LOGISTICS: FROM "UGLY" TO DESIRED BUSINESS

The epidemic is causing strange mutations in the logistics world. Or, as the president of the UNO employer, Francisco Aranda describes, “contradictory movements” due, on the one hand, “to the drop in B2B [the relationship between manufacturers and subcontractors], of close to 50% and the unprecedented boost to electronic commerce ”. Once the confinement boom passed, Aranda figures that e-commerce "has grown by 20% with products that were not previously purchased online and now yes." This has forced logistics operators to react hastily.

While other activities crumble, investors have smelled the business and are on the trail of money. A report by BNP Paribas Real Estate speaks of the fact that the hiring of warehouses in Madrid has shot up 57% in the first semester (223,274 square meters) due to the strength of demand in the Corredor del Henares and peripheral towns such as Coslada, Alovera, or San Fernando. In Barcelona, ​​there is a decline that David Alonso, its director of Research, attributes to two large logistics operations in 2019 that may distort the comparison. But in general, he believes that logistics are saved from burning thanks to the increase in rental contracts of less than six months. "This type of operation has occurred due to the peaks of activity related to food and electronic commerce. In addition, the projects for the construction of new warehouses are maintained ", Alonso maintains, giving an example:" We have seen how a developer is going to develop 60,000 meters in Dos Hermanas (Seville) without still having a client. That means he trusts that the market will respond. "

A report by BNP Paribas Real Estate speaks of the fact that the hiring of warehouses in Madrid has shot up 57% in the first semester (223,274 square meters) due to the strength of demand in the Corredor del Henares and peripheral towns such as Coslada, Alovera, or San Fernando. In Barcelona, ​​there is a decline that David Alonso, its director of Research, attributes to two large logistics operations in 2019 that may distort the comparison. But in general, he believes that logistics are saved from burning thanks to the increase in rental contracts of less than six months. "This type of operation has occurred due to the peaks of activity related to food and electronic commerce. In addition, the projects for the construction of new warehouses are maintained ", Alonso maintains, giving an example:"

We have seen how a developer is going to develop 60,000 meters in Dos Hermanas (Seville) without still having a client. That means he trusts that the market will respond. " From CBRE, its national industrial director Alberto Larrazabal makes a similar diagnosis. “We were starting from a very good first quarter. In April and May the coronavirus was noticed, many investors have postponed their operations, but they have not stopped them ”. If last year logistics received about 1,200 million in investments in Spain, this strange exercise could end with about 1,000 million at the current rate, with a significant flow of foreign capital on the table. “There is a brutal interest in the sector. All the large groups sell online and other medium and small ones have started to do so. The food sector has exploded, everyone is trying to improve their computer systems ”, analyzes the CBRE representative. Needs have also changed. Smaller spaces, close to cities, are sought for that door-to-door distribution of packages. Industries, for their part, have needed warehouses to place unsold surpluses during the closing of the activity. The sock has turned around: "Before the e-commerce boom we said we were the ugly duckling ... not anymore." The profitability now reaches 5% and real estate investors see it as a refuge from the decline of other segments.
 

New operations At the top of the pyramid of that market are the greats of electronic commerce. Amazon, which at the end of July announced that it will create 2,000 jobs in Spain, will open two logistics centers in Seville and Madrid, as well as other smaller ones in Murcia, Rubí (Barcelona) and Leganés (Madrid). Aliexpress (Alibaba) has invested in its logistics arm, Cainiao, setting up a commercial route that will operate three weekly flights from Hong Kong to Madrid with a stopover in Liege (Belgium). Worldwide, the Chinese platform will add 1,000 new air routes to reduce the average waiting time to three or five days.

"We have expanded the logistics possibilities in Spain through alliances with more than 10 different logistics and warehousing companies —among them Correos, Packlink, E-log Canarias, Genei, 4PX or EDA—", describes a spokesperson by email. Precisely, the Spanish public operator has bought 43,000 square meters in Zaragoza to build a new platform. To the bottom, Blackstone has acquired logistics assets from a company in the sector, Gallastegui.

Consequently, employment shows a friendlier face than in other businesses. A report by Randstad indicates that 79,045 contracts were signed in the sector in June, 15.7% more than in May. The data is still 31% lower than that of the same month last year, but it is clear that nothing is being the same in 2020. “The recovery in logistics is going to be fast and above average, according to the perception of entrepreneurs ”, writes Valentin Bote, director of Randstad Research.

From XPO Logistics, one of the world giants in the industry, its director of Transportation in the peninsula, Massimo Marsili, believes that in these months the lesson that companies have learned is that without technology there is little to do. “What customers want is safety, efficiency and adaptation. During confinement, for example, we delivered more than 100 million masks throughout Spain, 1.5 million PCR tests, 825 respirators. We have hired more than 1,000 people and went from making 1,500 daily last mile deliveries (to homes) to 4,500. This was possible because the group invests more than 500 million in innovation every year ”.

There are also promising start-ups that, like fintech in banking, overcome entry barriers with technology in a sector that requires, a priori, significant investments. "We do everything that the greats don't do," says Yaiza Canosa, founder of the operator Goi four years ago, which has just received an injection of 17 million euros to continue growing. “Fragmented and little digitized sectors, with very local, deprofessionalized companies, are an opportunity. We were born as a technological and logistics hybrid ”. His company transports, installs furniture and assembles household appliances for clients such as Ikea, Leroy Merlin or Amazon. They hardly have their own warehouses, but those of third parties operate.

Pending subjects

The most promising forecasts, however, could run into a general decline in consumption in line with the continuous outbreaks of the virus and the increasingly distant recovery in tourism. “Postcovid demand is not going to look like precovid. Some operators are going to disappear. There will be, on the one hand, large players, and on the other, very efficient small or medium-sized ones ”, predicts the president of UNO. A few weeks ago he met with the Minister of Industry, Reyes Maroto, and told her about pending issues in the country.

“Multimodality is the main one. The use of the railroad to move goods is residual. At airports we have the opportunity to be a logistics hub for Asian products that are sent to Latin America. However, the big portals are choosing to do the consolidation of merchandise in Holland. When that happens, and given that both countries have the same rules, we are talking about an issue of customs efficiency ”. The minister took note and announced the opening of a sector agenda for logistics and digital transformation.

Source: El País Madrid