Construction Logistics: A fast changing landscape

Pressure to deliver construction projects on time and to budget has never been higher. The increasing complexity of modern projects only adds to these pressures. Factors such as evolving safety and environmental regulations, or the sheer number of disparate suppliers, can hinder progress and put projects over budget.

These, and other logistical challenges, will continue to change the way construction businesses and their supply chains do business in the months and years ahead.

The rising challenge of a falling pound

Last year’s depreciation in the value of the pound has led to rising costs for importing construction materials and other goods. Whilst this may pose a challenge to some construction businesses, it also offers an opportunity to appraise existing logistics solutions and identify efficiencies across the supply chain.

One possible consequence may be that supply chain models, based on importing building materials, will be challenged and new, more cost-effective material sourcing solutions could take their place.

An evolving regulatory environment

Increasingly stringent standards are being placed on the industry and these will have a lasting impact on ways of working and bottom lines.

In London, poor air quality is a mounting political issue and construction businesses face a growing logistical challenge from strict new emissions legislation. From September 2020, all heavy goods vehicles (HGVs) entering the existing Congestion Charging Zone will be required to meet stringent emission standards or face substantial daily charges (in addition to the Congestion Charge already in place). London Mayor, Sadiq Khan, also recently proposed a “zero emission zone” for Hammersmith town centre and the implementation of an Emissions Surcharge for older, more polluting vehicles on London roads.

The safety of vulnerable road users is also high on the political agenda. Last month the Mayor formally commenced efforts to ban over 35,000 HGVs that don’t enable drivers to have “direct vision” of other road users from their cabs. Under these proposals, older model HGVs with smaller windscreens and limited side-cab visibility will not be compliant.

There’s every chance similar policy measures will be rolled-out across the UK’s other major urban areas, particularly as new elected “Metro-Mayors” begin to take power, as part of the devolution revolution.

Again, the full impact of these changes are yet to be felt by the industry. The costs for the construction industry to ensure all their vehicles meet the new standards will be significant and failure to comply will impact efficiency and costs.

 Sustainability is key…

While these regulatory interventions are hugely important, there’s no denying that overall project sustainability is a growing priority for all stakeholders.

Construction businesses need to be thinking about how else they can limit financial, social and environmental risks, meet obligations and exploit opportunities, both in the short and long-term. Demonstrating how these considerations will be met is now a standard part of winning, and maintaining business.

However, construction projects are undoubtedly becoming more complex as the trend towards wide-scale use of sub-contracting and tiered transactional interfaces becomes more commonplace. Many major infrastructure projects now have specific procurement policies to promote more opportunities for small and medium-sized enterprise suppliers. HS2, for instance, expects 60% of contracts to be awarded to SMEs.

Needless to say, increasing the number of suppliers raises the logistical challenge for major infrastructure projects and managing all this complexity, whilst retaining flexibility, is key to project success.

It’s time for construction to target a smarter, more joined-up way of working and building the logistics strategy into a project at the concept stage is the way forward. Unfortunately, too often logistics solutions are added on at a later stage, almost as an afterthought. Having a single provider overseeing logistics from the very start of a project can make all the difference to sustainability in all its guises.

3PLs and logistics solutions

Business leaders need to be planning now to ensure they’re not on the backfoot when these challenges really start to bite.

It’s clear the industry needs innovative logistics solutions that meet changing regulatory standards, demonstrate business value, minimise environmental impacts and help the industry take full advantage of the opportunities that lie ahead. This is where third-party logistics (3PLs) providers can really add value.

I lead a team responsible for delivering more than half a million loads to construction and building sites across the UK every year. My role isn’t limited to construction, however, as I also oversee logistics operations across industrial, manufacturing, energy and defence industries. What we’re increasingly seeing, across all sectors, is that collaboration is the answer to many shared logistical challenges.

By working across a wide range of businesses and sectors, 3PLs are ideally placed to facilitate collaboration and integration across supply chains. They can also provide access to highly trained drivers and the latest, most compliant vehicles – in our case, on a flexible basis.

By working together to deliver logistics solutions, 3PLs can help construction businesses meet increasingly stringent regulations, surpass environmental performance KPIs, implement new, more advantageous supply chain practices, increase the profitability of operations and face the future with confidence.

Chris Fenton, Managing Director of Industrial and Transport at Wincanton

 
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