Why Warehouses in Asia are on the rise in 2022

08 March 2022

Warehouses are in high-demand all across the world at the moment and in 2022 we’re only going to see that popularity rise even higher. But why is that? What’s with all of the hype and desire for warehouses right now? In essence, businesses (especially retailers) are running out of room to hold all of the items that we are ordering online.

 

Ever since the COVID-19 pandemic took the world by storm in the end of 2019, the online shopping industry has expanded by a whopping 43.5% - reaching an estimated $2.87tn (trillion!) globally. Almost half of that wealth has come from Asia.

 

Of course, with the rise is online shopping, the global supply chain has been put under a tremendous amount of stress over recent years. There has been a shortage of absolutely everything, from factories, warehouses, and even a shortage of lorry drivers in countries like the US and the UK.

 

As stressful as this time has been for many industries, and as many businesses have flopped under the economic pressures brought on by the pandemic, the one industry that is booming is the warehouse space. That said, the world is close to full capacity and vacancy rates are at a staggering record-low. Now more than ever, there is a demand for quality, functional, and affordable warehousing space! A nightmare for some but a lucrative opportunity for others.

 

Asia is currently where the majority of the products we buy are manufactured

It’s no secret that most of the products that we purchase online are manufactured and shipped from Asia. As such, the pressure on the logistics and warehousing industry has been immense. In fact, the current warehousing vacancy rate in Asia is at approximately 3%.

 

As there are stronger demands for e-commerce and the supply chain disruptions continue, it means that businesses are wanting to have the highest possible safety stock available and on hand. In order to adapt to the rising demands, online retailers that wish to remain competitive in the current economic climate must secure larger warehouses and integrate automation into their processes.

 

Key trends of industrial and logistics in 2022

There is a huge shift happening in the industrial and logistics sector and the supply chain will continue to evolve throughout 2022 as manufacturers are continually building resilience into their network in order to protect themselves from future disruptions. For example, the nearshoring of supplier bases could help to promote growth in both the industrial and logistics sectors in Thailand. These facilities will have a greater ESG focus on their operational side, including on-site safety and an emphasis on employee’ welfare and well-being.

 

The frequency and complexity of the shift that is being brought on by travel restrictions in Thailand and other Asian countries will have a negative impact on site inspections, signing of contracts, and could delay decision-making for any new site acquisitions and leasing activities that relate to inbound investment.

 

Occupiers must engage with landlords and owners in advance in order to secure a built-to-suit facility that will meet their specific business needs. In the same breath, landlords will also need to tailor their facilities to occupier demand with modern features that are up to ESG standards.

 

Big data is an emerging market in Thailand and other Asian countries due to the gargantuan growth of e-commerce and online platforms during recent years. Facility owners and landlords should brush up on the requirements and prepare for the opportunities that could arise over the coming months.

 

Here’s a quick summary of the key trends:

  • Manufacturers must build resilience into their network and supply chain in order to protect their business
  • Companies should put more emphasis on on-site safety, the welfare of their employees, and utility consumption as part of ESG
  • International travel may impact decisions for new site acquisitions and leasing activities.

 

Warehouses are getting bigger

Warehouses have always been exceptionally large spaces but today they’re having to grow even larger in order to keep up with the current demand from e-commerce. In fact, more than three-quarters of the companies that are relying on warehouse space in the Asia-Pacific region right now have each expressed a desire (and need) to expand over the next three years – thus signalling the huge demand for warehouse space that will only continue to grow.

 

And of course, as that growth in demand continues so too will the competition. But, that’s not all. Now, warehouses will need to become ever more automated and grow even larger in size. This is even more prevalent in places like Hong Kong where land is limited for industrial use – bringing the rise of 20-storey warehouses.

 

So, not only is the demand for warehouse space on the rise, but quality warehouse space as well. Facilities will need to be larger, taller, and able to operate with greater efficiency at lower costs.

 

Automation has its downsides

Automation, particularly in warehousing has enabled large companies to cut back on staff whilst improving the overall efficiency of their operations. However, many people are concerned about these changes as people are fast becoming replaced by robots which will only lead to an increase in unskilled, unemployed workers. That being said, as we buy more and more products online, retailers are going to be forced to continue growing, investing in more warehouse space, and relying on technological innovations such as automation in order to keep up with the competition and remain in business.

 

Conclusion

To recap, warehouses are on the rise and will continue to grow in popularity throughout 2022. This is because of the immense growth that the e-commerce industry has seen in recent years – particularly due to the pandemic. The online shopping industry has expanded by a whopping 43.5% - reaching an estimated $2.87tn (trillion!) globally. In order to meet such high demand and keep up with customer requests such as, express, same, and next-day delivery, retailers and e-commerce giants have had to expand their warehousing space.

 

As the world slowly gets a hold of the COVID-19 pandemic, will there be a shift back to physical retail stores? Or are we going to find that most people prefer the ease and efficiency of ordering online instead? Only time will tell.

 

Expand your horizons with Frasers Industrial

Are you on the lookout for quality warehousing space? If you are a business owner and you are currently feeling the pressure to expand, then Frasers Industrial Ltd can be of service. We have a wide range of premium quality warehouses available to rent throughout Thailand and Asia, each of which are located in strategic areas.

 

For more information or if you have a specific question regarding our factory and warehouse rental services then please feel free to contact us today.

 

Reference https://www.ey.com/en_vn/supply-chain/why-manufacturers-must-rethink-their-supply-chains-in-southeast-asia

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