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Shipping & Logistics

Warehouse investors shun cities over traffic jam delays

Modern warehousing firms
Modern warehousing firms are moving to build warehouses in industrial parks. FILE PHOTO | NMG 

A 2018 global report by Swisslog Holding AG, a Swiss company specialising in integrated automation solutions for warehouses, shows that by 2030 urban warehousing distribution centers will be located outside of cities in order to maximise on space, avoid traffic jams and a strategy to attract international developers.

In Kenya, the trend is already taking shape with international developers of modern warehousing such as Africa Logistics Properties (ALP) moving to build their warehouses in industrial parks located along Kenya’s main arterial roads on the outskirts of Nairobi as opposed to along Mombasa Road, which was once a favoured location.

ALP, a specialist in industrial property investment, is building grade-A logistics and industrial facilities of up to 100,000sqm at the Tilisi industrial site in Kiambu Country, away from the congested traditional areas but still accessible to major roads.

“With the space constraints inherent in most urban cities in growing markets, the best future locations are on new industrial nodes that benefit from strong transport connections.

“Cities like Nairobi are congested and we expect to see traffic restrictions in future which support having dedicated suburban industrial nodes.

“We are in discussions with a number of businesses that are presently located on Mombasa Road but wish to consolidate and move their warehousing to our modern industrial units and parks,” said Toby Selman, CEO Africa Logistics Properties.

Indeed, the ALP West Logistics is located close to the Southern bypass and Nairobi-Naivasha Highway junction.

The site benefits from direct access to Jomo Kenyatta International Airport (JKIA) and the Nairobi-Nakuru highway which is the main cargo route from Mombasa port to Western Kenya, Uganda and Rwanda and is being upgrade to six lanes.

Cargo movement along the bypass has reduced, taking as little as 20 minutes to transport goods from Mombasa Road to Limuru, from a previous five hours. Its flagship project, ALP North with grade A warehousing of 47,000 sqm, is also located in Kiambu County along the Northern Bypass. The bypass offers easy connection to the Western side of Kenya and JKIA without driving through the CBD.

“Due to the traffic congestion during the day in Nairobi, many companies are making deliveries to customers in the evening hours.

“Suburban facilities like ALP’s allow for fast turnaround and unloading/loading of trucks to increase distribution and supply chain efficiencies substantially improving their bottom line,” said Selman.

Similarly, on the Eastern Bypass are Northlands Industrial Park by Actis and Improvon. The two parks boast of easy access to JKIA through the Eastern bypass and the recently constructed Outer Ring bypass without having to drive through the CBD.

Improvon, a South African based warehousing and commercial property development company, has invested with Actis on 103 acres in Northlands Industrial Park and is considering developing grade — A warehousing although still no works have commenced on its site.

Internationally, mega warehouses are also strategically developed outside large cities allowing them to benefit from the abundance of space. By maintaining access to road, sea and rail transportation channels, mega warehouses do not sacrifice their ability to directly deliver goods to consumers in a timely manner.

For instance in the US, developers are constructing their warehouses in Pennsylvania, an area that includes wide stretches of farmland, national forests and mountains.

Central Pennsylvania has gained eight warehouses each over one million sqft since 2010 such as Unilever PLC occupying 1,370,052 sqft.

“For businesses that rely upon the ease and affordability of shipping their products to make a living Central Pennsylvania possesses four main components that drive the decision — a great roadway system, an abundant work force, relatively inexpensive and available raw land, and the ability to reach 70 to 80 per cent of the US population in 24 hours,” reported Omni realty group in its case study on the Mega Warehouse Space in Pennsylvania.

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