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3 June 2021, France | Property Investment Management | News

Logistics: a strategic issue at the heart of the sovereignty of public and private players

Far from only being a technical subject for industrialists, logistics is really everyone's business, including consumers and citizens.

At the end of March, the Ever Given, a container ship weighing over 220,000 tonnes, blocked the Suez Canal. Ten percent of the world’s maritime trade is shipped through the Canal every day. As a result, deliveries were considerably delayed and logistics costs soared by more than 45%. Another key topic is the supply of vaccines against Covid-19. From delivery to storage to transport and vaccination sites, the success of France's vaccination strategy is at stake. Well beyond the public health issue, delay could cost the French economy seven billion euros per week, according to the credit insurer Euler Hermes.

These two examples show to what extent logistics, far from only being a technical subject for industrialists, is a matter that concerns everyone, including consumers and citizens.

Logistics: an instrument of war

Logistics is a matter of operational performance. It is evaluated, for example, in terms of customer satisfaction. In a “4.0 world” where immediacy is a given, it is also very much a competitive issue. Amazon has clearly understood this by making delivery times a strategic competitive advantage. But logistics is no longer simply a supply or distribution issue; it is a segment of the economy on its own. It has become a new industry, bringing together economic, societal and regional interests. In the past, it was a question of increasing market share; today it is an “instrument of war", the outcome of which is reflected in terms of industrial and national sovereignty.

At the forefront is the evolution of consumption patterns accelerated by the health crisis. The increase of online commerce, the main beneficiary of the situation, had a considerable impact on companies’ management of their supply chains, both for pure players and for traditional outlets. The same is true for local shops, which have been favoured over large-scale retail outlets. This has led to an intensification of parcel flows and an increased demand for collection sites. While logistics typically represent 10% of a company's turnover - half of which is transport – their entire production chain network has been at stake.

In a context of just-in-time delivery, being less dependent on distant sourcing means ensuring regular and controlled delivery. Manufacturers must therefore rethink and optimise their supply schemes to avoid shortages. From an environmental point of view, with 20 tonnes of deliveries per year per European inhabitant now the average, relocating supplies would reduce carbon footprints. This is a significant positive for many consumers, who are increasingly demanding on the subject.

The real estate market has fully understood this. In 2020, warehouses confirmed their appeal to an ever-growing number of investors. Although down for the year as a whole, the level of investment in this segment remains very satisfactory, placing France just behind Germany and on par with the UK.

 

Logistics: an issue of sovereignty

Let us take comfort from these fundamental trends; they represent many steps towards autonomy and sovereignty. They also draw attention to the fact that the efficiency and control of logistics is an important issue, and one that must be strategically integrated into public and private policies.

So what should be done? There is an urgent need to reform many French administrative procedures that are currently too complex and laborious. On the one hand, it is a question of integrating the laws on climate and land use, and on the other hand, of simplifying and rationalizing the methods used regarding project instruction and consultation to affect greater efficiencies.

It is urgent to integrate logistics into the priorities at both national and regional levels. Our regions are rich in resources and know-how. Relocating and developing the territorial network is an opportunity to decentralize the economy and to create value and jobs that could revitalise depressed areas.

Delegating the construction of logistics sites to professionals must be a priority. These specialists will be able to integrate all the parameters and issues related to this sector, thereby allowing companies to concentrate on their core businesses.

In conclusion, the primary purpose of logistics has not changed. However, it is now viewed and understood through a new prism that integrates all its components: ecology, economy, employment, transport and territories. It is time to appreciate this better and to highlight it as an inseparable component of our security and our freedom.

 

By Thierry Bruneau, CEO of Catella Logistic Europe