E-commerce giants like Amazon will move to take logistics supply in-house and develop their own big-box facilities to keep transport costs down and to keep pace with the extraordinary growth in online sales, a PropertyEU event on the first day of the Provada real estate fair in Amsterdam heard on Tuesday.
'It is only a matter of time before the likes of Amazon become logistics suppliers,' René Buck, director Buck Consultants International, told the E-Commerce and the Logistics of the Future investment briefing at the International Business Lounge at Provada.
Earlier this year Amazon hit the headlines because it was believed to be considering an acquisition of FedEx or UPS. Amazon, with a value of more that €215 bn, would have the capacity, market watchers say, to acquire FedEx, which has assets of about €33 bn. Acquiring FedEx would give Amazon a global delivery network of 300,000 logistics staff that operates a fleet of 650 planes and some 200,000 vehicles.
Costs related to transportation and the supply chain from the factory to fulfilment centre and then to 'last-minute mile' urban centres is one of the biggest challenges for e-commerce retailers.
In a presentation, Buck said the growth in online sales is spectacular, putting further pressure on the issues of timely delivery and costs. Figures from AXA Investment Management show online sales in Europe came to €146 bn in 2015 and this is expected to rise to €243 bn in 2020. This means some 7.5 million m2 of logistics space will be required to service this demand, Buck said.
'CBRE estimates that nine of the top-30 existing global logistics hubs are in Europe. Similarly, when we look at emerging global hubs nine of the Top-20 in this category are also in Europe,' he pointed out.
Other panellists noted that the big e-tailers have almost unquenchable thirst for logistics space, particularly for big-box fulfilment centres of 50,000 m2 or more. Tim Davis, director of industrial and logistics at Colliers International said that e-commerce retailers requirements can change quickly due to the speed at which the market is growing. 'You go to talk to one about a 50,000 m2 facility and suddenly they need 85,000 m2.'
E-commerce retailers like Amazon and logistics providers such as DHL have already become developers of the big-box formats they need, although they also rely on traditional developers. 'But e-commerce is moving so fast,' said Davis. 'Sometimes it is a matter of taking what they can get. Of 25 medium-sized logistics centres Amazon acquired in the UK recently, only three were purpose-built.'
