Warehouse demand in Europe surges

Large investors are buying warehouse space in Europe as online commerce grows because of the coronavirus pandemic.

Before the pandemic, e-commerce was growing, but since shops have been closed and people have been staying at home, the sector is expanding rapidly. According to real estate company Savills, the size of the e-commerce market is about 12 months ahead of where it would have been if there had been no coronavirus pandemic.

Amazon has pioneered quick delivery times and customers now expect speedy delivery on orders from all online retailers. To deal with this issue, UK companies are acquiring many smaller warehouses, rather than relying on one large warehouse to service the whole of the country. This cuts down average delivery journey times.

Savills estimates that warehouse vacancy rates in Europe are around 5%, which is a record low. This rate is decreasing rapidly, which could mean there soon will be no spare storage capacity unless more warehouses are quickly constructed.

Another logistics issue is the worldwide shortage of containers to transport goods from China and Asia, which has led to higher shipping charges. This has prompted some Chinese retailers to look at establishing overseas warehouses. Chinese e-commerce site DHgate has opened 10 overseas warehouses and is planning to open a further 40. Orders are delivered to European customers from these warehouses, so that delivery is not subject to long shipping delays.

The warehouse equipment supplier sector is benefiting by providing all the racks, shelving, material handling and other equipment warehouses require.

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