The government needs to change its approach to land-use planning to allow the warehouse sector to catch up with surging ecommerce demand, a new report has found.
Research by the UK Warehousing Association (UKWA) has found that the sector is struggling to meet the demands of changing consumer habits and a continually evolving logistics sector.
The report also highlights “major growth in the sector and seismic shifts in occupier profile over the last six years”.
3PLs takeover warehouses
The report shows that while High Street retailers have historically been the dominant occupiers of warehouses, third-party logistics (3PL) firms now lead the way taking up 42% of space.
According to logistics site ShipBob, 3PL refers to the “outsourcing of ecommerce logistics processes to a third-party business, including inventory management, warehousing, and fulfilment” and is a key driver of the recent ecommerce boom.
Online retail spike
Online retailers have seen their warehouse occupancy increase by 614%, the report finds.
This is backed up by research by Savills for UNCTAD (United Nations Conference on Trade and Development) illustrating ecommerce’s “dramatic” rise during the pandemic.
Its share of overall retail sales rose from 16% in 2019 to 19% in 2020. The UK saw a spike in online transactions from 15.8% to 23.3%.
Savills also found that for every extra £1bn spent online, a further 775,000sq ft of warehouse space is needed to meet demand.
Build more warehouses
Peter Ward, UKWA CEO, said his trade body’s report reveals the urgent need for more warehousing space.
“As retailers move from high street premises to online channels to serve consumer demand for home delivery, more fulfilment and distribution facilities will be needed,” he said.
“With this in mind, it is critical that as government rolls out plans to build more new homes, warehousing should become part of infrastructure planning moving forward.”
Ward, who has led the UKWA for six years and is a member of the IOE&IT’s board of trustee directors, yesterday (2 June) announced that he will be stepping down from his position.
“It has been my privilege to represent the warehousing and logistics sector as CEO of UKWA,” he said.
“I am proud to have been able to instigate change, drive improvement and help this great industry achieve the respect and recognition it deserves.”