Whilst the old adage of location, location, location still very much rings true, warehouse and logistics providers are increasingly differentiating themselves by providing clients with a value proposition that directly impacts the bottom line.
With COVID-19 increasing pressure on operating margins, forcing third party logistics and other FMCG companies to carry larger inventories picked from a multitude of warehouses, greater warehouse efficiencies have a tangible impact on the overall cost of occupation.
FMCG and other essential businesses are mostly defensive in nature, especially in emerging markets with largely cash-based economies. Although COVID-19 has had far reaching negative impacts, it also increased the migration to online shopping significantly, presenting logistics operators with new challenges such as “click and collect” options where address verification and traffic congestion are proving significant barriers to market.
Although the cost of an A-grade logistics warehouse may look more expensive on paper, improving the flow of goods into and out of a warehouse, along with greater volumetric capacity and energy saving building practices, could have a marked impact on operational costs.
The fundamentals of efficient logistics and warehousing is not rocket science, but it takes careful planning, experience, and expertise. A-grade logistics warehouses typically only covers 50% of the premises, with the balance dedicated to the flow of interlinked trucks and loading facilities. Multiple roller shutter doors and loading facilities at dock height and multiple ramps further improves efficiencies. In fact, it is estimated that an A-grade warehouse could increase delivery and dispatch turn-around times by at least 50 – 60%.
Improvements around solar energy, the use of natural light, heat pumps , insulation and water harvesting can save up to 30% on energy costs, based on location and tenant specifications.
Improvon’s latest development, Nairobi Gate is fast becoming a brand associated with superior logistics in Nairobi, Kenya. The Park forms part of the larger Northlands Mixed Use Scheme, ideally situated on the Eastern Bypass of Nairobi, providing easy access to key arterial roads, only 30 minutes away from Jomo Kenyatta international airport, the inland container depot and the Southern Bypass.
Phase one is built on 100 acres of land and will comprise in excess of 200 000m2 under roof once completed. Nairobi Gate is ideally suited to accommodate large international warehousing, distribution, and manufacturing businesses with agencies represented in east Africa, as well as large local businesses including specialised goods manufacturers of high-value items such as pharmaceuticals and medical equipment as well as specialised electronics and engineering components.
Inside the warehouse, efficiencies all start with the floor, which has to be exceptionally level to allow for racking of 12 metres or more to underside of eaves. This is achieved through FM2 160mm thick class 35mpa concrete and steel fibre reinforced large panel floors, able to withstand a uniformly distributed load of 100KN per /m², and rack leg loads of up to 65KN per leg.
The African logistics and warehousing market is increasingly becoming sophisticated as the demand and call-out for proper rail and road infrastructure increases. This is primarily driven by governments recognising that an efficient transport system ultimately benefits the economy and GDP of a country, as well as clients who are demanding much quicker turn-around times and a more formal market.
Turn-arounds at ports in East Africa have increased dramatically, placing down the line pressure on container depots, requiring faster clearing from importers. Countries such as Kenya have multiple infrastructure improvement projects underway that will increasingly narrow the gap, allowing for modern infrastructure and efficient warehousing comparable to international standards.
Increased demand throughout the value chain for greater transparency around the proper tracking and classification of goods requires specialist technology and expertise that will squeeze a number of smaller operators out of the market. On the inverse, larger operators with economies of scale are increasingly outsourcing to smaller companies, once the technology is in place, resulting in numerous principles running their operations from the same warehouse.
Especially third party logistics providers are demanding shorter-term, flexible solutions, which have given rise to warehouse developers implementing innovative solutions around a flexible warehouse model similar to flexible offices.
Tenants are equally demanding built-to-suit options and large warehouse developers are able to leverage their experience and expertise to make it easier for international companies to operate in high-growth markets such as Nairobi, by introducing flexible options to increase tenant competitiveness. To this effect, Nairobi Gate offers purpose built and designed facilities specifically catering to tenant needs such as specified height in the warehouse or the size of the yard. Technical innovations and construction techniques further allow for greater efficiencies.
It is our believe that Africa logistics will continue to gear up despite the world technically being in a recession. The growth of flexible A-grade logistics and warehouse models will provide FMCG, third party logistics operators and manufacturers with the optionality to structure their needs according to their business requirements, allowing for greater competitiveness and sustainability.