Industrial & logistics sector

For those of us working in the industrial and logistics sector, the benefits and advances of the past decade are abundantly clear.  

The British Property Federation echoes this sentiment in its recent report Levelling Up - The Logic of Logistics: “I&L facilities are part of the Critical National Infrastructure. Alongside their supply chains, they support the functioning of our economy and the way we live our lives, by ensuring we have what we need. They are as critical as the roads, rail, airport and port facilities needed to move goods around the country.”   

The profile of the industry is an unquestionably positive one: the sector contributes £232 billion of Gross Value Added (GVA) to the economy each year; it supports 3.8 million jobs in England, paying on average almost £5,000 a year above the national average, and logistics schemes often contain a district’s highest concentration of office jobs.  

But while those of us in the sector understand these changes, decision-makers and policy-makers are not necessarily aware of the sector’s considerable evolution. Problems linked to (often out of date) perceptions threaten further progress – something which must be addressed.  

 

A changed and changing sector 

The substantial growth is largely due to the demise of the traditional warehouse and the rise in just in time (JIT) supply chains, which has been fuelled by a rise in online retail sales.  

Now, in a further stage of its evolution, increased on-shoring is occurring in response to the supply chain risks exposed by Covid, caused by global political uncertainty and Brexit. Consequently the role of warehousing has transitioned from simply storing goods to logistics and assembly: breaking down large consignments of single items into a selection of goods for retailers or consumers.  

Accordingly, the level of technology and management is increasing rapidly. When Amazon recently opted to open a 2.5 million sq ft distribution over three floors in Swindon, it was the closure of a Honda car plant which determined the location: in finding a site in close proximity to the car plant, Amazon benefited not only from a good supply of general labour but the highly specialised robotics engineers who had previously kept the car production tracks running.  

 

Problems with perception  

Perhaps understandably given the rapid pace of change, the new positives associated with the sector are little understood.  

For example, it is rarely appreciated that Big Box development has an impressive record in carbon reduction, in both development and operation. To enable energy security and decrease operational costs as well as responding to the need to meet Net Zero targets, I&L developments are becoming increasingly self-sufficient in their use of renewable energy. 

Furthermore, there is a misplaced perception about traffic generation. Images of gas-guzzling HGVs blocking local roads are far from the reality: in fact this would defy the very logic of logistics. The need for utmost efficiency means that HGV movements are generally during off-peak hours to avoid goods being delayed in commuter traffic.  

Furthermore, the increased flexibility between Use Class B2 (general industrial) and Use Class B8 (storage or distribution) gives companies the flexibility to accommodate a business’ entire operation in a single location and thereby substantially minimises vehicle movements.  

In general, the sustainability credentials of the sector are little understood. 

 

A positive story untold 

In my day to day role I constantly see the unrealised potential in the sector. I know a planning manager of a major logistics developer who is regularly contacted by the chief executive of a Golden Triangle authority who is keen to see a logistics scheme located within the local authority boundary. And I know of a local authority which benefited so substantially from the business rates generated from a new logistics scheme that a potential rise in Council Tax was avoided. 

On so many levels, the sector has a positive story to tell. But as the British Property Federation has identified, the message is yet to reach the many decision-makers who still view B8 simply as storage.  

An example of how out of date the view on warehousing is, the fact that there is no warehouse classification in the Standard Industrial Classification of Economic Activities (SIC). And as a result, it is impossible to collect worthwhile data on changes in employment in the sector or produce data on employment generation by warehousing. This then means that the usual process of planning for future need, through projecting change in employment levels, cannot work. And it’s a clear indication that change in the way in which the sector is viewed is necessary. 

Furthermore, the current NPPF, which runs to 223 paragraphs, contains a mere three on economic development.  

With the new Labour government embarking on a consultation and future re-write of the NPPF, those of us working in the sector hope to see those three paragraphs extended considerably to the benefit of both the industrial and logistics sector and the wide economy.