How Changing Global Trade Patterns and Consumer Habits Will Disrupt Manufacturing Business Models
Rapid changes in technology, the global labor situation and consumer habits will have a profound effect on the manufacturing supply chain and the commercial real estate sectors of manufacturing, warehousing and distribution, and retail
Area Development Research Desk (Q3 / Summer 2013)
Back in 2001, global trade totaled $6.5 trillion. But global trade has been growing by an average of 9.5 percent a year for more than six decades. If it continues to do so for the next decade, that will send approximately $2.7 trillion more in goods across the globe every year, according to a Cushman & Wakefield white paper, “The Changing World of Trade.” By 2021, the total global trade figure could be $45 trillion. “Even at half of this pace, exports would reach nearly $30 trillion in 2021,” the report observes.
Add in the technological and demographic changes that are impacting the global labor and retail scenes, and it’s clear to see that the future most certainly won’t be business as usual when it comes to the manufacturing supply chain and the commercial real estate sectors of manufacturing, warehousing and distribution, and retail. For starters, according to the white paper, “Rising wages in some Asian countries, increasing transportation costs, and advanced automation have some manufacturers rethinking their business models and moving all or parts of their operations back to North America or Eastern Europe or emerging new markets.”
According to Maria Sicola, executive managing director and head of Cushman & Wakefield’s Research in the Americas, “In major markets around the world, countries are positioning themselves to capitalize on the growth in international trade by investing heavily in infrastructure improvements such as ports, airports, highways, railways, industrial parks and, most importantly, intermodal hubs.”
Then there are the revolutions in retailing. “Some experts estimate that up to 25 percent of all retail sales in both the U.S. and U.K. will take place through online channels by 2020,” the report notes. That calls for big changes in delivery systems and highly automated distribution centers.
In retailing, an important buzzword is “omnichanneling.” That’s the concept of creating a seamless and unified shopping experience that includes not just bricks and mortar but computers, mobile Internet devices, direct mail, catalogs, TV, and radio. Says Cushman & Wakefield, “Omnichannel requirements are putting new inventory, location, transportation, and space cost-control pressure on retailers and shippers at a time when they are expanding into new continents and adapting to the challenges of retailing in increasingly dense cities.” Efficient distribution will be more important than ever, as consumers will be expecting to see their purchased products show up as rapidly as possible once they tap the “purchase” button on their smartphones. As a result, look for distribution centers to pop up all over, the white paper notes: “Multiple, well-placed distribution centers minimize the time and distance spent on the final leg of delivery.”