Logistics property developer GLP is taking advantage of new technologies to increase efficiency for its tenants. Chief executive officer Ming Mei told attendees at the ULI Asia Pacific Summit 2017 that his firm is using big data to improve efficiency in its logistics parks in China, analyzing everything from the temperature of cold-storage trucks to site selection for logistics tenants.
The Singapore-listed group is also leasing robots—used for moving stock around warehouses—to its customers. “We don’t care if it is logistics space or logistics robots,” said Mei. “We are happy to lease it to you!”
GLP is inevitably keyed into technological change, said Mei, because such changes have been one of the most important drivers of its business. E-commerce has taken off spectacularly in China, which is now the world’s largest e-commerce trading market.
According to China’s Ministry of Finance, e-commerce transactions rose 19.8 percent in 2016 to CNY26.1 trillion (US$3.8 trillion). China now has 467 million people who shop online and 441 million who use their smartphones to shop. “In many ways, China is ahead of the U.S.,” Mei said.
China has become a pioneer in logistics—first through widespread next-day delivery, then same-day delivery, and now 30-minute delivery, said Mei.
GLP has seen e-commerce tenants grow to take 27 percent of its space in China, compared with 3 percent when the business was launched less than a decade ago.
The company is now adapting to provide the infrastructure necessary to satisfy a shopping public that wants to get its items right away. On one hand, this means developing large and efficient modern warehouses, which can accommodate automation and robotics; and on the other, GLP has created 50,000 smart lockers in neighborhood fulfilment centers and in residential blocks to allow for rapid and secure delivery and pick-up.
The cold-storage temperature sensors came because a client of GLP’s that was transporting ice cream found that while its product left the warehouse and arrived at its destination frozen, at some point in between it had melted, affecting quality. The new sensors allow the product to be monitored at all times, ensuring better results for both distributor and customers.
In conjunction with McKinsey & Co., GLP has developed new site selection software that analyzes the best locations and best routes for its customer base.
New software is aimed at making GLP’s portfolio more efficient, to get more value out of each square meter, he said. The company is introducing electronic bills of lading that can be tracked with GPS, which allows deliveries to get into the warehouses more quickly. “In most warehouses, the deliveries arrive in time and can be dealt with swiftly once inside, but it is the admission process that slows things down,” he said.
The company is also trying out a system whereby it bills tenants not for the amount of space they occupy, but for the amount of cargo that passes through the center. However, basing payments on this “throughput” requires advanced scanning that can measure the cubic capacity of the cargo.
The developer is also working with the city of Chengdu in western China on tracking delivery trucks so their journeys can be timed to avoid congestion on the city’s roads. It is the power of big data that allows this sort of project to succeed, he added.
The sharing economy will become an increasingly important factor in the logistics business, Mei said. As GLP’s tenants share space at its logistics parks, so in the future they could increase efficiency by sharing vehicles or even drivers, he said. “We could have an Uber for deliverymen, where they are hired as and when needed by logistics companies.”
He acknowledged that security would be an issue to be dealt with in this case of shared services and said China was now requiring photo identification to be linked with parcel deliveries.
Naturally, the audience wanted to know how and when drones would be taking a major part in the logistics business. JD.com, China’s second-largest e-commerce company, recently said it has drones that can carry up to 30 kilograms (66 lbs.) and was working on a drone that could transport up to one metric ton (1.1 tons).
Mei said: “Were it not for safety concerns, drones would already be in wide use and would be an ideal solution. But in the short term, drones cannot work.” He noted that there was a “constant struggle between efficiency and safety.”
An audience member asked Mei how the demand for rapid delivery could be accommodated for all of China, not just the major metropolitan areas. He said: “We have to assume that people who choose to live in more isolated communities are there for a reason—they prefer the slower life!”