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Nearshoring trend to have a lasting impact on logistics

Ben Bannatyne, President, Prologis Europe

One legacy of the pandemic will be the re-organisation of supply chains, experts agreed at Real Asset Media’s The Future of Logistics investment briefing, which took place this week as part of Transport Logistics online 2021.

“Nearshoring has been a big trend and we can expect more of it, especially in Central Europe,” said Ben Bannatyne, president, Prologis Europe. “Our focus is on the consumer and the biggest challenge is being close to the large population centres, so for the foreseeable future there will be a lot going on in this sector, not just e-commerce but data centres as well.”

Nearshoring became a trend last year as the total or partial closure of some supply chains forced companies to formulate new strategies.

“The nearshoring trend will have a definite impact on the sector,” said Otis Spencer, CIO, P3 Logistic Parks. “After the shutdowns of last year people are looking for more resilient supply chains. Central Europe will be a beneficiary, but there’s a lot of activity in Western Europe as well as companies look for space.”

Local supply chains avoid supply issues

For many, moving from international supply chains to regional or local ones is a way to avoid supply issues and to guarantee efficient and timely deliveries to market.

“Resilience has become a key word,” said Bannatyne. “We expect there will be at least a 5 to 10% increase in grade A logistics space just to cater for the resilience factor, and that’s a lot in Europe.”

There are factors other than the pandemic behind the near-shoring trend, from supply and cost issues to a stronger focus on the environmental impact of transport. According to the World Economic Forum, buildings account for 17% of greenhouse gas emissions from the freight industry but the vast majority is due to road freight.

“Some nearshoring will be driven by sustainability,” said Raimund Paetzmann, vice president corporate real estate, Zalando. “There are other factors, like China and Vietnam not being such cheap producers anymore. I would say the Suez Canal blockage had more of an impact than the pandemic.”

Optimising the supply chain is a must, but according to Paetzmann the biggest challenge logistics faces “is exponential growth and constrained land availability”.

Robert Dobrzycki, CEO Europe, Panattoni, agreed. “In time, the resilience of supply chains will not be a problem,” he said. “But construction costs will remain an issue and it will be a resource-constrained market, which is an exciting challenge.”