Warehousing and Logistics Industry Outlook 2022
We find ourselves in an interesting time, in 2022, with COVID-19 on seemingly its 10th wave, the world on the brink of war, a recession looming, massive layoffs a weekly occurrence, and oil is at its highest price in history.
Yet, life continues to go on.
So, it’s with the current state of the world in mind that we took a deep dive into the warehousing and logistics industry, to understand how they’ve been impacted.
During the global lockdowns for COVID-19, people got used to not leaving their homes. And, now that we are (hopefully) on the other side of that people are still spending far more time at home than they did prior to 2020. This has made the acceleration of last-mile delivery increase tenfold.
The services that logistics companies are offering continue to evolve as the standard a customer expects develops. In fact, we are even starting to see the emergence of 10-minute delivery businesses in some cities. Even though this space is extremely volatile -- new versions of these companies are popping up and shutting down monthly -- the effect they have on the perception of end consumers will last forever.
Retail is trending in the direction of consumer-less stores. To that end, a future where no one will walk the aisles of a store anymore is possible, likely even. In that environment, everything will be purchased online and fulfilled through “Dark Stores” -- retail stores that have been converted into mini-fulfilment centres. Imagine your current grocery store, but instead of consumers picking the products from the shelves, it will be the grocer’s staff and a logistics partner will deliver it to your house same day.
That’s a future that is likely not that far away.
Today, and certainly in the future outlined above, warehousing and Logistics are so intertwined that one should not be mentioned without the other. Both are a crucial element of most businesses - movement of goods from the manufacturer to retailer, storing inventory / physical items in storage, final mile delivery to the customers and everything in between.
Warehousing in 2022
Looking at warehousing specifically, Canada is seeing historically low warehousing availability rates of about 2.2%, which is down from 3% just a year ago. As space continues to be more and more scarce, we are seeing the cost of rent rising exponentially. This, paired with the meteoric rise of e-commerce that requires no storefront, makes space a hot commodity in 2022 and beyond.
The biggest trends we are seeing in 2022 are as follows:
- E-commerce Growth Will Continue As mentioned above, e-commerce has been growing year-over-year for quite some time. Growth of e-comm sales was 14.2% from 2020 to 2021, as more businesses continue to shift online. And, with no slowdown predicted, warehousing and fulfillment businesses will continue to experience increased demand.
- Warehousing Shortage With the increased demand in space, there is a lack of availability. We are in an owner’s market, where getting space is only possible with the connections to a warehouse owner. Without that you are hoping to get lucky, but more likely you’ll just be paying through the roof.
- Warehousing Automation A developing trend is robotics in warehouses, which increases the efficiency of fulfillment centres. Automizing specific tasks has allowed warehousing businesses to get more work done, use fewer staff and reduce their costs over time. Autonomous Manoeuvrable Robots (AMRs) have seen significant growth from $0.99B in 2017 to more than $7B in 2022. This suggests that as the technology continues to advance the use of these machines will only increase.
- Higher Inventory Numbers As a result of COVID-19, there has been worldwide shipping delays. This put businesses in a position they never want to be in, nor ever dreamed they would be in: They didn’t have any product to sell!
As a result, businesses changed their behaviour to prevent this from ever happening again. They now have much more product on hand than ever before. There is a consequence to that, however. More inventory means more products, which, in turn, means more storage space required.
- Omni-channel Fulfillment Allowing customers to fulfill orders from different outlets in one or more warehouses is changing from a want to a NEED quickly. The businesses that can utilize technology to serve these needs will survive while others will get left behind. As consumers demands shift to online, retailers are finding the value in exploring warehouse fulfillment, including dark stores where full visibility across the business is crucial.
Logistics in 2022
From a distance, logistics can appear to be quite simple. Afterall, it’s just the movement of goods from one place to another.
The truth is, it’s far more complex than it seems.
Logistics is constantly evolving, while maintaining much of the same traditional trucking and packing that has always been a key component of the industry.
We will highlight some of the newer trends we are seeing within the industry:
- Finding Drivers and Using Crowdsourced Delivery
Drivers are crucial to the successful movement of goods from point A to B. That is undeniable.
So, there is huge demand for good drivers and no where near the supply needed to fill that demand. That is forcing businesses from North America to expand their recruitment efforts all across the globe to find more drivers that are looking for work and can be trained to drive. By utilizing crowd sourcing technology – the connecting of a community pool of drivers on one platform to fulfill shipment requests -- businesses have found a solution to the driver shortage. An amazing example of this is Pickups, an instant delivery platform that connects a driver to you for the immediate shipment of goods.
- Predictive Technology for inventory and delivery needs
As technology grows, our lives become easier. That is especially the case in logistics. With the use of AI machine learning, many businesses can get accurate updates on when inventory should be replenished, and when deliveries should be made. This, in turn, saves businesses and customer’s time.
- Creating Local Shipping Locations Through Strategic Fulfilment
With fulfilment businesses opening locations across North America this is allowing shipping times to decrease with local delivery. The products are spread across all warehouses in the network and these warehouses are equipped with the technology to determine which locations require more or less product. This makes the supply chain as efficient as it has ever been.
We understand that the warehousing and logistics business is complex and we understand that as a business owner/ operator / manager you would much rather focus on your core business.
That’s exactly why we exist.
By leaving us to manage your warehousing and logistics needs you will save time, money and your sanity, all while growing your core business.
If interested in storage and logistics services, get a quote today, or contact one of our FlexSpace Logistics advisors to find the right solution for your business at 1-844-985-3539.