U.K. Readies for Port-Centric Logistics Model

Nov. 14, 2012
Supply chain challenges to cause switch to multi-location distribution networks, say developers.

Shifts in global sourcing combined with new and multiple channels to market are likely to drive the need for multiple stocking locations, said Peter Ward, cargo supply chain commercial manager for DP World London Gateway, speaking at commercial property adviser Jones Lang LaSalle’s agents briefing in Birmingham last week.

That means companies will need to be more agile and flexible in designing their distribution networks, he added.

“In the U.K. it may prove optimal for a major DC in the South to complement another operating in the Midlands,” he said.

Explaining the logic behind DP World’s massive investment into London Gateway, the U.K.’s new international hub port and Europe’s largest logistics park (more than 9 million square feet), Peter Ward said this approach would be particularly relevant to companies whose key customer base is in London and the Southeast, the country’s largest consumer market and population center.

Lisa Fitch, associate director, supply chain consulting, BNP Paribas, told delegates that the DP World London Gateway port and logistics park development was well timed given current market conditions—especially for end users grappling with the challenges of the recession and are having to accommodate multiple channels to market.

“The port centric logistics model [where DCs are located close to a port to reduce transport distances] at London Gateway will be compelling for many businesses as it adds capacity to the market that will enable end users to reconfigure their supply chain,” she said.

Jones Lang LaSalle, National Director, National Industrial & Logistics, Cameron Mitchell, commented that the country could be facing a shortage of distribution facilities.

“There is a shortage of good quality distribution capacity looming as a result of a recession related lack of speculative builds over the last two years,” he said. “We therefore welcome DP World London Gateway’s commitment to offer a substantial common-user facility from which businesses can either benefit from incubator or shared space—while gaining flexibility in their supply chain—and if the business case is right, for them to later move into their own facility.”

Peter Ward added that the increasing size of containerships has caused supply chains to become longer and more costly.  He explained how new ports and terminals around the world have been developed further away from population and manufacturing centers because of the need for deeper water that can accommodate these larger vessels. 

“London Gateway is bucking this trend, bringing a new deep water port closer to exporters and importers, not just in London but also Birmingham and the Midlands,” he concluded.

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