Where cross-dock warehouses make sense

Cross-docking across traditional warehouses has become a familiar part of the distribution scene, although there are at present very few in operation other than in freight forwarding and specialist parcel depot sectors. As Steve Lamb from distribution and warehouse consultancy sbh points out, with generally lower site coverage and relatively high build costs, developing such facilities can be difficult, although still achievable.

"Cross docking means using the facility mainly as a staging post where goods arrive, are sorted, consolidated and stored ready to be shipped, often within hours. Storage space is minimal and most of the facility is given over to goods in transit.

Cross-docking can reduce handling and operating costs, delivers products to the customer more quickly, and in the case of retailers increases available space on the sales floor as they need less storage on the high street or shopping centre.

The ideal purpose built cross-docking warehouse will be longer and narrower than a standard warehouse but will be designed to accommodate the higher number of loading doors and docks required and will have extensive external services. As a guide, while a typical warehouse building may occupy around 40% of the usable site, a full cross docking facility may take nearer 20%. In addition without the need for high volume storage, such buildings do not need to be very tall, with an operational internal height of 6m usually more than adequate.

sbh has recently completed with Rhenus Logistics two such projects – a 4,925m² (53,000ft²) facility in Bradford and a 6,450m² (69,500ft²) unit in Cannock. Both units have been designed with extensive external parking, office suites and loading bays on both sides of the building to suit high-speed cross-dock operations.

Rhenus Logistics is part of the German owned Rhenus Group, one of the leading European logistics service providers with an annual turnover of 3.3 billion Euros and 230 locations worldwide. The company operates eleven centres in England and Scotland serving the fast-growing international trade sector, and the new centres will play an important role in further developing its services for the UK market.

The Bradford facility has 32 loading doors and docks together with external parking for a further 30 vehicles, all on a site of 4.5 acres. A similar sized site would normally be expected to accommodate 80,000ft² to 90,000ft² of traditional warehousing. Cannock’s unit has 30 loading doors, extensive external canopies and a parking area similar to Bradford. The site could likewise be used for a far larger traditional single side access facility.

Developers will look for premium level terms for this type of facility, whether freehold or leasehold, to allow for the enhanced specification, in particular the higher number of loading doors and low site utilisation. The occupier on the other hand will regard a more bespoke design as highly efficient, avoiding the need for unnecessary and expensive building space to achieve the same throughputs much less efficiently.
Therefore a higher price per square foot of smaller built space will not generally an issue.

sbh has now completed a number of these facilities with a range of developers and has been able to successfully meet both parties’ requirements on rent or price. As cross-docking facilities become more common sbh would expect any remaining resistance to the concept from landlords and developers to dwindle, helped by the fact that operators of such facilities tend to take a longer initial lease term than would be expected for a standard Shed."

June - 2009