Following the USA and Europe, the sharing economy is set to filter into Australia’s industrial sector, in the form of co-warehousing.
In the same model as Uber, Airbnb and flexible workspace operators like IWG, co-warehousing (collaborative warehousing) allows companies to engage external parties for space and storage options when required, sometimes for short periods of time.
The positioning of warehouses has always been paramount, but in the omnichannel ecosystem, where orders need to be fulfilled from anywhere, it is essential to hold inventory and process orders close to points of demand and/or ports and major infrastructure, aiming for optimised transport and network operations that reduce operating costs.
This is a need that has been recognised throughout the USA and that companies like Flexe, Ware2go, Stowga, OneVASTwarehouse, STORD, Log-hub and Stockspots are capitalising on.
According to Colliers International National Director, Logistics and Supply Chain Monica Velez, the shortage of industrial land and low vacancy across major Australian cities is fuelling businesses to look at alternative solutions to store their stock and fulfill their orders in a more efficient way, meaning the concept of ‘co-warehousing’ are prevalent in the USA and Europe could be the next major trend for Australia’s industrial market.
“Co-warehousing also referred to as the warehouse marketplace, on-demand or digital warehouse, is driven by the promise of ultra-flexible on-demand engagements between entities in need of storage and fulfillment capability in strategic locations where parties have space and resources available service operations” Monica Velez said.
“This concept is not limited to filling empty sheds; it extends to storage, receiving, fulfilment, inventory management and value-add services.”
“The pioneers in co-warehousing have created a platform where, not only the user and the supplier can match their needs and obtain value, but also where the supply chain and inventory flow can be managed.
Luke Crawford, Associate Director of Industrial Research at Colliers International, believes continued growth in online retail will help underpin the co-warehousing phenomenon in Australia, spurred on by the need for industrial occupiers to service their last mile logistics function.
“While online retail has grown at a rapid rate in Australia, it remains well under the US and UK markets where it is as high as 20% highlighting the growth potential in Australia,” explained Luke.
“Coupled with fluctuating demand levels, this will result in businesses looking outside the box to meet their space and operational requirements, particularly as the last mile carries an unproportionate cost in the supply chain process – this is where co-warehousing ‘s flexible offering could become particularly appealing,” said Luke.
Monica Velez said, “Increasing demands in customer expectations, the boom of digital technologies and the omnichannel phenomenon (order from anywhere, deliver from anywhere) continues to put pressure on businesses and traditional warehousing models. As a result, warehouse operations now need to incorporate flexibility, improve visibility and drive productivity and proactivity.”
“I expect the co-warehousing concept in Australia will come into effect over the next 4-7 years and be particularly beneficial for companies that experience extreme seasonal demand. Co-warehousing is likely to be well received in inner ring locations where the population density is greatest and where land and rental costs are higher, as this will assist businesses with their last mile logistics function.