So the question goes: “What are the one or two important changes we can expect in 2009?” If I knew for certain, I surely would be in a great position to significantly increase my personal wealth!
To say that the transportation and logistics industry is entering un-charted waters would be a gross understatement. Global trade volume is declining, even in historically resilient trade lanes. Supply chains are under constant scrutiny, particularly cost and inventory reduction. Consumer confidence is at an all-time low, with few signs of improvement. Combined, these factors do not present a very positive collection of industry conditions.
So how will these trends impact the future? There are few indications that 2009 will deliver much positive change. In fact, many suggest a turnaround will not come until early 2010. If this proves correct, what will the industry face in 2009?
Supply-chain “tweaking” will continue. This will drive new and imaginative solutions to the forefront. These will include a push for higher warehouse productivity and efficiency supported by improvements such as additional automation to handle higher volume in equal or less space, additional racking to optimize the current footprint, and outsourcing short-term solutions to support further port diversification.
Alternative sourcing origins in Latin America — particularly Mexico — will gain additional support. Despite this, China will certainly maintain its dominant position as the global sourcing leader. Airfreight shipments will continue to be scrutinized as the migration to ocean freight continues, supported by the accepted trade-off between transit times and freight cost.
What does this mean for industrial real estate? Demand in North America will remain limited for new construction as users take a wait-and-see approach. Demand will remain stable for existing facilities in markets with a strong tie to global trade. Latin America, driven both by new sourcing opportunities and growth in domestic economies — particularly in Mexico and Brazil — will realize strong demand in 2009 and beyond. Asia demand will also remain strong, particularly on the back of continued intra-Asia trade growth. Bottom line: 2009 holds no silver lining for any of us!