Month: October 2019

The UK logistics market remained resilient in the third quarter of 2019, with take-up of industrial space up 15% compared with the same period last year, according to research from Cushman & Wakefield.

The firm’s Industrial Outlook report for Q3 revealed that take-up for the first nine months of the year was on a par with the five-year average of 24 million sq ft.

Across the quarter, 8.6 million sq ft of space was transacted, however the number of deals completed fell by 17% and 33% on an annual and quarterly basis respectively, indicating a degree of Brexit-related nervousness among many occupiers.

Third-party logistics providers (3PLs) remained active accounting for 29% of deals completed since the start of the year with take-up in this sector driven, not only by occupiers stockpiling in preparation for Brexit, but retailers utilising specialist logistics providers to navigate increasingly complex supply chain fulfilment.

Take-up volumes in the manufacturing sector, which accounted for 53% in Q3, were boosted by JLR’s decision to consolidate 10 existing depots into a new 2.9 million sq ft global parts distribution centre to be built in Appleby Magna in the East Midlands, which was the largest deal of the year to date.

The report, which tracks enquiries for units over 50,000 sq ft, also revealed that take-up in London, South East, East Midlands and Yorkshire was above the five-year average, with notable deals including Ocado taking 304,000 sq ft at at SEGRO Park Purfleet in East London.

The availability of industrial stock rose by 6% year-on-year to 64.2 million sq ft in Q3, equating to two years’ supply at current take-up rates with less than half of this (44%) classed as Grade A quality.

Data also showed that 2019 to date has been a record year for speculative completions with 14 million sq ft due to be delivered to the market this year, however the volume of speculative construction looks set to slow down through 2020.

Preliminary figures to date suggest that logistics investment is circa 40% down compared to the corresponding period last year largely due to the current economic and political landscape. Despite this, logistics continued to outperform other commercial property sectors with long-income and strong covenants remaining highly sought after and commanding keen yields.

Bruno Berretta, UK Logistics & Industrial Research & Insight, Cushman & Wakefield, said: “The market is generally more favourable to the occupier than 12 months ago. However, the level of occupier choice continues to vary substantially from one submarket to another and across size bands. Availability remains relatively tight for some product types even in regions that have seen greater levels of speculative development which is supporting rental growth.”

Richard Evans, Head of UK Logistics & Industrial, Cushman & Wakefield, commented: “Despite the business uncertainty caused by the ongoing Brexit situation, the logistics and industrial market has continued to outperform other sectors. The structural changes in the retail sector and the increasing focus on supply chain efficiencies are just two of the key drivers which give us confidence that market demand will remain robust.”

Policies designed to vet suppliers and vendors against indicators of bribery and corruption risk are poorly understood and inconsistently applied, according to research from Dow Jones Risk & Compliance into the third-party risk management practices of UK companies.

The research, conducted in August 2019, surveyed 250 UK-based procurement professionals from five sectors: Engineering and Construction, Oil and Gas, IT and Technology, Media and Telecoms, and Manufacturing.

• 31 percent of the third parties that businesses work with are considered ‘high risk’
• 50 percent say that the time required to vet suppliers results in corners being cut to do business faster
• A third of all new supplier onboarding undertaken in the last 12 months was likely to have been executed incorrectly
• Over half of procurement professionals are not confident that existing suppliers have been vetted properly
• 41 percent say senior-level relationships influence the level of supplier vetting
• Less than half (45 percent) have regular and training certification programmes to ensure the code of conduct for third-party risk management is fully understood and applied

With the promise of increased scrutiny from regulators, and stronger enforcement from prosecutors such as the Serious Fraud Office, change is needed – and quickly – if UK companies are to avoid disruption, financial penalties and reputational damage.

A third of all new supplier onboarding undertaken in the last 12 months was likely to have been executed incorrectly, while more than 50 percent of the procurement professionals surveyed said they were not confident that existing suppliers had been vetted properly.

This is particularly worrying as the research uncovers that procurement professionals expect a doubling of third-party relationships in the next three years, despite the challenges already faced in managing 2019 volumes.

Two-fifths admit that their approach needs an overhaul, but the majority do not expect to see an increase in budgets to prepare for future requirements. Half expect budgets for third-party vendor management to stay the same, while a quarter forecast their budget will be cut.

Guy Harrison, General Manager of Dow Jones Risk & Compliance, said: “With global supply chains becoming ever more complex, managing regulatory and reputational risk necessitates a rigorous approach to the vetting and onboarding of third-party vendors and suppliers. This research reveals significant gaps in the implementation of third-party risk management processes, as well as a lack of business-wide understanding about the risks such processes are designed to address.”

“With enforcement action on the rise, compliance simply isn’t the place to cut corners. UK businesses need to address blind spots around third-party risk management as a matter of urgency.”

Jim Lord, former FCPA prosecutor, said “This survey suggests that compliance officers need to have visibility over the entire third party onboarding process and not just leave it to procurement to get it right. A consistent risk-based approach implemented throughout the organization with oversight from compliance is a critical component of having “adequate procedures” in place.”

Charles Monteith, former Head of Assurance, Serious Fraud Office, “UK business is much less likely to be caught up in bribery overseas than they were ten years ago. This thanks to both the threat of prosecution and the stipulations of the UK Bribery Act. The demand side is also changing. Driven by the need to have anti-corruption laws of equal standing and to protect domestic industry other countries have instated tougher laws, although this hasn’t completely caught up. Overall, there is a sense amongst business that bribery is neither sustainable or worth the risk.”

Read the report here.

Dutch system integrator VanRiet premiered its new small parcel sorter, the HC Smalls Sorter, at the Parcel+Post Expo last week. Tailored to the special needs of the courier, express and parcel industry, it is designed to enable the damage-free transport of small and light parcels in rough environments, such as parcel delivery.

‘With the rising volumes of smaller items, changing packages and ongoing need for short delivery times, we see that having an automatic solution for the sortation of smalls is no longer a wish, but a must-have for our customers,’ says Frank Engelen, Product Manager at VanRiet.

The HC Smalls Sorter’s special feature is its narrow-profile infeed belt, which transfers small packages smoothly to the sorting deck. The advanced design of the sliding shoes combined with rounded slats prevents thin packages from getting caught under the conveying elements, and the overflow conveyor belt can process the entire range of packages.

The technology used in the new system is based on VanRiet’s flagship HC Sorter. As a result, it is robust and also features the patented fully closed deck. This prevents dirt and cardboard pieces from getting stuck in the system. It also contributes to low noise levels and safe working conditions for distribution staff. The HC Smalls Sorter achieves its high throughput thanks to its maximum speed of 2.0 m/s. Due to the new switching system, it is possible to place outfeeds every 650 or 900 mm along the main conveyor line. With these short outfeed pitches less floor space is needed. Its modular design allows for easy customer-specific configuration of the standard components. Moreover, the sorting system can be extended and synchronized with other shoe sorters.