Prologis is the leading owner and developer of logistics parks in the UK and has been investing heavily in London and the South East for over 15 years. In the UK alone, £54 billion of goods flow through Prologis’ warehouses each year – that’s the equivalent of 2.6% of the UK’s GDP and growing.
Prologis believes it’s time for the logistics sector to build on a new level of awareness created by the COVID-19 pandemic and highlight the critical importance of the sector and the enormous contribution it makes to the UK economy.
Although conversations about the future of the logistics sector, in particular, often revolve around rapidly emerging technologies such as automation, robotisation, and AI (artificial intelligence), there is a fundamental asset all logistics companies will need if they are to meet the growing demand for last mile delivery in urban areas. That fundamental asset is space, and in the right places.
One of the main challenges Prologis is focused on is the loss of land earmarked for industrial logistics in the Capital, which could lead to a last mile delivery crisis. The growth in online sales driven by the pandemic and a need to store more goods in the UK and closer to where people live and work will have a significant impact on market demand, property types and locations. Close to cities like London, for example, where industrial land competes with fierce demand from different uses, such as residential, finding locations on which to locate logistics buildings is challenging. To give an idea of the scale of this loss, over the past decade, the capital has lost around 100 hectares of industrial land annually.
Prologis builds modern, sustainable industrial logistics buildings where its customers, who include household retail names such as Amazon, Argos and John Lewis, can store and process goods for delivery to people’s homes or places of work. These logistics facilities create a variety of jobs for local people and help local economies grow. In urban locations, such as London, they are also ideally placed to support delivery by electric vehicles, helping to improve air quality and reduce traffic noise. Indeed, recent research conducted for Prologis by the MIT Real Estate Innovation Lab revealed that the carbon emissions generated by online shopping are 36% lower, on average, than emissions produced by visits to an out of town shopping centre, for example. This carbon saving was achieved even after factoring in higher returns and increased packaging. Indeed, the research shows that a full standard delivery van can replace more than 100 individual car trips to collect items.
With London’s population expected to grow to almost 10 million in 2030, demand for last-mile logistics facilities – where shipments are delivered to a transportation hub from where they make a short journey to their final destination – will only increase. By placing goods as close as possible to the end consumer, the report found that these urban fulfilment centres can reduce carbon emissions by a further 50% whilst speeding up delivery and reducing overall cost.
The added benefit of placing last-mile logistics facilities close to the end consumer is that shorter delivery routes lend themselves perfectly to the use of sustainable forms of transportation, such as electric vans and bikes. The report notes that EV technology can decrease average transportation-related emissions by 27% and has the added benefit of reduced traffic noise, both of which will be welcome news for the communities in which these last mile logistics facilities are located.
The property company is keen to explore creative solutions and develop partnerships with other organisations looking to build a greener, more sustainable London for everyone.