Many warehouse operators are looking at revamping their premises and operations rather than moving, according to Martin Bailey of Industrial Logistic Services (ILS).
Companies wary of investing in new facilities due to global and local political and trade uncertainty and the cost of moving, are finding that refurbishing can be a more cost-effective option, he told Freight News.
Operators are looking at making existing facilities more efficient rather than building new infrastructure.
Improving efficiency starts with removing constraints.
“Often it just takes somebody new to the facility to walk around and observe the operations to identify ways to raise productivity.
“It could be rearranging the warehouse, changing the flow, installing new doors, adding technology or upgrading the information systems.
“Sometimes, it just needs everyone to do things better,” he says.
For example, one option is raising the roof of existing facilities.
“When I started in this business, eight metres used to be regarded as high. Today, 22 metres is not uncommon for a new facility, and we have done a 40-metre-high warehouse in South Africa.”
Going up has the advantage of the facility staying close to a factory, logistics corridors or customers.
“Moving to a new site is often much more expensive than going up,” he says.
Bailey does not see a major trend towards warehouse automation in South Africa, except for specific-use cases where it is needed.
“Many big European companies with a presence in South Africa do not want to invest capital.
“They may automate in Japan or Germany, but not in SA.
“With our labour costs being around a fifth of those in Europe and probably a fourth of those in the United States, technology often does not offer any real savings. In South Africa, it is hard to justify automation.”
Meeting the demands of e-commerce deliveries is behind much of the investment and innovation happening in South Africa at present.
The likes of Takealot, Checkers’ Sixty60 and Amazon are setting the trend.
“There are a lot of warehouse operations in South Africa that are really world-class, several without automation.
“And then there are companies that do not want to be world-class.
“It is a mixed bag.”
Bailey believes that future investment in warehousing will also be influenced by what is happening with the rail system.
“As always, the big issue in South Africa is that 70% of our economy is up in the Jo’burg area.
“And our rail system does not work, and the ports also have issues.
“As long as our rail and port systems are not world-class, our economy can’t be world-class.”
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