Prological’s H1 2025 report reveals key supply chain shifts, property trends, and strategic investment insights.
The first half of the year has ushered in major change, both internationally and locally. Trump’s return to the White House with aggressive new tariff policies is prompting Australian businesses to diversify their sourcing strategies, while the Reserve Bank of Australia’s strategic rate cuts are creating the most favourable conditions for supply chain investment in years.
Prological’s H1 2025 market update collates the latest market data and figures to reveal how smart operators are navigating the biggest trends so far this year, from capitalising on favourable industrial property market conditions to building sourcing networks that reduce dependence on traditional trade routes. The full report dives into the following:
Global trade reset: New partnerships, new opportunities
Australian companies are changing their approach to international market expansion and risk management, creating opportunities for supply chain operators to establish themselves as reliable partners in diversified global networks that can withstand geopolitical volatility.
While Australia’s economic ties to China remain significant, businesses are actively diversifying their global footprint in response to escalating trade tensions. The strategic focus has shifted from managing disruption to building partnerships with both established and emerging markets while reducing dependence on traditional trade corridors.
Industrial Property: The End of the Golden Run
The first half of 2025 has marked the end of industrial property’s golden run for developers, with tenants in a position to benefit from a dramatic shift in market dynamics. Oxford Economics Australia says that rents could fall as much as 11 per cent across the eastern seaboard as an estimated 3.5 million square metres of new warehouse space hits the market in 2025, followed by another 2.5 million square metres in 2026.
The cost differential between major markets has reached game-changing levels. Melbourne now offers approximately $100 per sqm lower leasing costs than equivalent Sydney facilities – a gap large enough to force businesses to reconsider fundamental network strategies that have been in place for years.
Economic recovery: From pause to positivity
The Reserve Bank of Australia cut the official cash rate by 25 basis points to 4.10 per cent in February 2025 – its first reduction since November 2020. This move marked
a shift from the ‘higher-for-longer’ approach that characterised 2024, as the RBA gained confidence that underlying inflation was easing toward its 2-3 per cent target range.
For supply chain operators, this easing cycle provides welcome relief for inventory financing costs and capital investments in infrastructure.
AI Reality Check: Beyond the Hype
While AI’s transformative potential is widely acknowledged, the reality in 2025 is more nuanced. Businesses are seeing results in forecasting and inventory management. According to IDC research, retailers using AI-driven demand forecasting are achieving 30 per cent reductions in lost sales due to stockouts. However, Australia’s progress still lags behind regions like the United States, Europe, and Asia.
Network Design: The Problem-First Approach
With 35 per cent of organisations planning to expand or relocate warehousing operations within five years according to Prological research, the current market conditions present a rare opportunity for strategic network redesign.
Rather than chasing the latest technology trends, successful businesses are taking a problem-first approach, identifying where they’re actually haemorrhaging money before pursuing solutions. This systematic evaluation covers eight critical factors from customer service promises to carbon reduction priorities.
Other key insights in the full market update include:
- Sustainability Reality Check: Why electric fleet transitions will take longer than expected, despite positive progress and significant investments like ANC Delivers’ $45.5 million electric vehicle commitment
- Strategic Workforce Solutions: How automation is addressing labour shortages while maintaining productivity in an increasingly competitive market
- Investment Capital Trends: Why 56 per cent of industrial property trades are now core or core plus transactions, and what this means for tenant relationships
Peter Jones, Prological Managing Director:
“The companies thriving right now aren’t the ones with the biggest budgets or the fanciest technology. They’re the ones asking the right questions first. Before you chase the next shiny solution or jump on the latest trend, take a step back and identify where you’re actually losing money. Sometimes the best investment is the one you don’t make until you’ve properly understood the problem you’re trying to solve.”
To read the full H1 2025 market update, visit here