In his latest blog, UKWA CEO Peter Ward reflects on the escalation of pressure on businesses as tough new COVID-19 measures are put in place, in stark contrast to the upbeat tone at the association’s National Conference just two weeks ago. He concludes that in the long run, change is indeed the new normal, and urges members to stay confident in the future opportunities on offer for our industry.
“It was all looking so promising. At the UKWA National Conference just a couple of weeks ago, we were discussing exciting new opportunities for the warehousing and logistics sector in a mood of considerable optimism. 81% of delegates polled that they were ‘more optimistic’ about the business outlook, and 78% were likely to increase their warehousing footprint within the next 12 months.
That of course was then, when Covid-19 appeared to be essentially a short-term supply-side problem. Few were predicting total lockdown in major European economies.
So should we just forget all that conference optimism? I don’t think so. We are indeed still facing ‘exciting new opportunities’ albeit at a time of international crisis. In fact, it is our duty to play our role in getting things back on their feet.
Conference optimism was not, apart from some relief that Brexit was now a certainty, based on the short term. I quoted a new British Property Foundation report predicting, over a twenty year outlook, a doubling of online spending, a 43% increase in productivity and a requirement for 21 m sq ft of warehousing every year.
While Covid-19 may knock many economies into recession, I see no reason to doubt that the move online will continue. Indeed, if in response to the virus, homeworking really takes off, the move to online may even be accelerated.
More fundamentally, Covid-19 can only encourage a rethink by manufacturers, retailers and the public sector of their sourcing and inventory policies. The globalisation-max model is already under pressure, not only from trade wars but also from a variety of ethical and environmental concerns. Single-sourcing from far-away countries on a Just-in-Time basis no longer looks quite the smartest strategy, as firms start to price in risks that they have barely had to consider in recent decades. At raw material, intermediate, and finished goods level we can expect inventories, and thus the need for warehousing, to increase across the board.
Inventory holding has costs and it will be incumbent on us to work with our customers to contain these. That may mean increased automation to alleviate labour availability issues, but also developing more flexible and creative ways of working. The Covid-19 response is likely to see some relaxation of competition laws to allow, for example, supermarkets to work together. It may be we have an opportunity to demonstrate that supply chain collaboration, by making better use of assets, can in many ways actually save the consumer – and the planet.