As the COVID-19 pandemic disrupted consumer retail behavior, the “last mile” of logistics has become even more important as e-commerce companies meet next-day delivery expectations.
Before the disruption caused by the pandemic, the Office of National Statistics reported in January 2020 that UK internet sales had risen from 7% ten years ago to 20%. The same report said e-commerce would represent about 20% of global retail in 2023. As customers adjusted to pandemic mitigation measures, online orders from western Europe across all retail segments jumped as much as 80% in the first two weeks of April 2020 as compared to the previous year. Experts think these buying habits may become permanent, as the range of products consumers are buying online has expanded to include essentials like groceries and over-the-counter medication.
This increase in online buying activity presents an opportunity for the sectors associated with last-mile logistics, as demand grows for faster delivery times. There is also a focus on counteracting the urban congestion and carbon emissions that last-mile logistics contribute to.
The opportunities we see fit into three categories:
Real Estate– As stay-at-home orders have kept people from browsing inside stores and shopping malls, those spaces can help fill a distribution gap. Many conventional retailers are turning to a ‘click and collect” model, allowing customers to order items online and collect them at the nearby brick-and-mortar store location.
Infrastructure– To reduce carbon emissions, some cities are recommending retailers incorporate more electric and autonomous vehicles into their distribution fleets, consolidate shipments at hubs, or use lockers for consumer pickup. Technology is another area of infrastructure that can optimize efficiency and reduce carbon footprints through artificial intelligence, big data analytics and predictive modeling.
Private Credit– Borrowers need quick and flexible solutions, and there is plenty of dry powder available. Private credit financing can be an essential source of capital for the opportunities presented by the shifting strategies for real estate and infrastructure.
SS&C can help investors and fund managers navigate opportunities in real estate, infrastructure, transportation, aviation, energy and commodities. To learn more about last-mile logistics and how SS&C can help you achieve diversification and growth objectives, download our whitepaperOpportunities in European Last-Mile Logistics.