Warehousing Trends 2024

Warehousing has faced so many challenges in recent years that any article looking at warehouse trends is likely to be viewed as a threat list rather than anything else, however 2024 is a year in which some warehouse trends are going to stabilise, putting less pressure on warehouse businesses, while getting a good handle on others can allow for easier warehouse management in the year ahead. There is some good news too!

What used to be called warehousing is now often referred to as logistics real estate – evidence of just how significant warehousing space has become, not just to businesses but to the overall rental economy. In the UK, the national vacancy rate for warehouses is 4.7%, which is low, and allows little scope for movement.

Regionally, the tightest areas are the South West and Yorkshire and Humber with 2.31% and 2.7% vacancy rates respectively, while London is actually becoming a little more relaxed around warehousing, being close to the national average at 4.6%. The trend overall is going to be for fast decision-making around warehouse rental, and price increases occurring as soon warehouse premises are vacated. There is some good news here, as warehouse expansion is slowing from the frantic pace in 2022, and warehouse construction is on the increase, with automated warehousing becoming part of the new normal. This allows expanding businesses to move into more automated spaces, freeing up warehousing at the entry end of the market. However, there’s no doubt that warehouse space will continue to be at high demand in 2024, and there will be strong competition for rental warehousing.

Then trend towards automation continues, and the market is expected to double by 2025. But there are many different forms of automation and while automated guided vehicles (AGVs) are likely to become mainstream over the next five years, automated mobile robots (AMRs) are not having the same level of penetration in the UK, and probably won’t have substantial impact in the next few years. There are a couple of reasons for this:

• AGVs have a higher second-hand value because they are easier to fit into standard warehousing operations such as pallet storage

• AMRs require a level of automation around them which can make them difficult to retrofit into an established warehouse space.

While automation may be the standard for new warehouse space, that still means that the majority of UK warehousing will be lightly automated or not automated at all – classic warehousing operations still account for 80% of warehouse activity worldwide. Despite this reality, the UK does lead the European market in automated warehousing, running neck and neck with Germany, and is expected to outstrip its rival by 2025, offering a warehouse automation market of $3.9 billion.

Growing environmental concerns are causing warehouse managers to focus on sustainable behaviours and this is set to accelerate in 2024 with energy efficiency being a major focus, as this is one area that also reduces warehouse overheads. LED lighting and solar panels are likely to be part of all new warehouse space, as well as being retrofitted into existing spaces as they become available for rent.

A recent report from the Amazon Packaging Innovation Lab shows that around 11% of Amazon shipments worldwide are being made in their original packaging, with no Amazon e-commerce fulfilment re-packaging, and this is likely to cascade outside Amazon in the next 12 months, with suppliers being encouraged to work with businesses to reduce re-packaging to the absolute minimum. Finally, as with all other electric vehicles, electric forklifts are now becoming the norm, and charge points are being installed in new warehousing as standard.

Wearable scanners are likely to see substantial uptake in 2024, for all the reasons listed above. Wareable devices fit well with electronic vehicle use etc to create a zero carbon footprint logistics operation as well as speeding up pick and pack operations in particular. Because scanners share essential data in real time, they can not only improve e-commerce fulfilment but also make inventory tracking more effective. Alongside wearables, mobile warehouse workstations are on the increase in established warehouse operations – this is being driven by a number of factors:

• low availability of warehouse space requires businesses to improve warehouse operations in the space they already have

• personnel are a key resource in 2024, and anything that reduces workforce exhaustion and burn out is valuable to retain experienced warehouse staff

• mobile workstations allow for rapid deployment of fulfilment teams, which helps with peak order periods.

For food businesses that export to the USA, or export to other suppliers exporting to the USA, supply chain traceability is likely to be a key trend of 2024. This is because the Food and Drug Administration (FDA) has a new Food Traceability Final Rule which becomes effective in 2026, and it requires end-to-end visibility in the food supply chain. It demands that all businesses share

information with other ‘entities’ in their supply chain and while the rule accepts either paper or electronic records, the FDA itself has stated a clear preference for electronic record-keeping as the bill states that an ‘electronic sortable spreadsheet’ that contains all relevant traceability data must be provided to the FDA within 24 hours of a request, or within another reasonable time that the FDA agrees. It’s quite a challenge, and for UK warehousing operatives, the first requirement would be to establish if they are required to meet these new standards which apply to both domestic and overseas companies, retail food companies, restaurants and farms. You can use this tool to find out if your business, or warehousing space, is subject to this new rule.

Fast decision making is essential if you’re aiming to find new rental warehouse space, automation and traceability are likely to be key considerations for many businesses and for classic warehouse operations, wearables, mobile technology and sustainability may still change the way that warehouses function in the year ahead.