Victoria Kickham started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for DC Velocity.
Strong demand for logistics real estate drove rents higher worldwide in 2020, and the trend is expected to continue this year as demand for modern space in close proximity to customers intensifies, according to industry reports released this week.
Logistics real estate giant Prologis released its Logistics Rent Index Wednesday, revealing a nearly 3% increase in rents for industrial real estate globally last year. This came despite a mid-year dip due to the pandemic. Rents in the United States and Canada grew 3.2%, driven by strong demand for space as e-commerce and the need for last-mile delivery accelerated, especially in the second half of the year, according to the report.
“Willingness to spend on expanding logistics networks has increased as users view e-commerce distribution and speed to market as competitive advantages for revenue generation,” the researchers wrote.
Among the trends ahead for this year, Prologis says it expects accelerated e-commerce adoption to drive the need for more space closer to end customers, especially in urban areas. Pandemic-related disruptions are expected to continue, as well, but the volatility will be less severe than last year because many companies now have better supply chain visibility, they said. Rising inventory levels will add to demand growth too, and the anticipated economic recovery is expected to add cyclical demand for space in the second half of 2021.
“After a year of volatility, 2021 is expected to be a steady year of growth for most markets. We note risks to the outlook, among them the ongoing pandemic and political and economic headwinds,” they wrote. “The resilience of the logistics real estate sector has attracted significant equity; in this atmosphere, we are monitoring how this wall of capital now targeting the sector could lead to areas of oversupply. Substantial structural demand tailwinds remain, replacement costs continue to rise, and new supply is unlikely to meet this demand in most markets, in turn setting the tone for a year of strong rent growth.”
Separately, commercial real estate giant Jones Lang LaSalle (JLL) released its Q4 U.S. Industrial Outlook, which showed that industrial leasing activity in the United States continued to set new records in 2020. They said leasing activity jumped nearly 27% compared to 2019, driven by e-commerce acceleration, and that U.S. industrial rents have increased 4.2% in the last year.
Looking ahead, JLL predicts growing demand for infill, multi-tenant facilities.
“JLL capital markets sees a growing demand for infill, multi-tenant industrial sub-class known as small bay logistics assets,” according to a JLL spokesperson. “Small bay logistics assets are 20,000- to 100,000-square-foot multi-tenant industrial buildings in dense, infill locations in primary and secondary U.S. markets. This sub-class has huge potential for rent growth driven by low vacancy.”
The reports came on the heels of the January Logistics Manager’s Index report, which also pointed to strong industrial real estate trends in the form of tightening warehouse capacity and rising inventory levels across the supply chain as 2021 got underway. Inventory levels continued to rise during January as warehouse capacity tightened, making it difficult and more expensive for companies to “find a place to put things,” as LMI researcher Zac Rogers, of Colorado State University, explained. He said inventory costs are the highest they’ve been in two years and that the situation “really demonstrates the tightness people are dealing with.”
Rogers said he expects the warehousing capacity crunch to continue, noting the LMI’s future predictions index calls for available warehousing to roughly maintain the status quo over the next year.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.