Warehousing – in association with HSBC

Warehouses are large storage facilities for the containment and processing of goods. Depots are more usually associated with the parking and maintenance of vehicles used in moving goods.

Why warehouses?

Warehouses are an increasingly important tool for logistics and road transport companies. Transport of goods alone is now a commoditised service offering very small margins. Transport companies must work to keep their profit margins up by adding value to their services and also differentiate themselves from their competitors. Warehouse facilities can open up a whole new range of services including:

• Order fulfilment
• Labelling
• Packaging
• Container destuffing
• Assembly and sub-assembly

Where transport meets logistics

The nature of transport has changed. Once commercial emphasis was on the manufacture of goods. Today the commercial emphasis is on the efficient organisation and movement of all the goods and processes which contribute to delivering a finished product to a satisfied customer. Therefore all business has become an exercise in logistics. For more on the role of the supply chain in the modern world see John Gattorna. It has led many transport companies to provide outsourced facilities throughout the product life-cycle, overseeing ‘end-to-end’ contracts from sourcing raw materials to offering customer service desks. And it all starts with trucks and warehouses.

How much does warehousing cost?

Warehousing is expensive to build, to maintain and to staff. Warehouses require staff trained in pick and pack, materials handling and such equipment as fork-lift trucks. This makes the operator’s health and safety and insurance liability high. Full risk assessments must be undertaken. However, warehouses can be used for many clients and so the capital expenditure and employment costs can be spread throughout the client base, maximising return for the operator and lowering costs for its customers.

Many manufacturers and other firms now prefer to outsource the cost and management responsibilities of warehousing to logistics or transport companies. Land values are expected to fall slightly in 2008 with the effects of the credit crunch although there are other factors which may keep land prices up. For recent land values see the Valuation Office Market Reports.

Where can I get advice on warehousing?

The UK Warehousing Association can offer advice and support to members. It sets standards to which members comply and offers a self-audit of facilities for new members.

What type of land is suited to logistics?

Access to the motorway or trunk road network is most important for road transport companies when considering a depot or warehouse site. Traditionally the Golden Triangle in the Midlands has provided the best access to ports and has been almost equidistant to all parts of the UK. However land is at a premium in this area and developers have been forced out to explore other parts of the country. Greater development is taking place in the North-East and North-West, where rents and land values are typically cheaper. Land is still over subscribed in the South-East, with demand outstripping supply. Changes affecting warehousing and logistics land:

• The government’s targets favour brownfield or urban development but much land with access to major roads is greenfield – ie agricultural land.
• Until recently empty properties were exempt from rates. Now empty rates relief expires after six months. The government hopes this will lower rents to raise occupancy levels – critics say it will mean empty sheds are demolished.
• From April 6 2008, Energy Performance Certificates (EPCs) will be required for sale, rental or construction of commercial buildings, starting with largest premises and rolling out to all premises over 50m² by October 2008.
• It is increasingly worth buying rather than renting if affordable as commercial property can now be used to fund a Self-Invested Personal Pension (SIPP).

Depots

Depots require specific authorisation as an operating centre if they are to be used as a permanent base for vehicles. You will also be obliged to:

• Check out the environmental undertakings and regulations eg for fuel bunkering.
• Make sure inspection bays/pits conform to health and safety standards 
• Do a full risk assessment of your site

If you are planning your site from scratch seek professional planning advice to avoid risk areas and maximise efficiency of movements within the depot. You will also want to plan for growth if possible.

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