Logistics real estate investments outpaced revenue growth by 57% during the past decade despite automation and data analytics advancements. We call this the “supply chain productivity paradox.”
This paradox emerged because larger, decentralized logistics real estate networks unlock revenues and save on costs in ways that were previously not possible or well-understood. We identify the top five drivers.
AI and data capabilities’ primary purpose is to increase supply chain adaptability to drive revenues; efficiency investments are secondary and unlikely to reduce real estate requirements.
Logistics operations are incorporating new automated technologies at an increasing rate. Use of Autonomous Mobile Robots (AMRs) is growing the fastest, with limited implications for real estate. We expect that up to half of all logistics operations could incorporate AMRs over the next 10-15 years.
Automation can increase throughput and is a catalyst to upgrade facilities. Access to power infrastructure, especially renewable energy, is increasingly a top consideration in logistics real estate decisions.
This new study advances our past work in three ways.
- Logistics real estate. Prologis Research analyzed the supply chains of 25 leading U.S. retailers to determine how technology innovation has changed the logistics real estate utilization of supply chains.
- Artificial intelligence (AI). We assessed cutting-edge data analytics and their implication on supply chain design.
- Automation. We updated our assessment of automation’s implications for logistics real estate demand. Prologis Research studied the state of automation in 2020, concluding adoption was concentrated in e-fulfillment and unlocked previously overlooked infill locations, which still hold today.