Supply chains are being diversified and regionalised

Supply chains are being diversified and regionalised by companies, stated CBRE, owing to trade and geopolitical tensions, technological advancements and rising transportation costs over the past few years.

Explaining why supply chains are being diversified and regionalised, Andrew Armstrong, associate director and head of industrial and logistics agency at CBRE commented, “Supply chains are going through immense change at a time when consumers are purchasing goods online at a record pace. E-commerce is forcing companies to keep larger and more diverse inventories in closer proximity to end-users.”

“Inventory control failures in the first half of 2020 – when many companies could not fill orders efficiently – have vividly illustrated the urgency of having more inventory on hand to support online sales. The combination of inventory controls, consumer habits, population growth and transportation strategies will benefit growing seaports throughout the world and will increase the importance of inland ground, rail and air freight hubs in every region,” he added.

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Globally, these changes are leading to massive increases in infrastructure spending and modernisation of existing logistics hubs and will put emerging industrial real estate markets on the radar of both occupiers and investors.

CBRE feels that the Middle East is well-positioned to benefit from supply chain diversification due to its geographical position between east and west, coupled with previous significant investments into the logistics sector and ongoing pipeline.

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