Big cities have always demanded equally big logistics networks to service inhabitants and visitors and this is not likely to change by 2040. Two main reasons stand behind the increasing importance and complexity of urban logistics: the continued growth of the UK’s urban population and the fact consumers are becoming more demanding with their requirements in both parcel deliveries and leisure offers such as restaurants, increasing the supply needs of the latter.
Despite still having to service the wide variety of different businesses inside cities, urban logistics have shifted from a business to business focus. The business to consumer segment, or even consumer to consumer, is now a major influence, with e-commerce as the main and continuing driver for this (Figure 1). Technological change makes it difficult to forecast even ten years ahead, but we suggest that online retail in the UK might represent over one third of total retail sales by 2040, though penetration in different retail sectors will be very different, depending on the willingness of consumers to purchase goods online.
Figure 1: UK online retail percentage of total retail sales (2015-2030)
Source: CBRE, 2018
Omnichannel retail induces high expectations among consumers, including high differentiation, fast deliveries and easy returns, consequently forcing retailers and third-party logistics to improve their supply chains, especially for ‘last mile’ deliveries. Better supply chains will facilitate a decisive competitive advantage for retailers who possess or control them, eventually inciting some of them to vertically integrate.
Traditional locations for logistics – alongside motorways and on urban boundaries – will not be enough to cover cities’ demands for last mile deliveries and reverse logistics. So more logistics facilities will be needed close to city centres. We thus foresee an increasing growth of demand for logistics hubs or consolidation centres to service big cities, especially London. The implementation of the New London Plan, which offers overall support to increase or retain industrial floorspace capacity (Figure 2), should enable a better accommodation of logistics and industrial activity within London, where competition for floorspace usage has been fierce and will continue to be in the future.
Intensification of land uses will be key and, to make the most of all logistics spaces inside cities, innovative multi-storey warehouses will become usual within British urban landscapes, just as they already are in some congested Asian cities such as Tokyo, Shanghai, Hong Kong or Singapore. European developers have recently started importing those building structures, with the example in the UK being a new three-storey warehouse near London City Airport. Other options we will see in the future to accommodate industrial space inside UK cities are underground warehouses or mixed use buildings.
The city of the future will also have to deal with autonomous vehicles delivering parcels, though as we write elsewhere, current regulations make us sceptical about drones having a significant role, even by 2040.
Figure 2: London’s Management of Industrial Floorspace capacity – borough level categorisation
Source: GLA Planning