The right set of market dynamics and an acceleration in e-commerce adoption is driving additional interest in the logistics sector, which is proving to be a resilient one in the wake of this global pandemic. As the popularity of the sector continues to rise and investor allocations to logistics increase, our conviction remains high.
Reports and market research indicate the coronavirus pandemic has pulled forward e-commerce penetration by about two years, as global consumers experimented with, and even became reliant upon, online purchasing during this period. These trends and changing consumer behaviors will continue beyond the pandemic and will have a direct positive impact on the global logistics sector.
Online groceries is one of the fastest-growing slices of the e-commerce pie. Previously a relatively underpenetrated sector due to logistics and other reasons, this segment grew nearly three times during the pandemic in South-East Asia, but what is more interesting is that among consumers who have been buying more since April, at least 80 percent indicated they plan to continue buying groceries online even in the future, according to research from consultancy Bain & Co and Facebook. This will have a major impact on the cold chain segment of logistics.
The need to adopt
As extensive as the impact of e-commerce has been on the industrial property sector, we believe there is more to come given the unabating demand for higher speed, reliability and transparency – all of which hinges on the global supply chain becoming much more efficient, and it necessitates an increase in technology adoption.
“The coronavirus pandemic has pulled forward e-commerce penetration by about two years”
At GLP, digitization and automation play a pivotal role in driving asset utilization. Using a combination of data analytics, robotics, smart sensors, automated clearance systems and the Internet of Things, we have been able to increase the speed of gate traffic by 95 percent, increase the utilization of loading docks by 50 percent, improve the effectiveness of security operations by 25 percent, increase storage efficiency by as much as 400 percent and improve personnel efficiency by up to 50 percent. Our investment in G7, a trucking telematics company, is a prime example of our continued high-conviction focus on building a smart logistics ecosystem to meaningfully reduce costs and generate higher returns.
We believe institutional investors remain generally under-invested in industrial real estate and think the weightings will continue to rise, especially as investors reduce exposure to other sectors. We continue to see opportunities in investing behind further technologies and solutions and as we focus on new pockets of growth within industrial real estate, we are finding ways to leverage our experience in logistics to build businesses and invest in adjacent categories, specifically data and transportation infrastructure, which we expect to complement and enhance real estate businesses.
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