The new role of warehousing in port-centric logistics

As the world adapts to the ‘new normal’ ushered in by COVID-19, shipping and the entire supply chain have been exhibiting two of the characteristics that are vital to survival: innovation and flexibility. These new approaches to doing business include the role of warehousing, which plays significant roles in adjusting supply to changes in demand.

The porttechnology.org website recently noted that current conditions are “forcing ports and terminals to completely rethink how they operate, and the changing nature of the supply chain means they must also see themselves as more than a hub for goods”.

In an article written by Max Schwerdtfeger appearing on the website on April 16, 2020, it was noted that in 2010, warehouses were largely seen as a cost centre, that is, an asset that incurs a cost but does not directly benefit a business. However, only one decade later, they are now utilised as strategic hubs of e-commerce within a multitiered supply chain.

This change has been brought about by the same trends that have made port-centric logistics (PCL) such an extensively explored idea. Schwerdtfeger wrote that three of the biggest business trends driving the new approach to warehousing are time-to-delivery, drop shipping, and automation.

Time-to-delivery

The porttechnology.org article revealed that at the broadest level, the biggest driver of growth in the maritime sector is e-commerce and the increasing amount of goods being shipped. This has rapidly increased customer expectations, which, in turn, has meant that time-to-delivery has overtaken price as most important competitive differentiator.

This market phenomenon is often referred to as the ‘Amazon Effect’, due to the e-commerce market leader’s emphasis on ensuring that goods arrive at customers’ doors in the fastest and most cost-effective manner.

The importance of time-to-delivery, or fulfilment responsiveness as it also called, will become more important as is routinely shown in industry studies and surveys.

Drop shipping

Schwerdtfeger notes that ‘drop shipping’ is an increasingly popular supply chain trend that sees retailers transfer orders to manufacturers or wholesalers who then transfer goods directly to customers.

This allows retailers to increase their profit margins and cut costs and also increases the burden on warehouses, which now have to directly ship goods themselves.

The concept is growing at such a rate that there are numerous warehouse companies that cater specifically to drop shipping.

Automation

“For all warehouses to operate efficiently while housing greater amounts of goods, they must invest in automation technology” states Schwerdtfeger in the porttechnology.org article. He notes that particularly popular innovations are warehouse management systems or automated storage systems.

These help ensure that warehouses utilise space, consume less energy and run smoothly and that automation is implemented efficiently.

Warehouse automation includes traditional technology, such as forklift trucks, sorters, conveyors etc, as well as collaborative robotics.

Warehouses are of critical importance to the supply chain as has been demonstrated by the ‘Amazon Effect’ and IT providers have developed programmes that provide support for the new export, import, and trans-shipment needs. This not only shows the nuanced nature of port operations, but also that if port-centric logistics are going to be realised, the journey will begin in the warehouse.

Readers interested in viewing the full article by Max Schwerdtfeger in porttechnology.org can go to https://www.porttechnology.org/news/can-warehouses-transform-port-operat....