Dubai-based DP World Limited is aiming to expand operations at the United Kingdom’s port of Southampton by developing a warehouse to meet the increased demand from companies in Britain that want to fortify supply chains from disruptions to global trade. The strategy is in its early stages, according to a chief executive officer (CEO) of DP World in the UK. Yet, the company is really excited about the opportunities that would arise for its customers. DP World’s 2-square-mile logistics park next to its London Gateway port complex is a model for the project, which would be developed on a lesser size but with a similar concept.
DP World Limited is aiming to expand operations at the United Kingdom’s port of Southampton by developing a warehouse to meet the increased demand
The necessity for storage space has increased dramatically in the UK since 2020 as a result of Brexit and the pandemic, which spurred companies to expand their inventories and streamline the movement of internationally manufactured finished goods and assembly-required parts. Due to their proximity to emission-reducing rail connections, major ports are popular locations for industrial development. According to a commercial real estate advisory firm, average rents for industrial and logistical space increased by 10.4% in the UK last year, breaking the previous record. Rents are expected to continue to rise in 2023 even after the record amount of speculative square footage was delivered in 2022.
According to historical norms and occupier demand, there is still a lack of supply in the southeast, which encompasses the London area and some of the busiest container ports in the country, as shown by the robust 8.8% annual average rental rise seen in 2022.
Consumers are seeking to become more independent in the UK, with their own warehouses
Supply Cost of UK
According to the European President of XPO Logistics, a Greenwich, Connecticut-based transportation firm that combines end-to-end logistics operations across Europe, supply chain costs have increased in the United Kingdom far more than in neighbouring economies. Consumers are seeking to become more independent in the UK, with their own warehouses, and less dependent on the flows between the country and continental Europe. There has been a definite shortage of drivers and available space, and when there is a shortage, the cost increases. That has an effect on the UK economy as well.
Such market dynamics are driving expansions like those of DP World, which has committed to investing £1 billion in the UK over a ten-year period, including £350 million for a fourth berth at London Gateway that will be entirely powered by electricity and increased capacity by one-third when it opens in 2019. DP Global, which manages 10% of worldwide container traffic, announced an intermodal rail service connecting London Gateway with Southampton in November of last year. The majority of the cargo originates from non-European nations, and Southampton is where the service will run.