Once upon a time in the Midlands

THE NEW 1.2 million sq ft warehouse in Northampton will mark a key milestone in the 3PL’s sustainable logistics journey. Logistex has been awarded the contract to install automated systems at the Sustainable Distribution Centre (SDC), which will have a total capacity of 240,000 pallet locations. The automated shared user facility will serve both B2B and B2C operations, featuring two distinct chambers for pharmaceutical and ambient activities.

Logistics Matters spoke to Ben Bird, business development and solutions design director, and Milena Chambers, head of warehousing and automation solution design, both of Yusen Logistics, to hear more about this landmark project.

Simon Duddy: What is the key motivation for the facility?

Ben Bird: We are building the warehouse with no customers in it. Usually 3PLs get the customer’s buy in and then build the facility. Many 3PLs are looking for funding from customers to help build dedicated facilities, but we are making the investment ourselves. Lots of smaller transport businesses are going bust and they were the ones in the market that were happy to take the risk, many of the bigger companies are not willing to do so, but we’ve walked into this happy to take a risk. We’ve been full as a business for 8-10 years and it has been a challenge.

The property strategy is important too, we spent a few years looking. We had a lot of sites coming to the end of their leases simultaneously.  At the same time, we had a massive uplift in new business. The plan is build the site, fill it with new customers and grow the business. 

SD: How do you view the warehouse property situation right now?

BB: The obvious points are growing rents and business rates. They are higher than usual, and some rates have increased by 40% in 2022-23. However, these are known issues that can be planned for. 

The bit that people aren’t talking about as much is the impact of EPCs on business rates that will come into effect over the next five or ten years. That will be a massive challenge for landlords, as well as occupiers and their customers. The jump from EPC E rating to EPC C rating is dramatic in terms of operational carbon. 

Achieving Net Zero was a key issue regarding the new build facility. This means our customers will avoid cost increases in the future as the regs bite.

SD: You have highlighted the massive challenge in the market. Do you think the EPC deadline be extended?

BB: That’s the question most of our customers are asking. Some may be saying ‘it will never happen’. What I would add is that it has already happened in offices. If it has been applied in one sector it is likely to follow in others. 

If you sign up for a 10 year lease now, which is the minimum landlords are willing to accept, you run a risk where the rules will be applied and you or the landlord will have no choice.

One thing we see, as a provider, is that while people say that sustainability is key to their strategy, logistics and sustainability is often quite far down the to-do list. However, it will jump up very quickly when new EPC requirements come in, you could be looking at higher tax bracket, or maybe not being able to operate for a period of time. There are sizeable operational challenges that come with moving a warehouse from an E rating to a C rating. 

SD: Why go for full automation at the new facility?

Milena Chambers: We all know about the labour challenges in the market. On top of availability, price is an issue, customers are looking for the most competitive storage and handling rates. In addition, the speed at which we consumers are driving this market has an impact. 

These days, very few new build warehouses are below 18 metres in height and you cannot operate a warehouse to this height with manual equipment. When you take into account the size of the facility, over 1 million sq ft, without automation, it would take so long to retrieve a pallet, and would not utilise the cube, and would not provide customers with an optimal price. 

Going up, instead of simply spreading out, saves on carbon footprint also.

SD: What is your approach to Peak?

MC: We know there are Peaks throughout the year, and at Christmas, everyone is at Peak, so how do we compete? We have gone to automated solutions, and more specifically robotic deployments in a robotics-as-a-service (RaaS) configuration because that will allow us to flex the number of robots we use upwards at times of high demand and take it back down again for base level.

We expect to have a base fleet of around 150 robots, and at Peak we will be able to increase this to around 250, for three months of the year. It’s a very similar concept to short term hire for MHE.

As we will already have a map of the facility in use with the base fleet, and as mapping the facility is the most time-consuming element when deploying robots, we should be able to integrate the hired bots in minutes during Peak.

SD: What is your experience of labour shortages? 

BB: Everyone experienced two things over the pandemic and Brexit period. The first challenge was a shortage of HGV drivers. We had a similar challenge in warehousing, though it was not as bad. We’re very lucky with employees as Northampton has always been our base. We’ve had some of the big boys pop up around the campus and we have seen people leave, but they generally come back, because we are not offering zero hour contracts and so on. 

SD: What impact has the National Living Wage increase had?

BB: It is a challenge because the industry plays in that lower end of the salary spectrum. When we bid on new business, we tend not to go down as far as minimum wage. One of the things that will hit a lot of people hard next year is the Next ruling [which stipulated that in-store workers were entitled to the same remuneration as warehouse staff]. That will hit those who own both logistics and shops. I think there will be more outsourcing as a result.

SD: Why did you choose Northampton?

BB: It’s always going to be our home. We’ve been there for almost 20 years now. We had the opportunity to be part of the Northampton Gateway and SEGRO allowed us to design and build this facility, so we were allowed to change specs and get a really good offer on the table. It’s also in the Golden Triangle and next to the new rail freight terminal.

SD: How have you configured the site to be able to serve multiple customers?

MC: We will have two chambers. The temperature-controlled chamber will be home to about 80,000 pallets, and then we have an ambient chamber which has 160,000 pallet capacity in ASRS. We’ve got multi-deep storage solutions, euro pallet handling solutions, as well as standard pallet handing, and oversized pallet handling. On top of that we have manual racking with 5,000 pallet capacity. There will always be operations that don’t suit automation. 

There is also 100,000 sq ft of block stacking capacity, and two levels of mezzanine, 100,000 sq ft each, which will accommodate small parts handling, fast-moving eComm picking, and value added services. The facility can accommodate just about any customer with any need.

The automation brings lots of benefits, not least for healthcare clients, where pick accuracy is of particular importance and also in terms of security, which is important for many clients.

Furthermore, the younger generation is interested in tech, and so we are opening the pool of people who are interested in joining us. Training a person on the automated pick station, as opposed to manually, takes minutes instead of days.

SD: What do you need from your automation integration partner?

BB: We knew potential customers would ask us if we have done this before, and the answer is, yes, but not quite to this scale or level of complexity. So, we wanted to take that away. Logistex was successful in becoming our partner as they helped us ratify our own design. A key thing was integrating the WMS with the automation and Logistex had done that before, so that was a real benefit. Taking the messages from the WMS, through the WCS to all the different bits of kit we will have in cohesive way, is very important. They also helped with the flexibility aspect. A frequent criticism of automation is that it lacks flexibility, and our stance was we can have flexibility if we spec it right. 80% of our business is shared-user, so we need flexibility. We want to be able to store and handle variety so having a partner who can manage the many suppliers of the subsystems we need is very helpful. They also help when we get into the nitty gritty of conversations with customers and we find their needs are a little different than anticipated. 

MC: Logistex does not make their own kit, so they will go and find the solution we need to make a particular part of the warehouse work for a particular client. Whereas if you go to a global integrator, they make their kit, so you tend to be limited to what they provide. Logistex’s ability to source the best products from the market was important.

BB: We have put procurement packs out to around 50-60 suppliers through Logistex as part of this build. 

SD: How will the facility help Yusen meet its sustainability targets?

BB: We’ve already received BREEAM Outstanding rating for design, which puts us in the top 1% of industrial units. It will help in how we are graded in terms of business rates also. Our global target as a company is to be Net Zero by 2050, but in the UK we think that can be stretched to a 2035-2040 timeline. The warehouse itself will be Net Zero from day one, depending on how long it takes for the solar panels to be integrated.

One of the benefits of the design and build process is that we’ve been able to spec the roof for around 600,000 sq ft of solar panels. We will be able to generate more energy from the roof array than the grid can give us. The grid can take a surplus of 1MVA but we can generate 4.9MVA, so we are then having to look at the battery element. This will be useful, particularly if we move to an EV fleet in the future for local deliveries.

SD: What type of clients are you aiming for?

BB: We have a solid background in consumer electronics and healthcare, and we know clients we have worked with who will be interested in this facility. It will also open up new avenues for us and we are open to all kinds of customers, such as FMCG, dry food, and healthcare customers from a warehousing perspective.

For more information, visit www.yusen-logistics.com