Office towers and lofty apartment buildings create logistical challenges for Europe’s e-commerce boom

24 April 2018

Office towers and lofty apartment buildings create logistical challenges for Europe’s e-commerce boom

European cities are only looking one way: skyward. And as the continent reverberates under the hum of drilling and the slow-churn of concrete, its skylines are beginning to soar. Resembling scenes from Blade Runner comes at a cost, however. As research from TomTom shows, Bucharest, Moscow, Saint Petersburg, London and Marseille are among the most congested in Europe.

Replacing urban sprawl with buildings that are tall will be welcome by many. And although European tall buildings don’t make a dent into global charts, the cluster effects offer many economic benefits, particularly for emerging economies to the east.

While global tall building rankings are topped out by Dubai, Shanghai and Mecca, according to the CTBUH, buildings such as the Lakhta Centre in St. Petersburg, the Commerzbank Tower in Frankfurt and the Torre de Cristal in Madrid are still hitting substantial heights.

Upcoming cities in countries undergoing vast economic changes, like Prague in the Czech Republic and Warsaw in Poland, are also trying to touch the clouds with their towers. Further east, Russian cities are building up rather than out, with a swathe of soaring towers currently being delivered in Moscow, including the 974 feet tall Neva Towers and the three Capital Towers, each reaching 873 feet.

Many such mixed-use schemes attract a new urban class, fostering entrepreneurialism and allowing culture and human ingenuity to flourish.

The activities of city dwellers, however, will be far less ubiquitous than the buildings themselves. Many will express their individuality through what they do and what they buy – with much of the latter being done online.

Around 4 billion parcels are sent each year across the EU according to PostEurop, which poses challenges for building managers and the infrastructure underpinning urban transit. Having the right plans in place to process packages can be a challenge that perhaps isn’t given the attention it truly deserves. And with hundreds of apartments of office workers in a small area, it doesn’t take long for the lonely front desk managers to drown under a sea of cardboard.

This, of course, feeds into road congestion. Some would have hoped that mass urbanisation would lead to more parochial, localised forms of consumption, but they could not have been more wrong. Cross-border e-commerce is growing at nearly twice the rate of the domestic e-commerce in most EU countries, according to PostEurop. Not only does cross-border e-commerce require notably more consolidation points and sorting centres than domestic e-commerce, it also sets in motion a complex stream of deliveries and returns that spans the length and breadth of Europe, with its diverse terrains, fuel prices and market conditions.

While pick-up points at local hubs make sense for those commuting in and out of bustling cities, the expectation of “everything now” – fuelled in no small part by Amazon – is creating a triangular rift between customer expectations, e-commerce promises and the logistics networks’ ability to actually deliver.

The onus now is on the delivery firms to reconsider their approach to urban logistics, creating smarter, more efficient delivery networks. Ancient road networks across many European cities are tough to manage and even tougher to change. But with e-commerce comes an opportunity to consolidate and become more efficient.

For example, at DP World Constanta, the Black Sea’s premier container terminal makes effective use of intermodal options by moving approximately 30% of all cargo by rail, into the East European hinterland.

Consolidation centres are increasingly popping up around major commercial buildings, avoiding the need for multiple daily visits to multi-let buildings. But the challenge will need to be faced head-on by beneficial cargo owners (BCOs) as brands look to have an increasingly direct relationship with consumers.

Logistics firms and freight forwarders are having to invest in technology to keep up. Global logistics giant XPO alone is dedicating over €342 million a year to streamline and improve its forecasting, delivery tracking and visibility, autonomous warehouses and their big data and machine learning initiatives. Better tracking and visibility provided by logistics companies will have a positive knock-on effect within the sector, allowing e-commerce platforms and companies to analyse their supply chains with greater scrutiny, squeezing out inefficiencies in the process.

Our DP World Inland and Intermodal division works with customers to develop efficient responsive and customized supply chain solutions using rail and barge modal transportation to move more cargo efficiently and with a drastically reduced carbon footprint than by using trucks.

Tech start-ups like Parcelly – essentially the Airbnb of storage – are trying to get in on the action by paying to take up unused capacity to create new parcel collection points, while Uber is also looking at using its current road capacity to deliver goods.

Open systems of data collection and sharing need to be rolled out universally, particularly as 5G and other innovations become more commonplace. Advanced data analysis, forecasting and consolidation will help cities and e-commerce flourish – and this will be far cheaper than digging up the continent’s roads.

Where ever there are challenges, there are also opportunities. And in the complex, manifold world of urban logistics, there is many an opportunity to be seized. Unlike the lofty towers being erected throughout Europe and beyond, the logistics industry needs to keep its head out of the clouds, and its ear firmly to the ground.

 

Solving modern supply chain challenges requires non-traditional thinking

Come and speak to a non-traditional supply chain actor to unlock actionable supply chain solutions

For more details please contact our Regional Commercial Director, Dirk van den Bosch by e-mail dirk.vandenbosch@dpworld.com or on +44 7721 238159