, logistics solutions will search for more efficient ways to serve large population areas. More on increasing the efficiency of the final link in the supply chain, make sure to read Cushman & Wakefield’s Last Link report.
Addressing labour issues and ESG through technology
COVID-19 has demonstrated the use of technical innovations in the industrial sector such as automation in order to ensure productivity.
In Europe, ESG1 concerns are fast becoming paramount in the real estate sector which is reviewing its role in sustainability. In Belgium, several REITs have recently started to publish ESG reports.
Further to the above point on automation and labour issues, technology has a role to play as a direct result of ESG priorities, via smart buildings for instance. Automation can also be helpful where reshoring production is concerned, as well as improving employee safety and wellness.
1 Environmental, Social and corporate Governance, which include climate and carbon neutrality goals.
E-commerce expansion and growth
E-commerce has been an especially hot topic in the current logistics environment following a standout 2020 due to lockdown restrictions.
Consumers flocked towards the sector even in a traditionally more sceptical Belgium. Exponential growth in transport, logistics and warehousing sectors has ensued.
As far as the future is concerned, two key challenges are identified:
- Fast and efficient last mile delivery
- Managing increasing product returns
These challenges produce different real estate needs where building size, location, quality etc. are concerned.
Trade policy, connectivity through infrastructure and supply chain resilience
The flow of goods has been disrupted worldwide through a series of factors, including Brexit in the EU.
For some time now, the EU has been engaged in the TEN-T European regional infrastructure initiative which aims to reduce transportation-related carbon emissions and can help break down some disruptions as well as increase flow of goods efficiency.
Furthermore, we expect continued 3PL growth, as outsourcing to these operators affords enormous efficiencies and greater flexibility, a priority in unpredictable circumstances.
Indeed, many 3PLs have large enough geographic footprints to offer nimbleness to manoeuvre supply chains in a fast-moving global landscape. 3PLs’ increased standing has furthermore been boosted by recent trend of M&As in the sector.
The final part of this series of articles will examine opportunities for the commercial real estate sector which can result from these drivers. Beforehand though, we will set the scene by taking a look at recent market performance and dynamics.