Rapidly emerging advancements in technology such as autonomous trucks, 3D printing and warehouse automation will foster dramatic changes in how shippers, retailers and manufacturers configure their supply chains and distribution strategies, spurring a need for different formats and locations for industrial real estate, according to a new report from CBRE.
Taken together, these advancements will encourage industrial users to modernize their networks to adapt to the fast-evolving market rather than inherently requiring them to add more or fewer warehouses and distribution centers. Each of these technology categories are on track to reach widespread use by 2025.
“Autonomous vehicles, 3D printing and warehouse automation stand to reshape supply chains,” said Dennis Yeo, Managing Director, Industrial & Logistics, CBRE Asia. “Automated systems require economies of scale. This may place further pressure on warehouses to become larger, with fewer sites and leaner logistics networks. Vertical solutions are likely consequences for the denser hubs.”
The CBRE report includes in-depth examinations of each of the three areas of technological advancement and their likely impact on the industrial and logistics markets.
- Autonomous trucking: Labor represents roughly 75% of the cost of shipping a full truckload across the US, and drivers are limited to 70 hours of driving a week, equating to 3,000 miles. The advent of autonomous vehicles will allow cargo to travel greater distances in less time, saving costs. This, in turn, will allow some users to operate more extensively from large distribution centers in outlying locations, where land is less expensive.
In Asia Pacific, several governments—in partnership with private companies and universities—are road testing self-driving technology, with Australia, China, Japan and Singapore leading the region. In Singapore, the government has fast-tracked self-driving technology with the help of technology start-up nuTonomy; they tested fully autonomous taxis in Q2 2016. Local testing has also been done in China and Japan by helping to pave the way for autonomous vehicles in both the consumer and industrial market. Ford and local partner Changan Automobile completed a 1,200 mile road test from Chongqing to Beijing in six days. While much of these pilot studies have been for the consumer, they can easily be adapted to the industrial transportation market.
- 3D printing: The ability to manufacture certain items on-demand will spur a horizontal shift in the supply chain. Whereas this advancement may lessen the need for centralized distribution space in some cases, it also increases the requirement for bulk, raw materials to be stored at printing sites close to the consumer in last-mile distribution facilities.
China has invested significant sums into 3D print technology, as it looks to lower costs and decrease its reliance on other countries for parts. Its investment has allowed manufacturers to recapture parts formerly made elsewhere. This impacts the supply chain, as it shifts the production and distribution towards industrialization.
- Automation in industrial facilities: A greater use of robots and other automated technology stands to reduce labor costs and increase efficiency. However, it also will stoke demand for modernized industrial buildings equipped to accommodate the design requirements and IT infrastructure of automation.
A boom is taking place in Asia; China and Japan, in the early stages of reshaping the region’s manufacturing sector, are accounting for 69% of all robot spending, according to reporting from the Australian Financial Review.
“The combination of the burgeoning growth of e-commerce and the mainstream emergence of these technological advances has ushered in a far-reaching evolution of the physical supply chain,” said Mr Yeo. “Proactive industrial investors and users are adapting to these changes now to capitalize on this new era of modern site selection and supply-chain design.”
To download the report, click here.