New Zealand Post’s CourierPost facility in Highbrook is directly benefitting from the boom in ecommerce
Online shopping transforming logistics operations
In a few short years – by 2026 – 83% of New Zealanders will be shopping online (up from about 66% now). That boom has already seen New Zealand’s online retail spending rise 10% year on year to June, according to Statistics NZ, but brings with it some major logistical challenges.
With the rise in online shopping come higher expectations. Customers want goods delivered quickly and seamlessly, and are exhibiting mounting impatience – no easy challenge to meet. Delivery is an enormous part of the promise made by online retailers, which places increased emphasis on the property strategy put in place by operators and their landlords.
“Globally, ecommerce-related customers account for about 60% of Goodman’s new developments,” says James Spence, director of investment management for Goodman. “There are the large ecommerce players such as Amazon and JD.com, the logistics businesses who service them, as well as retailers who are reconfiguring their supply chains to incorporate ecommerce into their business.”
Ecommerce has transformed logistics around the world, and while we’re yet to see the immediate impacts in this country, New Zealand Post is thinking 5–10 years ahead so that it is primed to take advantage of the coming boom.
“When we partnered with Goodman to build, we knew we could tap into their expertise with ecommerce around the world and the technology that leading ecommerce companies are introducing, so we can cope with the growth we’re seeing,” says Hamish Plimmer, New Zealand Post’s general manager, property and procurement. “Modernising supply chains is only going to get more and more important for us.”
Crucial locationWhile Goodman keeps an eye on other centres around New Zealand, Auckland is still the critical hub for logistics clients, close to the source of goods – ports, airports and inland ports – and, more importantly, customers. The trend is for supply chains to be close to dense population centres.
Evan Sanders, Goodman’s portfolio manager for Highbrook Business Park, points out that with increasing consumer expectations (same or next-day delivery), locating logistics centres near the biggest markets and transport hubs is crucial.
“Transport time and cost to make that last mile of delivery efficient is a huge part of ecommerce,” he says. “Having the right land close to consumers is the most important part. One big truck load comes into a logistics centre, but then there are a large number of smaller vehicles heading out on shorter distances. You’ve got to be close to key transport hubs.”
Auckland alone accounts for 37% of New Zealand’s online spend, with the number of transactions even higher than that as shoppers buy more lower-value items.
Facilitating business growthInvestment in the technology fitout inside warehouses and properties has been a priority for clients like New Zealand Post, explains Mr Sanders. “As a landlord we need to manage changing needs, as we’ve seen ecommerce transform requirements overseas. We’re best placed to do that in Auckland where we have the experience and the properties.”
For example, New Zealand Post’s operations at Highbrook include CourierPost, Contract Logistics and the Auckland Mail Service Centre. Collectively these businesses occupy more than 45,000 sq m of warehouse space, with the mail centre typically handling two million pieces of mail every day.
The CourierPost facility, which handles the national parcel delivery service, is directly benefitting from the boom in ecommerce and is now handling up to 18,000 items per hour. This reflects growth of 33% over the last five years. The design and flexibility of this 20,000 sq m purpose-built space has facilitated CourierPost’s business growth.
Embedded relationships“Goodman has global expertise in a wide range of styles of logistics buildings, with embedded relationships that we can draw on for design or technology,” says James Spence.
“Online sales in New Zealand are just over 8% of total retail sales, and according to Statistics NZ are predicted to rise to around 18% by 2021. In China, online sales already account for a jaw-dropping 25% of total retail sales. Given ecommerce growth impacts demand for industrial property, Goodman – as one of the world’s largest industrial property specialists – is set to benefit from this.”
As the penetration of ecommerce continues to grow in New Zealand, Goodman’s industrial property portfolio will continue to meet and anticipate the growing volume and sophistication of demand.
For further information, visit nz.goodman.com