E – commerce Needs To Invest in Logistics To Ensure Net Zero Target is Met
Black Friday will never be sustainable unless we invest in ecommerce logistics, says leading economist…
A leading economist has revealed that the unrelenting rise of e-commerce, will create an additional 38,885 extra HGV round trips per day by 2025. These extra vehicles could take up one lane of the motorway from London all the way to Aberdeen bringing the UK’s road network to a halt by the end of this decade, unless drastic action is taken, says global commercial real estate firm Colliers.
‘Clicks & Consequences – accommodating the rise of e-commerce’ a report by Dr Walter Boettcher, the firm’s Head of Research & Economics in the UK, exposes the fragility and sustainable vulnerability within the UK’s supply chains. It highlights that at least an additional 54.5 million square feet of industrial logistics space, including warehouses – equal to more than 710 Wembley-sized football pitches – will also be needed by 2025 to satisfy existing shortfall and meet anticipated growth.
Dr Boettcher explains: “With transport accounting for approximately 30% of all territorial carbon dioxide emissions in the UK in 2020, it is clear this needs to be a focus area if the UK is to meet its net zero target.
“The distribution model in place for the growing volume of e-commerce is not without its problems. One being that it has a substantial environmental footprint that may equal, if not exceed, that of traditional ‘bricks and mortar’ retailing. Furthermore, the anticipated large-scale repurposing of ‘bricks and mortar’ retail assets into other uses could unwittingly exacerbate the problem and act to undermine the path to net zero.
“From a commercial property perspective, there are questions about whether and how future growth in consumer spending in general can be adequately accommodated, let alone the inexorable rise of e-commerce. Much attention is focused on ‘last mile delivery’ solutions, but the real existential questions have more to do with the sustainability of bulk transport from port quays to inland warehouses and on to urban agglomeration hubs.”
He adds that it is clear consumerism is driving the distribution challenge, and this is set to continue and increase. In 2010, UK retail sales amounted to £325 billion, rising to £438bn in 2020 and are expected to reach £651bn by 2030, according to Oxford Economics forecasts. The e-commerce share of total retail sales has risen from 7.3% in 2010 to 19.2% in 2019 before reaching an annual pandemic fuelled peak of 27.9% in 2020. This share is expected to fall back to 25% in 2021, but will resume its long-term climb to 27% by 2025 and finding greater stability at around 35% by 2030 according to Colliers’ forecasts.
David Fox, Co-Head of Retail Agency at Colliers added: “Do we curb consumerism for the greater good of the environment? Well, we can’t stop the customer from gravitating towards a seamless shopping experience, whether this is online, omni-channel or bricks and mortar. E-commerce is here to stay but retailers need to adjust by providing the best experience for societal expectations whilst guiding customers towards a sustainable outcome. We must get better at communicating the impact people’s consumer choices has on our carbon footprint so that we can all make more informed decisions, that go beyond the most convenient or cost effective.”
Alongside additional facilities, Colliers has identified a series of critical areas that must be addressed, to meet this growing consumer demand and structural change, including:
• Investment in ports and efficient multi-mode conveyancing systems including a shift of emphasis from road to rail for shipments between ports and inland warehousing, especially for north-south trunking, but also for downstream supply to large conurbations.
• Review of road taxation to distribute transport infrastructure maintenance and development costs more evenly among all the actors in supply chains whose business models all rely on this infrastructure that is still generally understood as ‘public’ amenity.
• Integrating supply chain infrastructure investment into government regional development planning, especially the ‘levelling up’ agenda, but also advancing reforms that will unblock investment by pension funds into long term strategic assets vital for UK economic development generally.
Dr Boettcher concludes: “This is an opportunity to craft a new sustainable footprint for UK commerce and now is the time to take action if the current trajectory of consumer demand is to be met, while also delivering against the UK’s ambitious net zero targets.
“However, this requires UK central government and devolved administrations to take active leadership roles, including co-ordination and creation of enabling regulatory frameworks and investment incentives.
“Without urgent action, it’s highly likely the supply and logistics challenges of today will, in a few years’ time, be remembered simply as a minor inconvenience. It’s a scenario that, if left unchecked, could paralyse the UK economy for a substantial period and block an already uncertain path to net zero.”