Why are cross-dock warehouses so important in the transport process? What characteristics should such facilities have, and what is their availability on the market?
Maciej Szczepański, Business Development Manager in the Industrial and Logistics Department, Cushman & Wakefield: Increasing price competition and rising costs caused by wage pressure from employees in the transport market are leading to growing interest in cross-dock warehouses among distribution companies.
Cross-dock warehouses allow for the optimization of costs associated with the delivery of goods to the recipient on the so-called last mile in distribution. In logistics terminology, the last mile refers to the final leg of transporting goods from a local hub (warehouse) to the recipient. A transport company combines goods from various senders at a local distribution hub and sends them to the destination in a single vehicle. The same happens in the opposite direction, i.e., goods from many local senders are delivered by many vehicles, and then reloaded and consolidated onto trucks heading in a given direction. Organizing the transshipment process is not easy and requires knowledge of warehouse logistics, but it allows for significant savings, among other things, by shortening the delivery route, as well as reducing the time goods are stored in the warehouse and CO2 emissions.
What distinguishes a cross-dock warehouse from a standard building is its primary function, which is short-term storage of goods. Rapid turnover of goods means that it does not need to be equipped with racks, which in turn affects the height of the hall. Standard Class A warehouses must provide at least 10 m of height for storage space, whereas for a transshipment warehouse, a height of 6 m is quite sufficient. A lower warehouse also means a smaller building volume, which translates to lower heating costs. Additionally, illuminating the space in such facilities, whether with natural or artificial light, is much easier. Standard warehouses are equipped with skylights providing 2% daylight. In a transshipment area, this parameter should be 5%, and since the area is not built up with racks, this is relatively easy to achieve.
The large number of transshipment operations means that this type of warehouse should have a sufficient number of gates and docks. The standard offer is 1 dock per approximately 300 sq m of warehouse space, which is definitely not enough to organize “last mile” logistics. It is assumed that an optimal cross-dock warehouse has a depth of about 48 m, which, when placing gates on both sides of the hall, increases this ratio to about 110 sq m per gate. When planning the layout of docks, it should also be remembered that some operations will be performed using smaller vehicles. Urban logistics is developing at a very fast pace, so the use of small vehicles in transport will become increasingly common. Therefore, some of the docks should be appropriately adapted.
The shape of a cross-dock warehouse is also quite important. It is considered that it should optimally have a depth of about 48 m, which will allow for the preparation of staging areas on both sides of the building and ensure efficient communication between them. Elements that can disrupt such communication are the load-bearing columns on which the roof structure rests – the fewer there are and the further they are from the gate zone, the better.
Due to the shape of plots, developers often offer a so-called “fake” cross-dock, often called an “L-shape”. This is nothing more than a corner module of a standard warehouse, where gates are located on adjacent walls. While such a shape allows for a good ratio of the number of gates to warehouse area, the organization of staging areas and forklift traffic is very difficult.
With a large number of transshipment operations, ensuring the minimum required operating temperature (14oC) in winter is practically impossible. Theoretically, one could use warm air blowers, but in practice, such a solution is not used. It is difficult to perform a reliable calculation of the profitability of such a solution. Perhaps it is worth doing something completely different, i.e., limiting the number of heating devices, taking into account that the obligation to ensure a temperature of 14oC is not absolute and deviations from this rule are possible. However, this requires a thorough analysis and appropriate internal regulations within the company.
Cross-docking is enjoying increasing popularity wherever efficient distribution of goods is necessary, but the supply of space meeting the above criteria is very small. While developers are willing to provide an L-shape building because they maintain the standard warehouse depth, facilities with a depth of about 48 m are available only in cases where the plot does not allow for a different building shape. Of course, in the case of BTS facilities, the construction of a shallow warehouse is quite possible. However, a potential tenant must reckon with a contract for a period of at least 7-10 years.
The price for renting space for cross-docking can be higher than the rental price of a standard facility by even about 60-70%, which is caused by a worse utilization ratio of the plot area for construction and higher construction costs, which are primarily influenced by a larger number of gates, maneuvering areas, and truck parking lots.
Regarding the expected 6 m height, it should be noted that such buildings are not offered in any form of rental. In some cases, this involves the necessity of concluding a BTO contract, i.e., the transfer of ownership by the developer to the ordering party after the completion of the investment.
To sum up, the demand for modern cross-docking warehouses will certainly grow. It is to be hoped that developers will follow these needs and enable potential tenants to use space close to the “ideal”.