Greg Goodman, the chief executive of the Goodman Group, has described changes in the way warehouses operate as “generational”.
At the group’s full-year results last week, he said there would be “robo-warehouses”, as artificial intelligence was being used in every industry and logistic centres were no different.
“There are big changes afoot and we as industrial property landlords need to adapt,” he said.
“Having positioned our business to take advantage of structural changes, we’re now looking to the future.
“Rapidly advancing technology and increased consumer expectations around price, product availability and delivery, while disruptive for some businesses, are providing us with opportunities. Although the evolution of e-commerce and supply chain transformation are still in their early stages, we are seeing increased demand for our expertise in providing high-quality logistics facilities in prime locations.
With demand rising in online shopping, there will be increased demand for distribution centres, not just from the retailers and providers such as Amazon, but the third-party logistic groups including DHL, FedEx and other transport and storage industries.
One of the key platforms for growth in the online space is the delivery process to ensure that a company’s promise of having it there in an hour will be met. This is known as last-mile delivery and will see more smaller warehouses and distribution centres open closer to residential areas.
Amazon and others will still need the large central warehouse near transport links, but will also seek our smaller sites closer in inner suburbs.
“There is an opportunity for us to be at the forefront of all this change and I predict, with the lack of space in the inner areas of capital cities, that multi-storey warehousing will become more prevalent,” Mr Goodman said.
Goodman already has vertical warehouses in Hong Kong and could introduce them to Australia.
“They are Beijing, Shanghai and we see them becoming popular in Australia,” Mr Goodman said.
This has all led to agents calling it the fourth industrial revolution.
Rich Thompson, international director supply chain & logistics solutions at JLL, based in Chicago, says, in a new paper, shifting views in cultural and political thinking, changes in operating cost curves and rapidly evolving technologies are all catalysts of change in the global supply chain.
“Increasing freight costs, intensified competition for labour, increasing customer service requirements, global complexities, risk mitigation and cultural sensitivities all play into supply chain thinking and keep corporate supply chain executives up at night,” Mr Thompson said.
“Regardless of the speed and direction the political winds are blowing, companies will continue to seek ways to make money and serve customers in the most efficient and effective ways possible.
“When it comes to supply chain network strategy, how many manufacturing and distribution facilities a company should optimally have and where they should be located, companies must ultimately make decisions that pin their operational strategy to the ground. Having the right facilities in the right locations is critical to making the supply chain work.”
Mr Thompson has called it the fourth industrial revolution, driven by the globalisation of industry, where time zones and communication are not as problematic any more.
He said this has led companies to become smarter, innovate, get lean and faster at what they do to compete in countries that operate with lower costs.
“Rapid advances in technology will continue to drive innovations in supply chain and distribution with a direct focus on labor productivity improvements, allowing companies to do more with less,” Mr Thompson said.
“Tight labour markets will become less of a constraint to more automated companies, and robotics and other new technologies will disrupt operating practices as we know them, creating opportunities to seek competitive advantage.”
As Mr Thompson says, anyone who grew up in the 1960 and 1970s undoubtedly watched the space-age cartoon comedy The Jetsons.
He said The Jetson family were doing some really cutting-edge and crazy things in those days. Among other things, they had driverless vehicles, 3D food printing machines, wireless phones, flying cars and robots. A little crazy, right?