Sustainable Warehousing: New Requirements to ‘Green’ Online Retail Demand

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Sustainable Warehousing: New Requirements to ‘Green’ Online Retail Demand


Although the pandemic rapidly increased the demand for online shopping, the e-commerce industry has been experiencing rapid growth for years. Spurred by consumer desire to have unlimited choices instantly, e-commerce is expected to represent 26 percent of all retail sales in the U.S. by 2025 — resulting in the need for an additional 330 million square feet of distribution space. With ambitious plans to make the U.S. carbon neutral by 2050, warehousing and logistics organizations have an obligation to decrease the industry’s carbon footprint. This means taking a low-carbon approach to construction and building maintenance, as well as improving site selection and availability for warehouses to reduce transportation emissions.

Warehouse Site Selection

The increase in e-commerce has inevitably led to a rise in demand for warehouse space. Ideally, providers are seeking options closer to where their consumers live — near major metropolitan areas. However, warehouses require expansive spaces, with most key players in the industry looking for facilities over 100,000 square feet or even 250,000 square feet. This can make it challenging to find suitable sites to meet new demand, hiking up costs for warehousing land. Additionally, distribution centers are finding it difficult to locate existing assets to lease or purchase that meet these requirements. Many end up looking for new builds or refurbishing abandoned commercial assets, such as malls or office spaces.

Currently, most warehousing demand is coming from the Western U.S., including markets such as Phoenix and California’s Central Valley. These areas are heavily populated but also offer vast land resources close to city centers. Moving further outside of cities and major metropolitan areas can increase availability and decrease cost, but it has an adverse impact on the environment. When distribution hubs are located farther from where the demand is, journeys will be longer, increasing carbon emissions. In order to improve the sustainability of the industry, government strategies are needed to reduce land requirements for distribution centers, allowing them to be placed closer to where consumers live. In circumstances where this isn’t possible, companies need to consider means to lower the emissions caused by distribution strategies, such as using Electric Vehicles (EVs) to transport products to consumers.

Repurposing existing spaces can help reduce the carbon emissions of warehousing sites, as it reuses resources and potentially allows for shorter distribution timelines. Unfortunately, there is still a lot of work required to get these facilities up to standard for modern warehousing and manufacturing needs. Another key trend that will improve site selection by allowing for smaller horizontal square footage and improved proximity to city centers is the growing popularity of vertical warehouses. In metropolitan areas where horizontal land is not an option, logistics facilities are going vertical, creating multi-floor warehouses and manufacturing sites. Logistics demands are changing as new industries enter the market, including food services. This has inspired innovation in the design of buildings.

Low-carbon Construction and Operation

According to a United Nations Environment program study, buildings and new construction are responsible for huge carbon emissions, accounting for 36 percent of global energy use and 39 percent of annual energy-related carbon dioxide emissions. With warehousing requirements increasing, it is a pivotal time for this industry to evaluate construction-related emissions and consider environmentally aware building methods.

Modular construction has been used across several sectors with great success, including life sciences and residential construction, and these same practices can be applied to warehousing and logistics. Modular construction takes place off-site in manufacturing facilities, with completed designs moved on-site for installation. This can reduce material waste, as it uses a controlled environment for building. It also creates reusable, standardized building designs. Because the building parts are plug-and-play, it also makes the demolition of buildings more sustainable as the units can be removed when they are no longer needed, then repurposed elsewhere. Using hydrogen-powered transportation to move modular projects on-site can help further reduce carbon emissions, but this new trend is only sustainable if companies invest in hydrogen manufacturing plants.

The materials used in warehouse construction are also important. Utilizing steel building frames can reduce wear and tear on the building. It’s also recyclable and can be reused on other projects. Reusing materials from other projects, or using materials that have lower embodied carbon, can bring down the carbon footprint of the building. All materials used in warehouse construction need to be carefully considered if a company wants to reach sustainability goals.

Sustainable practices should also be followed when the building is in use. In a warehouse environment, energy efficiency is important, but it must be balanced against workers’ needs. Workspaces must be illuminated and heated properly to keep workers safe and comfortable. Implementing energy-efficient lighting and heating, as well as using alternative energy sources, can help meet sustainability goals while managing requirements for workers. Technology can be used to monitor energy efficiency, manage inventory and create more efficient internal processes, thereby reducing overall energy consumption.

Smarter warehouses are also needed, whereby technology can be implemented to reduce consumption. Warehousing is now implementing robotics to reduce manual labor requirements while improving efficiency. Although the use of robotics is mostly to improve productivity, when used in conjunction with other sustainable design initiatives, the results can reduce carbon emissions. For example, JD.com, a retailer out of China, opened an automated warehouse in 2018 that boasted only four employees but 200,000 daily package fulfillment. When China announced its goal of reaching carbon neutrality by 2060, JD.com began exploring low-carbon, innovative solutions for warehousing, such as solar panels to power the robots. As new technologies emerge, building considerations will need to change. For example, the use of drones in delivery means that spaces need to accommodate charging stations and landing pads. In new warehouses, companies will need to look towards new technology trends to ensure buildings are prepared for the future.

Traditionally thought of as straightforward projects, warehouses are becoming increasingly complicated. New design, technology and sustainability requirements are forcing companies to innovate in order to develop forward-facing warehouses that will meet future demand. At the same time, increased demand is forcing companies to accelerate timelines while reducing costs. Traditionally reserved for complex life sciences projects, project control consultants will become increasingly necessary on new builds, as well as refurbishing projects.

Environmentally Aware Warehousing and Logistics

Large e-commerce companies are starting to see the importance of creating environmentally sustainable operations. Many U.S. companies that moved manufacturing capabilities overseas are now looking to reinvest in U.S. infrastructure to reduce shipping timelines. California’s World Logistics Center is aiming to be the most sustainable center of its kind in the world, investing in green vehicles and green technology, rooftop solar panels and conservation grants, among other efforts. Other large logistics players are also making promises to reduce the industry’s environmental impact.

These positive changes show that the industry is ready to ‘green’ online retail demand. To do so, there needs to be serious considerations around where and how warehouses and logistics centers are being built. The benefits for the operators are there — a low-carbon approach to construction can lower future operational costs. But it also has a larger impact on future industries that are experiencing increased demand, such as data centers and life sciences. If logistics can show the benefits and ease of sustainable construction and design, it can pave the way for future sustainable construction booms.

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Damien Gallogly website headshot

Damien Gallogly is Vice President, Americas West Region at Linesight and has over 17 years experience in the construction industry. As a project controls expert, he has worked on a number of large-scale projects, and benefits from considerable international experience across the U.S., UK, Ireland, the Middle East, and Asia. This gives him an in-depth understanding of working on major developments and complex projects, from early engagement through to project closeout. Damien has worked with a range of multinational clients, supporting their development and ambitious programs with valued, strategic counsel.

This article originally appeared here. Republished with permission.



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