Sunday 4th Dec 2016 - Logistics Manager

3PL consolidation

For many landlords, a visit to the property director of a third-party logistics provider (3PL) ranks slightly lower down the list of things-I-want-to-do than a visit to the dentist. And now that Deutsche Post has agreed to buy Exel and there is a rumour that UPS is acquisitive, will this mean that 3PLs are going to get more demanding of their landlords and developers?

The answer is that for some landlords, their relationships with 3PLs will become more difficult to bear. For others such as ProLogis, I am happy to say that our relationships with the 3PLs are something we try to nurture.

When it comes to property and of all ProLogis’s tenant types, 3PLs have the clearest idea about what they need from a building. They want good quality, low maintenance buildings in good locations and on flexible lease terms. They want more innovative and flexible funding schemes for fit-out. They are aware that fit-out costs – electrical works, lighting and heating, racking and shelving, electric truck battery charging bays and sprinklers – can add six or even seven figures to the shell costs.

Like all our customers, ProLogis helps 3PLs strive to operate more effectively. Thanks to the buildings we provide, the trend has grown towards 3PLs taking larger and larger distribution hubs of 18,600sq m-74,400sq m (200,000-800,000sq ft) to serve their own customers.

Approach most property professionals and you will find yourself called a potential tenant or occupier, or a corporate end user.

That is what Richard Eldred found when he started his search for new space. Chairman of fast-growing The Pallet Network (TPN), Eldred was running his company from a little more than 9,300sq m (100,000sq ft) in various buildings in Leicester. He looked at the tight triangle in or around the M1/M6/M69 and found two potential buildings but Exel took one of them and DHL the other, beating him to the mark. Tired of the length of the process, he finally came to ProLogis.

We made the decision easy for him. We had the stock and in the locations he wanted. We tried to talk him into moving to Daventry but he was adamant he wanted Rugby. TPN took Unit 2, 20,830sq m (224,000sq ft) at Central Park in November last year. The new hub can simultaneously accommodate 14 trunk vehicles being unloaded and loaded, meaning they are back on the road again as quickly as possible.

Talking to people like Eldred is crucial to ProLogis’s business. If you are headquartered in Amsterdam with a warehouse in Columbus, Ohio, and one in Coventry, we look after you in those three locations. Our local team – and they are always local – make it their business to keep in touch with you, so if there is an issue with the warehouse in Coventry, we can make sure we and you know about it in Amsterdam and Columbus.

ProLogis is a global business with a relatively tiny amount of staff. That means lines of communication are open throughout our company and our right hand finds it easier to know what our left hand is doing. In addition, we truly care about the building we build for you. That’s because we keep it after we build it. You continue to be our customer for the duration of your lease and, hopefully, into new leases. Most developers trade their buildings on. To them, you are only a “covenant” with “covenant value”. To us, you are a business partner.

Here’s a case study. Exel wanted to expand – it needed additional space to meet the growing demand for its freight services. At the same time, many of its key customers wanted Exel to provide more complex logistics services.

It was looking for a single site that offered inbound ULD handling, cross dock and merge in-transit, kitting, testing, storage and domestic distribution – and all at a port serving the continent across the water.

Working out what 3PLs want is the crux of ProLogis’s business. We reckoned we had the perfect 3,255sq m (35,000sq ft) building in this case. It could offer a wide range of specialised logistics services, including export handling and import freight shipments. Exel took the space.

This deal took place at ProLogis Parc Narita in Japan – but it could have been almost anywhere in the world. Exel now occupies more than 325,500sq m (3.5 million sq ft) of space at ProLogis parks in Asia, Europe and North America.