Trend predictions from 2019…how’d we do?
At the end of 2018, we shared several predictions for what would happen in our industry during 2019. We’ll share our predictions for 2020 in a couple of weeks, but we wanted to spend time this week revisited those 2019 predictions.
Let’s take a look at what we predicted and how it turned out.
Shrinking, more urban warehousing
We predicted that instead of trying to figure out large warehousing spaces that serve a large region, the industry would move to smaller warehouses that could even be converted, repurposed space. It only made sense that the warehouses that were constructed would be in more urban areas and would serve a smaller delivery area.
As e-commerce skyrockets each year, the need for warehousing also grows. Retailers of all sizes are realizing the need to establish warehousing opportunities close to their customers. This allows them to be more agile and get items to them more quickly.
In October, the World Property Journal reported, “According to new research from CBRE, even as the growth of e-commerce has lifted the entire industrial & logistics real estate sector, a sweet spot has emerged: warehouses smaller than 120,000 sq. ft.” The focus on the smaller warehouses has also driven up rent costs.
The article predicted that the trend would continue.
“’We’ll continue to see strong demand for light industrial facilities as e-commerce grows, which in turn means we can expect to see additional strong rent growth for these warehouses,” said Chris Zubel, a Senior Managing Director leading CBRE’s representation of Industrial & Logistics investors in the Americas. “Light industrial is the hottest coal in the campfire.’”
Truck driver shortage growth
The truck driver shortage has affected all logistics and transportation providers. We predicted last year that it would continue to be an issue as more drivers retire and e-commerce increases demand. Looking at how this issue has evolved over the year seems to produce a variety of responses. Some articles would tell you that the truck driver shortage is “fake news” and not as big as people predicted.
Most information agrees with our anecdotal evidence, which is that there is still a growing gap between the number of qualified drivers needed and how many are available. We’ve seen some strong efforts to attract more drivers, including reaching out to demographics that have not been traditionally in the industry before. A large number of these targeted groups are women, which have traditionally not been truck drivers. We’re excited to share that while we still need more qualified drivers, our team has grown in numbers and diversity.
Drone’s impact on last mile delivery
We predicted that there would be more research into how making drones and other unmanned vehicles work well for deliveries. That research has continued, but not at the pace we thought it might. That said, recent news reports say that some companies are making plans for driverless vehicles in 2020. So, a year or two of research might start seeing results. We’ll see. The focus seems on using driverless vehicles and drones for the “middle mile” part of the supply chain, leaving the last mile delivery to still have that human touch.
We predicted that fleet maintenance and finding new vehicle types to deliver items would be a focus in 2019. Not sure we can say it was a focus in the industry, but it was a major factor in efforts to become more efficient in 2019. What we’ve seen is, using apps and other technology to track maintenance and care of the fleet vehicles, and using smaller, more efficient vehicles for deliveries.
What have you seen in the industry and how has it affected your business? Do you agree with our assessments?