Sealand Americas Market Update (December 2022)

Warehousing after the Pandemic

During this topic of the month, we will be covering one of the critical products in every supply chain, Warehousing and Distribution (WnD).  According to Cushman & Wakefield’s Q3 Marketbeat report, the vacancy rate in the US industrial segment is around 3.2%. While, in Latin America, according to Newmark, the average vacancy rate in 2022 2H is below 6% in the region.  In Mexico City, around 4.9%, and in São Paulo, 12.1%. And in places like Santiago and Tijuana, below 1%.

Much has been said about how heathen the global demand for warehousing is. Many companies are facing a lack of space availability in a scenario of high inventory levels and an increasing need to support new purchasing habits and consumption patterns from post-pandemic customers. In addition to that, we see an ever-increasing demand for more sustainable facilities.

WnD and Sustainability:

"As you read in last month’s Sealand Update, sustainability in logistics has become something important not only for the industry but also something that customers request from their providers.

Warehousing and Distribution have kept up with the new green era, seeking sustainable ways to do different activities. At Sealand along with all our operations have sought to be renewable in our warehouses.

Sustainable warehousing seeks to have a low environmental impact by using different strategies and techniques to minimize the production of waste, water, and energy consumption. Using rational use of supplies and reducing the carbon footprint generated by logistics operations is part of green logistics.

Here are some practices that Sealand is taking into account and applying to our warehousing and distribution facilities:

• Energy efficient
  The idea is to take advantage of natural light and use efficient energy lighting by using skylights, solar panels, and sensors. There are other actions by using energy management systems to reduce the use of power and when power is being used, be more effective.  This includes hibernating the machines and tools or putting their operation in pause, while they are not used.
• Automation and connected systems
  As we shared with you on our topic of the month of september, digitalization in logistics is now a trend and stakeholders are adopting automated storage systems to be more agile in the changing world.  Adding up that with digitalization the warehouses tend to be more sustainable since automatic handling equipment emits fewer polluting gases, another example is the lights for operation with LED technology, solar panels, and automatic lights are some actions to reduce carbon footprint.
• Climate control
  Sustainable climate control is related mostly to cold storage and freezer rooms. A lot of warehouses are seeking new ways to reduce energy consumption by paying more attention to the structure of the facility using insulating materials so that the cold air stays inside, so they minimize their energy use.
• High-density storage systems
  Compact storage systems contribute towards sustainable warehousing by leveraging the available surface area to house a larger number of products. This also helps to make better use of space on racks.
• 3 Rs
  Reduce, reuse, and recycle, taking into account that as we shared in our topic of the month of November, logistics activities generate a lot of waste. In sustainable warehouses, recycling different types of packaging is increasingly common, therefore separating, recycling, and reusing can help minimize the environmental footprint in logistics.
• Location
  Bring warehouses closer to the customers so there is less need for transportation, as a result, there is less pollution which helps towards more sustainable logistics. Having warehouses close to freeways, ports, highways, railways, and airports are now key to being agile and contributes to greener logistics.
• Maintenance
  Preventive maintenance reduces possible breakdowns and helps taking quick decisions in the event of machine failure and can help to make the warehouse sustainable. A study from MarketsAndMarkets consulting firm states that preventive maintenance will grow by more than 25% from 2020 to 2025. The report shows that adopting technology such as artificial intelligence and devices can provide real- and on-time information on the warehouse. Preventive maintenance helps anticipate preventing malfunctions and improve safety on logistics facilities.
• Layout
  Having an efficient layout and optimizing storage space is essential for maximizing operations and movements. Digitalized warehouse software, crossing and analyzing data can help maximize the performance of the facility.  With efficient processes, companies can provide good service with minimal environmental impact.

Some other features to consider in a sustainable warehouse are:

• Sensors
• Building materials
• Fans
• Roof
• Landscaping and water usage"

Trends in WnD market:

"Warehousing industry has become more digitalized, automatized and with smart devices and it’s the new trend in the market to have a more agile and optimized part of the supply chain.

Equipment such as artificial intelligence, LEAN management, the internet of things, and blockchain is now used in warehousing and distribution to automate repetitive tasks, eliminate labor-consuming duties, and improve safety.  All these actions make the implementation of automation more cost-effective, sustainable, and agile in a digitalized world.

The top warehouse management trends are:

• Warehouse management systems
• Warehouse automation
• Inventory tracking
• Warehouse security
• Sustainable Warehousing
• Fleet management

With these trends, warehousing has improved operational efficiency, and decision-making, prevent risks, and innovative solutions, and has more sustainable logistics. "

The importance of partnering with a company that understands the market and will help you navigate in a new scenario.

"It is clear that headwinds are bouncing worldwide economies, and the demand for space will soften at some point as interest rates increase worldwide. One of the essential things to have in mind in a scenario like this is not whether you will find a facility for your business but how well-prepared your business is to navigate in this new scenario of uncertainty.

Having a lack of space in addition to a turbulent market scenario might be challenging; it`s relevant to partner with an expert that can provide the best solutions for your business and help you navigate the uncertainties and complexities of the post-pandemic world."