Locating a warehouse strategically and in the most cost-effective geographic location is one of the most important decisions a company will make. For example, in terms of fulfilment centres, because of the nature of deliveries, an important criteria is the need to be located near to the motorway/high-way network and to the parcel hubs to delay the latest collection time from the parcel companies and therefore enable companies to introduce a later order cut-off time for next day delivery.
Many of these locations are oriented along international and global trade flows and are near major consumer markets. Other factors include transportation costs, land cost, skilled labour availability, travel minimization and overall cost of operation. The environment will also play a part in the decision-making process. The following are specific factors that need to be taken into account when deciding on a warehouse location:
- cost of land, rent and rates;
- access to transport networks;
- proximity to multimodal hubs;
- availability of affordable, skilled labour;
- transport links for staff;
- availability of funding, grants, etc;
- availability of existing buildings;
- availability and cost of utilities including telecoms;
- availability of finance and resources;
- goods traffic flows;
- proximity to ports and airports;
- location of suppliers and manufacturing points; and
- the potential neighbours (eg proximity to oil storage depots can be a negative factor as ASOS found out to their cost during the Buncefield oil disaster).
According to the Prologis 2016 report the top-three ranked location factors were:
- proximity to economic network
- transport cost; and
- real estate cost.
When asked what the likely drivers for warehouse location will be in 2020, these included the following:
- availability of qualified staff
- improving global trade volumes
- infrastructure improvements.