Australian food and drink manufacturers are facing the challenges of land shortages due to rapid urbanisation and the rising cost of energy. While these are big hurdles, they also create opportunities for innovation, efficiency, and ongoing sustainability. Dematic's industry logistics manager, David Rubie, looks at how the industry can strategically respond to these issues and the types of innovative practices being adopted.
Land Shortages: Maximising Efficiency in a Crowded Landscape
The phenomenon of urban sprawl, particularly along Australia's eastern seaboard, has significantly impacted the food and beverage supply chain. With more than half of Australia's population residing in just three cities on the eastern coast along with a significant spike in ecommerce, the demand for land in these urban centres has soared, creating severe land scarcity. As a comparison, in the UK or US this proportion of the population would instead be spread across approximately nine and 27 cities respectively.
The situation is most acute in Sydney, where a CBRE report found that there was only a 0.2 per cent vacancy rate for buildings of 5000 square metres or more during the first six months of last year. This is the lowest rate recorded globally. CBRE said rents in Sydney are highest at $215 per square metres, compared to $119 per square metre in Melbourne, where the vacancy rate was also higher.
The congestion in Australia has not only inflated the cost of available land but has also necessitated a rethink in how food and beverage suppliers manage their logistics and distribution networks to service increasing demands of their customers.
Innovative Solutions to Urban Congestion
When specifically focusing on grocery retailers, it becomes apparent that a high-density population combined with high real-estate costs has led to a transition to smaller footprint metro stores, so retailers can stay closer to their customers and better service their need for convenience in our major cities.
The shift towards these smaller stores, with more distributed networks, requires strategically located facilities and the need of getting the most out of the limited land available. By co-locating and integrating warehouses with existing manufacturing sites, the food and beverage industry aims to streamline operations, reduce transportation needs, and ultimately mitigate the impacts of urban congestion.
When considering their logistics footprint, food and beverage suppliers must implement optimised solutions that not only enhance economies of scale but also maintain agility in response to fluctuating market demands, without sacrificing performance. It's imperative they leverage their existing land footprints to achieve increased storage capacity, heightened throughput, improved facility velocity and greater overall value, ensuring every square inch contributes to operational efficiency and effectiveness.
One leading solution used for this logistics requirement is an Automated Storage and Retrieval Systems (AS/RS), which offers a way to significantly enhance storage efficiency within the limited available space. Combined with the capability of automatically loading and unloading trucks, this solution provides a fast, accurate and cost-efficient storage and delivery solution.
Because automated warehouses do not need to accommodate manual access, they can be a high bay configuration that takes up less cubic space for the same amount of storage – typically 25-35 per cent more storage density over traditional warehouses, and with heights typically 30-35 metres (and up to 45 metres) they can deliver up to 200 per cent increased storage in the same land footprint.
An AS/RS provides the high-density, high-capacity storage for pallets in a fully automated solution and at a high speed, which also helps to reduce reliance on labour during a time of low worker availability. With an AS/RS solution, stock cannot be lost or forgotten, as the system provides complete and real-time visibility of overall inventory.
The Diageo AS/RS System in Huntingwood exemplifies this approach, integrating high-density warehousing right next to its Sydney manufacturing centre. This strategic move not only improves storage efficiency but also reduces the logistics footprint by eliminating the need for multiple storage locations, minimising truck movements and manual operational touches between facilities.
Rising Energy Costs: Embracing Efficiency and Sustainability
Another pressing challenge for the food and beverage industry is the rise in energy costs. In recent years, wholesale energy prices have risen at record rates. The default market offers for 2023-24 determined by the Australian Energy Regulator (AER), increased by approximately 50 per cent.
While the rate of increase for the current year isn’t as high as the peak that was seen in 2022, Research from Cornwall Insight Australia’s Benchmark Power Curve (BPC), has forecast that energy prices will remain high across all states in the National Electricity Market (NEM) until 2026. Predictions for ongoing high retail energy prices, coupled with the high energy consumption characteristic of these sectors, have highlighted the urgent need for more energy-efficient warehousing solutions.
This is particularly pertinent for cold chain logistics where energy efficiencies are often lost due to footprint and ineffective use of the available cube.
The Path to Energy Efficiency
High bay warehouses in cold chain logistics environments represent a significant advancement towards addressing energy inefficiency. By optimising the use of cube and minimising overall footprint, these facilities can reduce energy consumption by more than 50 per cent compared to traditional, larger footprint warehouses. Energy efficiency is achieved through maximising storage density in the cube with minimal open spaces, reducing energy lost through the floor and ceiling and deploying a lights out operation with smart automation that can optimise energy consumption through on/off operation and electrical energy regeneration capability.
The move towards more energy-efficient warehousing solutions is not just about cost savings; it's also about positioning the Australian food and beverage industry as a leader in sustainable practices. With consumers increasingly valuing eco-friendly supply chains, the focus on energy efficiency serves as a key differentiator in the market, enhancing brand reputation and customer loyalty.
Looking Ahead: A Sustainable and Efficient Future
As the Australian food and beverage industry looks to the future, it faces a landscape marked by rapid change and increasing complexity. The challenges of land shortages and rising energy costs necessitate a strategic approach that balances immediate needs with long-term sustainability.
The industry's pivot towards innovative storage solutions and energy-efficient practices highlights a commitment to overcoming these challenges through adaptability and foresight. By optimising the logistics footprint and embracing sustainable operations, the sector is not just responding to current challenges but is also preparing for the future.
