There has been a clear shift toward smaller warehouses in Europe, according to research conducted for WarehouseMatch.com, an internet platform for logistics property and services. The change is attributed to new distribution strategies, risk-averse decisions or changing distribution channels.
WarehouseMatch.com partnered with LogiReal.com to study European search data for the second half of 2010 in the so-called Blue Banana and Golden Triangle areas. The former stretches from London to Brussels, Frankfurt and Milan. It is the most densely populated region in Europe. A warehouse located within this belt can reach 70 percent of the total European market within one-day trucking. The Golden Triangle stretches from London to Paris to Dortmund and accounts for 69 percent of all European logistics handling.
WarehouseMatch.com numbers indicate there is huge interest in the area that stretches from Rotterdam to Calais and from Venlo/Liege to Leipzig/Prague, with an average requested surface of 21,500 square meters.
Almost 75 percent of the searches received by WarehouseMatch.com range between 0 and 5,000 square meters, and are a result of the new e-commerce growth in the market. These companies are also looking for logistics services in the Golden Triangle for their European distribution.
The data on 5,000 square meters and above still show the normal patterns of the Blue Banana Belt as the larger supply chains need to deliver to all regions of Europe.
Conclusions
There are three possible causes in the change of search behaviour:
1. New distribution strategies
In response to the economic crisis companies are revisiting their distribution strategies. They have come to the conclusion that they need to be more responsive to handle changing market demands. Such responsiveness requires lower inventories and shorter distribution lines. This results in the need for more and smaller warehouses. Hence, big warehouses are permanently less attractive and companies are searching for smaller warehouses.
2. Risk-averse decision making
The economic crisis has made companies risk-averse. With the crisis coming to an end, demand is slowly increasing again, but companies are careful in expanding too quickly (again). In addition, funds to finance increased inventory levels are still limited. Hence, big warehouse are temporarily less attractive and companies are for the time being searching for smaller warehouses.
3. Changing distribution channels
The use of internet is creating a boom in internet sales. The distribution of the goods purchased through such web-based companies requires a combination of a few international large warehouses (hubs) and many local cross-docking locations for the fine-distribution to the end users. This is partly supported by the increasing emergence of courier and package delivery services. This also explains the still existing searches for big warehouses, but the increasing searches for smaller warehouses.
