final report south northamptonshire logistics...
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gva.co.uk
Final Report
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South Northamptonshire
Logistics Study
March 2017
South Northamptonshire Contents
March 2017 gva.co.uk
Contents
1. Introduction................................................................................................................................................... 1
2. The UK Logistics Sector ................................................................................................................................ 3
3. South Northants – Location and Context ............................................................................................... 6
4. The Functional Market Area for Logistics ................................................................................................ 8
5. Drivers of Demand ..................................................................................................................................... 17
6. Sector Overview and Activities ............................................................................................................... 27
7. Drivers of Growth ....................................................................................................................................... 34
8. Understanding the Potential .................................................................................................................... 41
9. Employment Land Supply ........................................................................................................................ 47
10. Conclusions and Recommendations .................................................................................................... 56
Prepared By: Martyn Saunders, Simon Phillips, Richa Joshi, Zak Vallander and Kate Green
Status: Final Report v2
Draft Date: March 2017
For and on behalf of GVA Grimley Limited
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1. Introduction
1.1 This report sets out the findings of the Logistics Sector Study for South Northamptonshire
Council (SNC) completed by GVA. This Study provides a thorough and detailed evidence
base of the logistics sector and identifies suitable and appropriate opportunities to grow the
sector within the District.
1.2 This study will help the Council understand the needs of the sector both now and in the future
and to identify why, where and how the Council can support and accommodate growth. It
will provide the evidence to the Council that enables it to make planning and economic
policy decisions, consider future planning applications and identify additional support needs
by balancing the sector opportunities against its other priorities for the District.
Approach
1.3 A five part methodology has been applied which has considered the following:
Part 1 – Defining the Logistics Sector:
o Scale and recent growth trends;
o Sub-sectors and activity;
o Functional markets and areas of operation;
o Future drivers and growth prospects; and
o Types of employment and job density.
Part 2 – Importance of the Sector to South Northamptonshire:
o Drivers of demand within the District;
o Key operators and businesses;
o Employment and jobs provision; and
o Sub-market role and relationship to the wider M1 corridor market.
Part 3 – Logistics Sector Growth and Future Floorspace Requirements;
Part 4 – Ability for South Northants to Accommodate Growth; and
Part 5 – Implications and Intervention Requirements.
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Report Structure
1.4 The remainder of this report is structured as follows:
Section 2: The UK Logistics Sector;
Section 3: South Northants – Location and Context;
Section 4: The Functional Market Area for Logistics;
Section 5: Drivers of Demand;
Section 6: Sector Overview and Activities;
Section 7: Drivers of Growth;
Section 8: Understanding the Potential;
Section 9: Employment Land Supply; and
Section 10: Conclusions and Recommendations.
1.5 If you require any further information please contact either of the GVA Directors as below:
Simon Phillips Martyn Saunders
T 0121 6098265 T 0207 911 2037
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2. The UK Logistics Sector
2.1 The main aim of this section is to provide a robust understanding of the logistics sector both in
terms of current and future growth potential. It provides an overview of the sector, its scale
and recent growth trends, activities, market areas and future drivers for South
Northamptonshire.
2.2 Logistics is a complex and often a difficult sector to define. It includes management of the
flow of physical capital between the point of origin and the point of consumption. The sector
therefore is inherently a service sector that operates continuously on a global scale,
underpinning all other sectors in the economy. It constitutes a world-wide network of
integrated functions within businesses and between them.
2.3 Within the UK economy, the logistics sector holds a significant value; it currently employs over
1.6 million1 people who represent 5% of the UK’s total workforce (Figure 2.1). As a result the
sector has a large direct impact on the economy, supporting 93,000 companies2 with a GVA
of £70bn – 4.3% of the total economy3 (Figure 2). The indirect impact is likely to be significantly
larger given the interconnectedness of the sector with other industries.
Figure 2.1: Annual Change in Logistics Sector Employment, UK
Source: Experian
1 Experian, 2016
2 ONS
3 Experian 2016
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Figure 2.2: Annual Change in Logistics Sector GVA, UK
Source: Experian
2.4 The sector has performed well in recent years, creating over 100,000 jobs and £6 billion in
annual GVA output since the financial crash.
2.5 Logistics employment is expected to see significant growth in the coming years with an incline
of employment by 25% in the next 20 years compared to 20% for overall economy. GVA
growth is also expected to be stronger over the period with 83% projected for the sector while
national GVA growth is expected to be 69%.
Figure 2.3: Volume of Logistics Development Investment
Source: Savills Research
2.6 Growth forecasts are supported by a recent Savills report which finds that investors remain
confident in the sector and continue to make significant investments in logistics development
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(Figure 2.3). The figure shows that the last five years has been a golden period in logistics, with
a notable surge in investment in the sector.
2.7 In terms of supply chain activities, logistics has strong supply chain links with wide variety of
sectors, strongest being with manufacturing, retail (including e-commerce and consumers) as
well as other transport and storage providers. Therefore, logistics businesses support continued
operations and growth of these sectors are a fundamental enabler of growth within the
national economy4.
4 Delivering the Goods: The Economic Impact of the UK Logistics Sector (Turley, 2015).
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3. South Northants – Location and Context
3.1 The previous section shows that the
strategic logistics and distribution sector has seen
significant growth over the past 15 years,
representing a 12% increase in sector employment
and an 8% increase in GVA. This shift has seen an
increased focus on moving imported goods across
the country, rather than more local component
movements. As such locations with good
accessibility to ports, airports and freight hubs have
become a key focus for operators and developers.
3.2 South Northants is at a significant
advantage to gain from its strategic location within
the UK. It is a southern borough in the county of
Northamptonshire and shares its border with
Daventry, Northampton, and Wellingborough within
the county and Aylesbury Vale, Cherwell, and Milton Keynes to the south.
3.3 The geographical location of South Northants benefits from two major north/south routes
passing through the district (the M1, M40) and has a close proximity to east/west routes (A14)
meaning that logistics and distribution freight is a significant feature of the roads within the
Northamptonshire County. There is also a key relationship via the UPA Route based strategies
including the A34/A43 and M1/M40.
3.4 This provides a strategic positioning to the district and the county in general, where it is at the
crossroads of national road and rail network and with strong international links: (5 international
airports) within 2 hours drive, three hours to Port of Liverpool and Haven Ports and the deep
ports of Southampton and Felixstowe.
3.5 In addition, it is possible to reach over 90% of the population of England and Wales within a
drive time of 4 hours. Therefore, the wider area of Northamptonshire in general has proved to
be a popular location for warehouses linked to the distribution industry.
3.6 The presence of Silverstone Circuit and Business Park plays a vital role within the District. It is
located to the east of the A413 and west of the A43 with Towcester located 4.4 miles to the
north. It is home to the British Motorsport F1 Grand Prix and has a great history and a growing
status as a world class centre for motor sport, vehicle engineering and high end precision
engineering.
South Northants
Figure 3.1: Location of South Northants
and approximation of distance
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3.7 The Park caters for Tier 1 motorsport and high performance engineering, high technology and
research and development businesses for which an address at Silverstone is a pre-requisite.
The formation of Tier 1 businesses subsequently forms a two tier property market in the District
between premium space located at the Park for advanced manufacturing, motorsport and
HPE businesses and the remaining existing and potential future stock that meets normal B class
employment demand elsewhere in the District.
3.8 This sector has remained a high growth opportunity for South Northamptonshire Council,
particularly in the drive for highly skilled jobs. In line with our 2014 study we would encourage
that they continue to be supportive of Silverstone’s potential to drive economic growth and to
provide high quality skilled jobs for the people within the District.
3.9 Alongside this Silverstone can be used to promote the District as a location for inward
investment and so encourage demand from the automotive supply chain that may not
necessarily require a presence on site but may wish to take space in some of the future
employment sites that are brought forward in the District.
3.10 Similar to the logistics sector HPE operators will also seek to occupy sites with good accessibility
from major trunk roads to enable movement of materials and goods between suppliers and
clients. The nature of highly specialised and high value activities has a labour market draw
way beyond the local area. Highly skilled engineers, technology specialists and technicians
are in short supply nationally and command sufficiently high wages to be relatively ‘footloose’
or able to commute significant distances.
3.11 The May 2016 SQW report on the Evolution of the High Performance Technology and
Motorsport Cluster provides further insight into the existence and character of the high
performance technology and motorsport cluster in the area around Silverstone.
3.12 We are aware that businesses in sectors such as motorsport and transport technologies have
linkages to local locations like Bedford, other south east clusters (such as Cherwell and Oxford)
and places in other parts of the UK including East Anglia, Merseyside, Derbyshire and the North
East. The ‘reach’ of the manufacturing sector is therefore arguably wider than that of logistics,
potentially stretching across the country. Key businesses are major national and international
brands and attract a range of related businesses to the area. However, the core functional
market is likely to be more localised and linked to the particular specialism and sector specific
assets in the area. Whilst it is appropriate to be mindful of the wider linkages, the functional
market for manufacturing is likely to be focussed along the ‘arc’ north of London that
connects Swindon/Oxford manufacturing hub east across the country, perhaps as far as
Cambridge. This essentially fills the gap between London and Birmingham.
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4. The Functional Market Area for Logistics
4.1 To recognise the significance of logistics and distribution sector in South Northants, it is
important to acknowledge that logistics operations within the district do not work in isolation.
Instead, the economic and operational boundary of the sector expands beyond political and
administrative boundaries, being defined by much wider networks of freight transport through
roads and rail.
4.2 To understand South Northants position within this wider network of logistics we have identified
several applicable geographies.
Midlands Engine
4.3 The first is the Midlands Engine which includes 11 Local Enterprise Partnerships:
Black Country
Coventry and Warwickshire
Derby, Derbyshire, Nottingham and
Nottinghamshire
Greater Birmingham and Solihull
Greater Lincolnshire
Leicester and Leicestershire
Northamptonshire
South East Midlands
Stoke-on-Trent and Staffordshire
The Marches
Worcestershire
4.4 The region has a population of 11.5 million and a yearly GVA output of £222 billion.
4.5 The region has received £5 million to promote the Engine and the £34 billion of economic
growth proposed to be achieved by 2030.
4.6 Advanced manufacturing is the foundation of the Midlands economy and the Engine aims to
build on existing strengths through enhancing connectivity, encouraging training and
innovation, and supporting access to finance.
Figure 4.1: Midlands Engine
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4.7 Logistics in the region will benefit from a coherent approach which includes all major routes
that connect the North and South of the UK.
The Golden Triangle
4.8 The ‘Golden Triangle’ is a regional concept used to describe the largest concentration of
major logistics and distribution operations in Europe. Much of the activity in the ‘Triangle’ is
clustered on the M1/M6, A14 and A43/A45.
4.9 There is no official and precise measurement of exactly what constitutes the Golden Triangle,
but it largely includes Leicestershire, Northamptonshire, Warwickshire, plus parts of Staffordshire
and Derbyshire.
4.10 The ‘Golden Triangle’ and ports, such as Felixstowe and the wider networks and supply chains,
which connect them to suppliers and markets, are vital to the functioning of the national
economy, international trade and future economic growth prospects.
4.11 SEMLEP and Northamptonshire County Council are working to form a strategic alliance within
the logistics sector, Freight Transport Association, the Port of Felixstowe, and operators to
support innovation and growth in the sector, reduce congestion and create new jobs.
4.12 Spanning from Northamptonshire up the M1 to East Midlands Airport and West as far as
Tamworth area, the Golden Triangle is host to a variety of large logistics companies. Proximity
to the huge distribution centres of supermarkets and high street stores, Midlands-based supply
chain companies enjoy access to over 90% of the UK population within 4 hours drive.
4.13 Proximity to major motorways, notably the M1 and M6, means that major cities such as
London and Manchester are not difficult to reach from the Golden Triangle.
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Figure 4.2: The Logistics ‘Golden Triangle’- Indicative Extent
Oxford – Milton Keynes – Cambridge Corridor:
4.14 The Oxford – Milton Keynes – Cambridge Corridor includes 6 Local Enterprise Partnerships:
Buckinghamshire Thames Valley
Greater Cambridgeshire and Greater Peterborough
Hertfordshire
Northamptonshire
Oxfordshire
South East Midlands
4.15 The corridor has a population of 6.5 million and a yearly GVA output of £165 billion. Between
2016 and 2051, the population is expected to increase by 1.6m (25%) and 400,000 jobs will be
required.
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4.16 The corridor has significant specialisms in advanced manufacturing, engineering, and life
sciences. With a relatively high skilled population and a good standard of living, a corridor
strategy is currently under consultation which is likely to encourage investment in housing,
infrastructure, skills, innovation and access to finance.
4.17 Logistics has a strong connection to these key industries and will benefit from a sub-regional
strategy.
Figure 4.3: Oxford - Milton Keynes - Cambridge Corridor
South East Midlands Local Enterprise Partnership (SEMLEP):
4.18 The South East Midlands Local Enterprise Partnership includes the four unitary authorities of
Bedford Borough, Central Bedfordshire, Luton, and Milton Keynes, together with the seven
district councils of Aylesbury Vale, Cherwell, Corby, Daventry, Kettering, Northampton, and
South Northamptonshire. The previous Northamptonshire Local Enterprise Partnership (NEP)
merged with the SEMLEP in October 2016.
4.19 The sub-region has a combined population of 1.7 million and a yearly GVA output of £39
billion. Between 2001 and 2011, 56,400 jobs were created in the SEMLEP and a further 111,200
are planned by 2020.
4.20 The area has a particularly strong foundation in High Performance Technology, Manufacturing
and Advanced Technology, Creative and Cultural industries, and Logistics. Examples of key
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businesses include Nissan Technical, Lockheed Martin, Jungheinrich, Selex Galileo, Mondelez,
Unilever, St Andrews, AstraZeneca, Movianto, Jordans/Ryvita, Carlsberg, Vinci, Kier, BEA
Systems, Cinram, Yusen Logistics, Cullina Logistics, Europa Worldwide Logistics, Kuehne and
Nagel, Wincanton, C Butt, BSI, Maxim and Eddie Stobart.
4.21 The logistics hub in South East Midlands is the product the regions strategic location on the
M40, M1 and A1, having become concentrated over many years. As a result, in recent years
25% of speculative logistics related development has been constructed in the East Midlands.
4.22 European route E 30, an A-Class West-East European route, also passes through the SEMLEP
which extending from the southern Irish port of Cork in the west to the Russian city of Omsk in
the east. The A14 which forms part of the link provides a strategic connection between the
motorways that continue north through the sub-region.
4.23 In addition to wider economic schemes, the Local Enterprise Partnership aids the logistics
sector by investing in training, funding, and networks and partnerships. Examples set out in a
previous SEMLEP logistics report include the support of Local Logistics Community Networks
(LLCNs), Job Clubs, the Professional Development Stairway (PDS), the Logistics Guild, Credit
Unions, qualifications, and engagement with businesses and institutions.
Figure 4.4: South East Midlands Local Enterprise Partnership
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Key SEMLEP Logistics Site Phasing: The following section presents regional schemes that have come forward
in the wider SEM LEP area and main planned development within them.
DIRFT: Daventry International Rail Freight Terminal (DIRFT) is a rail-road intermodal freight terminal with an
associated warehousing estate; the facility is located at the junctions between the M1 motorways, A5 and
A428 roads with a rail connection from the Northampton loop of the West Coast Main Line.
Construction of 7.8 million sq. ft. of additional warehouse space is set out to begin 2017 to the north of the
existing DIRFT site, on the location of the former Rugby Radio Station site. The DIRFT III development relates
to the 6,000 dwelling Rugby urban extension and will include a new rail freight terminal alongside a 70ha
public green space.
Eurohub Corby: The well-established distribution centre in Corby offering high quality accommodation for
logistics distribution. Currently the area hosts over 1,150,000 sq. ft. of warehouse and distribution (Source:
CoStar) space and hosts companies like CEVA Logistics, Gefco UK Ltd., iForce (Wincanton Plc), Corby
Distribution Centre, Wincanton premier Foods.
Although no expansion appears to be planned in the near future, land is available at the centre of the hub
which has been associated with previous planning applications.
Source: http://www.thebusinessfile.co.uk/maps/displaymap.asp?id=39
Prologis Marston Gate: Located at J13 on the M1, Marston Gate currently includes 1.8 million sq. ft. of
warehouse provision which is set to increase by 400,000sq ft with an expansion that will be completed in
2017.
Prologis Park Wellingborough West: Wellingborough West is a new site on the A509 that is expected to be
completed in 2018 with capacity for 2.15 million sq. ft. of logistics space.
Prologis Park Kettering: The logistics park in Kettering will include over 2.2 million sq. ft. of warehousing space
with the addition of 530,000 sq. ft. set to be complete in 2017.
Prologis Park Pineham: The Northampton site located on J15a of the M1 recently gained consent for a 1.1
million sq. ft. addition, with 325,000 sq. ft. to be leased to Sainsbury’s.
These developments constitute over 12 million sq. ft. of additional provision in the SEMLEP by late 2018.
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Logistics Corridor in South Northants
4.24 The South Northamptonshire lies at the heart of the Golden Triangle and SEMLEP with
prominent connections as a result of its direct access to the M1 via three motorway junctions
(15, 15a and 16). The district is located to the east of the M40, linking London and Birmingham,
and to the west of the M1, linking London to the North of England as shown in the previous
figures. The A43 runs through the District connecting the M40 and M1, as well as serving as a
main route to the towns of Towcester and Brackley, with a number of key A-roads also offering
strategic freight routes and key transportation links.
Figure 4.5: Growth corridors M1 and M40
4.25 As shown in Figure 4.5 the M1 corridor is the key location for B8 distribution/logistic sector
development with demand from both existing and new occupiers for additional space. The
corridor connects South Northants with major industrial and warehousing parks in Luton and
Milton Keynes to the south and Northampton and Daventry to the North.
4.26 The M40 has connections with Cherwell and Banbury industrial areas, however, it is not
perceived by the market as being a key logistics corridor, nor are there any emerging
allocations. However, the route continues to play a key role in maintaining the attractiveness
of the area as both a place to live and work given its strong north/south
connectivity/accessibility.
4.27 The district in particular has seen a number of high profile occupiers taking up space along
the M1 in major distribution parks at Junction 15 (Grange Park) and Junction 15a (Pineham). A
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number of site owners are promoting new strategic distribution schemes that take advantage
of South Northamptonshire’s connections, indicating that there is a significant level of
occupier demand.
South Northants position within the County
4.28 Northamptonshire has three local authority areas that provide the core offer to the distribution
sector (Daventry, Northampton and South Northamptonshire. The three local authorities are
central to logistics operation due to M1, M6 and M42 road network in and around the
Northamptonshire, the 33-mile stretch of the A14, which forms part of Euroroute E30, DIRFT (the
Daventry International Rail Freight Terminal) and Eurohub5 in Corby.
4.29 The emergence of Northamptonshire as a logistics centre hub is the product of geography
and transport developments over many years. The result of these economic and locational
factors is likely to be high numbers of HGVs travelling to, from and through Northamptonshire
together with the associated impacts on the highway network and local communities.
5 http://www.thebusinessfile.co.uk/maps/displaymap.asp?id=39
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Figure 4.6: Northamptonshire County and its Main Features
DIRFT
Eurohub
Charted Institute of Logistics
(Corby)
Motorway
Strategic Lorry Route
South Northants District
Euroroute 30
A14- East West
M1-North South
Northamptonshire’s central geographic location and ease of access to national and international markets is
reflected in the high level of employment in the distribution/logistics, or ‘wholesale’ sector and in the relative
concentration of national distribution centres and major rail freight terminals. The area of England around
Northamptonshire, and parts of Leicestershire and Warwickshire is home to one of the largest concentrations of
major distribution facilities anywhere in Europe. Much of this activity is clustered in the area covered by the M1/M6,
A14 and A43/A45. The county is also well placed to make use of major rail lines: the Midland Mainline, the West
Coast Mainline and Chiltern line, and links to Eurostar at St Pancras. (Source: Northamptonshire Local Economic
Assessment)
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5. Drivers of Demand
5.1 The drivers of demand in the South Northamptonshire include:
Central location – infrastructure connections;
Accessibility to the supporting supply chain;
Readily available ‘fit for purpose’ employment land;
The relationship with other growth sectors and activities, i.e. motorsport and higher value
engineering; and
Population growth.
5.2 These are discussed in further detail below.
5.3 Relatively few locations across the UK offer the nature of connections and scale of
development provided by that of South Northants. The M1 that provides the key element of
these characteristics. As a result of this, many operators consider other junctions on the M1 to
provide equally significant opportunities enabling an extension of the functional economic
market area, in terms of distribution, beyond the immediate area. This includes the stretch of
M1 between London and Daventry, and potentially as far as Rugby.
5.4 An associated demand driver will be the ability to locate close to Northampton. In part this will
allow businesses to relocate from Northampton’s own industrial estates as their buildings
become obsolete. It will also allow the distribution operators to service key manufacturing
activity in the town.
5.5 It is clear that the M1 market corridor dictates the location in which the wider South Northants
will operate within and compete for investment from in terms of development delivery and
occupier demand.
5.6 The District’s other major gateway of the M40 is not perceived by the market as being a key
logistics corridor. Despite this its presence is key to maintaining the attractiveness of the area
as both a place to live and work as it provides easy and fast access to London in the south,
the Midlands to the north and connectivity to the adjacent town of Banbury. Unlike the M1, it
is not perceived as a strategic location for B8 logistics uses. We are not aware of any sites that
are being promoted, nor of any developer interest in the opportunity areas in the District that
are located adjacent to the M40. Any development in these areas will most likely see
extensions of the commercial development in Banbury around the motorway at junction 11,
most of which is located outside the District in Cherwell Valley and as a results will service
demand and grow on space for this market.
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5.7 South Northants also has an established regional infrastructure network that enables easy
access via road and rail to a dedicated terminal at either London Oxford airport or Luton
Airport for freight cargo, rail freight interchanges at Daventry International Rail Freight Terminal
(DRIFT), and the Eurohub in Corby. These essential networks combined with labour and low
property costs make the District and the wider regional area in which it is located, South East
Midlands (SEM), a prime location for logistics organisations to grow.
5.8 It has been recognised that alongside South Northants centrally located position to the M1,
access to the rail facilities play a further driver in demand with regard to its strategic positing.
In conjunction with easy access to the wider market through prime junctions on the M1 and
wider road infrastructure, these networks also provide efficient access to rail-road intermodal
freight terminals such as Daventry International Rail Freight Terminal (DIRFT).
5.9 DIRFT is located 4 miles east of Rugby and 6 miles north of Daventry. It provides access via
road to junctions between the M1, A5 and A428 and via rail to the Northampton Loop as part
of the West Coast Main Line. DIRFT supports two existing sites including DIRFT I which spans
120ha and DIRFT II which spans 54ha. Market demand at the site is evident as planning
permission was granted in 2014 for a third extension to provide a further 163ha of warehousing,
3.5ha of HGV parking, and 70ha of open space.
Accessibility to supporting supply chain
5.10 It is recognised that alongside main logistics operators there are a large proportion of
companies within South Northants that form the supporting supply chain. This is formed of Tier 2
and Tier 3 companies that essentially drive the logistics sector in the District. It includes freight
forwarding, packaging providers and couriers.
5.11 With this in mind, mapping business supply chains at a localised level is a complex and often
futile exercise and relies heavily on data provided by businesses themselves, which may, by its
nature, be commercially sensitive. As such it can be resource intensive but add limited value
to the definition of the economic market.
5.12 The 2013 GVA ELR study identified a total of 8 sites, comprising 387.06 ha that could support
future growth and demand within the logistics sector. These sites are located across the
District.
5.13 The highest supply (56.5% and 218.84ha) of the future employment site provision will be
suitable for all B class employment uses. In addition to this 159.81ha (41.3%) has been identified
for pure B8 uses. Of these two sites Prologis Pineham at J15a of the M1 is an allocation in the
West Northamptonshire Joint Core Strategy. On the other hand, Roxhill at J15 of the M1 was
not allocated and is being pursued as a National Infrastructure Project. Similarly we
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understand that the 167.93ha site at Midway Park, off J16 is also an allocation as a mixed
regional distribution and manufacturing allocation in the revised Joint Core Strategy.
5.14 The occupation of distribution sites at junction 15 and 15a at Grange Park and Pineham
indicate there are significant levels of occupier demand within the District. Despite this, within
the core market area there are limitations on capacity close to South Northamptonshire. The
Northampton District has historically provided a base for logistics activity, however existing
hubs have limited vacant stock of a quality that will attract modern operators and there is little
identified land capacity for new development. This is borne out by recent investment and
occupation by the likes of Zara, Clipper and Amazon.
5.15 As such, operators are being ‘squeezed’ out of Northampton and, in order to retain staff,
seeking new space within South Northamptonshire. Aside from wider growth in the sector, this
sub-regional dynamic is driving increased levels of demand within South Northamptonshire.
The relationship with other sectors activities
5.16 In seeking to maximise the opportunity presented by new employment sites any future logistics
led employment land strategy needs to ensure that land is allocated in locations that are
attractive to the appropriate target market. This requires an understanding of the key drivers
of business location decisions in each sector.
5.17 In identifying the strategy for logistics land the following sites are likely to be the most
attractive to the market.
Table 5.1 - Assessed Supply Potential
Site Quantum
Floorspace Land Status
Prologis Pineham (J15) 64,973 sqm 59.7 ha Agreed
Roxhill (J15) 468,000 sqm 100.11 ha Not Agreed
Midway Pk (J16) 222,412 sqm 35 ha Agreed
755,385 sqm 194.81 ha
Source: GVA, Experian, South Northamptonshire Council, 2014 & 2017
5.18 The 2013 ELR identified a potential for oversupply, equating to almost seven times the
requirement, despite focusing development around a large number of strategically important
sites.
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5.19 When balancing the demand and supply of land for logistics activity wider considerations
need to be taken into account beyond market demand. Future development should seek to
minimise the impact of development on the wider landscape and maximise existing
infrastructure provision. This would suggest prioritising land that effectively extends existing
centres of activity. This would be suitable at Pineham.
5.20 The allocation of new ‘standalone’ distribution parks at Midway Park and the potential future
capacity at Roxhill will need to be considered on the basis of more detailed assessments of
environmental, landscape and transport impacts.
Scale and Recent Growth Trends
5.21 In this section the scale of the logistics sector is assessed in terms of the number of jobs, stock
of floorspace, and economic output in addition to how these have changed over recent
years.
5.22 The logistics sector is a large employer that provides jobs for a sizeable proportion of the
working population in South Northamptonshire, the UK, and in benchmark areas. Table 4
shows that logistics sector employees make up almost 6% of the working population in South
Northamptonshire, 4.6% in the UK, and larger proportions in the benchmark areas. In total,
nearly 1.6 million people are employed in the UK logistics sector.
5.23 As shown in Table 2, over the last 15 years logistics employment has increased in South
Northamptonshire by 600 jobs (37.5%) and out-performs the East Midlands logistics growth at
27.9%. Compared to UK logistics employment growth of 12.3%, the sector is performing
extremely well within this region of the country. Given the strategic location of South
Northamptonshire, larger growth rates in the SEMLEP (48.3%) and Northamptonshire (50.9%)
indicate potential rates that could be achieved in the district.
Table 5.2: Logistics employment
2001 2006 2011 2016
United Kingdom 1,403,060 1,502,810 1,493,510 1,575,120
East Midlands 94,020 109,960 118,850 120,280
SEMLEP 45,800 58,600 61,300 67,900
Northamptonshire 21,600 28,100 31,400 32,600
South Northamptonshire 1,600 2,400 2,400 2,200
Daventry 2,400 4,400 6,200 6,500
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Northampton 7,900 9,800 10,100 10,600
Source: Experian
Table 5.3: Logistics sector contribution to total employment
2001 2006 2011 2016
United Kingdom 4.7 4.7 4.7 4.6
East Midlands 4.6 5.0 5.4 5.2
SEMLEP 5.5 6.6 6.8 6.9
Northamptonshire 6.5 7.8 8.6 8.4
South Northamptonshire 5.7 7.4 7.0 5.8
Daventry 6.9 11.0 15.1 15.0
Northampton 5.8 6.7 7.0 7.1
Source: Experian
5.24 In addition to employment, development of logistics units remains strong in all of the
benchmark areas as the current stock in each has increased from the 5-year average as
shown in table 5. The M1 and M406 also form key corridors for logistics development with
nearly 8.5 million sq m in proximity to South Northamptonshire.
Table 5.4: Logistics floorspace
Current Floorspace (sqm) 2011-2016 5-Year Average
(sqm)
United Kingdom 217,987,957 215,262,983
East Midlands 25,025,341 24,194,299
SEMLEP 11,711,218 11,216,815
Northamptonshire 6,987,945 6,581,267
South Northamptonshire 268,637 217,466
Daventry 1,382,849 1,322,515
Northampton 2,025,297 1,922,309
M1 Corridor 7,667,381 7,255,214
M40 Corridor 750,142 673,309
6 It is to be noted that the extent of M1 and M40 corridor for both ends is aligned with SEM LEP boundary.
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Source: CoStar
5.25 Table 5.5 below shows the sector Gross Value Added (GVA) in each of the benchmark areas
and annual change between 2001 and 2016. Although not shown in the table, GVA of the UK
logistics sector peaked in 2007 at £72,350m before falling by £8,572m (11.8%) to £63,779m in
2012. Over the last 15 years however, the GVA of the UK logistics sector has increased by 7.9%
to the current value of £70,098m.
5.26 At the local level, GVA growth has been more acute, at 33.8% in the SEMLEP, 24.7% in the
Northamptonshire County and 30% in South Northamptonshire.
Table 5.5: Logistics Gross Value Added (£m)
2001 2006 2011 2016
United Kingdom 64,938 71,713 64,251 70,098
East Midlands 3,641 4,372 4,013 4,253
SEMLEP 2,106 2,761 2,594 2,817
Northamptonshire 843 1,057 1,009 1,051
South Northamptonshire 57 82 74 75
Daventry 83 139 180 205
Northampton 309 372 331 355
Source: Experian
Table 5.6: Logistics sector contribution to total GVA
2001 2006 2011 2016
United Kingdom 4.7 4.7 4.7 4.6
East Midlands 4.6 5.0 5.4 5.2
SEMLEP 5.5 6.6 6.8 6.9
Northamptonshire 6.5 7.8 8.6 8.4
South Northamptonshire 5.7 7.4 7.0 5.8
Daventry 6.9 11.0 15.1 15.0
Northampton 5.8 6.7 7.0 7.1
Source: Experian
5.27 Overall, these figures show growth in the sector and which has been relatively strong following
the 2008 crash. Given the strength of current growth in South Northamptonshire and
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neighbouring areas, the district would likely benefit from a strategy for the sector built upon
the existing location and sector competitive advantage.
Road and Rail-based Logistics Demand
5.28 The UK’s road and rail transport infrastructure plays a vital role in keeping products moving
efficiently. The following section presents a snapshot of the UK’s road and rail based logistics
sector and their importance for the logistics sector.
Road
5.29 In 2015, the UK road based logistics carried 152 billion net tonne kilometres of domestic freight
by HGVs, regaining pre-crash levels. The ONS estimates that a further 10 to 15% is carried by
light good vehicles.
5.30 Figures 5.1 and 5.2 below show that although there is little change in the amount of freight
moved since 1990, GDP output of domestic HGV activity in the UK has grown almost
continuously increased year-on-year.
Figure 5.1: Domestic Freight moved by HGVs on the UK road network
Source: ONS
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Figure 5.2: Per cent Change in GDP of the Domestic Activity of GB-registered HGVs indexed against the
year 2000
Source: ONS
5.31 In addition to further increases in consumer demand and domestic road freight, logistics
development is being accelerated by changes to the sector as a result of e-commerce.
Prologis find that for every £1bn spent online, compared to other methods, an additional
775,000 sqft of warehousing space is required.
5.32 The changing nature of road-based logistics, particularly with regard to the role of multi-
channel delivery services, final mile activity and light goods vehicles, is propelling the need for
more space and units.
Rail
5.33 Concerning rail-based logistics, 18 billion net tonne kilometres of freight was carried on the UK
rail network in 2015/6.
5.34 Total UK rail freight fell between 2013/4 and 2015/6, from a peak of 23 billion net tonnes
kilometres. The reduced movement of coal is the principle driver of this drop, having fallen
from 6.5 billion to 2.3 billion net tonne kilometres.
5.35 Yet when reviewing domestic intermodal, which is most applicable to South
Northamptonshire, Figure 5.3 shows that growth in freight carried has been robust. In 2016-17
Q1, domestic intermodal recorded its highest amount of freight moved since the start of the
quarterly time series in 1998-99 Q1, with 1.69 billion net tonne kilometres.
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Figure 5.3: Domestic Intermodal Freight moved on the UK Rail Network
Source: Office of Rail and Road
5.36 Over the last ten years, domestic intermodal rail freight has increased by 50%. This is set to
increase as sites such as DIRFT continue to show value in intermodal logistics sites for
accommodating multi-channel delivery.
5.37 The recently published “Future Potential for Modal Shift in the UK Rail Freight Market” study
(DfT, 2016) provides a basis understanding potential growth within the sector, identifying a
range of locations (existing and proposed) which are seeking to play a future role in delivering
a modal shift from road to rail.
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Figure 5.4: Domestic Intermodal Freight moved on the UK Rail Network
Source: Department for Transport
5.38 Growth in freight activity will be driven by a wider range of investments that are designed to
enhance the capacity and access to the rail network. The proposals for a major rail-
orientated distribution park allied to London Gateway Port could provide a major boost to the
sector. Enhancements to the Ipswich Cord have also unlocked greater potential to move
imported goods directly by rail.
5.39 Rail capacity (there identified rail ‘bottlenecks’ in north London for example) and a lack of
uniform infrastructure provision (different rail gauges are still used, preventing some rolling
stock being used in certain locations) will be a major challenge to growing the sector
nationally as they make rail freight less efficient than road in many cases. However, as
government pushes forward its Industrial Strategy and environmental agenda it is likely that
there will be an increased focus on rail freight for strategic and more localised distribution.
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6. Sector Overview and Activities
6.1 The distribution sector is of critical importance to the UK economy. As consumer demand and
manufacturing techniques have evolved, the requirement for increased distribution activity
has grown significantly. The distribution and logistics sector has not just grown in scale, the
changing role of ‘just in time’ servicing across the manufacturing and retail sector has also
driven a change in the nature, location and operational requirement of the sector itself.
6.2 Nationally, logistics and distribution activities are a vital part of the economy and the sector
has recovered strongly since the recession. In 2013 IPD estimated that the UK distribution
sector grew by 16% with the Freight Transport Association reporting an increase in profits of 3%
for the top 100 haulage businesses (Sources: IPD Pan-Europe Annual Logistics Index & The
Logistics Report 2014). Key drivers of growth in the sector have been the shift in retailing
activity in terms of the volume (and high turnover) of shop stock sourced directly from abroad,
the increased penetration of online retailing requiring goods to be stored and then distributed
directly to customers, and the stabilisation and growth in some sections of the UK
manufacturing sector.
6.3 These factors have created a boom in warehouse development activity specifically focussed
on the delivery of bespoke units to meet identified occupier requirements. New bespoke
distribution centres have been delivered along the UK’s key infrastructure networks and close
to major concentrations of population. These have focussed on meeting the new demand for
larger, more technology based distribution activity which has seen the average distribution
facility size grow considerably. National data shows that average distribution unit sizes have
grown from 200,000 sqft to 400,000 sqft, highlighting the recent demand for large scale
national distribution facilities, as logistics operations change.
6.4 Greater importing of both finished products and production components from a range of
global locations (most notably China and the ‘Far East’) has driven the demand for a new
network of distribution spaces within the sector generally. These tend to focus on two distinct
offers, national distribution centres where bulk loads of imported goods are processed, sub-
divided and shipped (largely via road freight) to a series of regional distribution centres. The
RDCs then play the role of distributing goods to end users, either in terms of retailers or
manufacturers or, increasingly, direct to clients.
6.5 A third distinct offer, which is a newly emerging type of space relating specifically to the retail
sector is local/‘final mile’ distribution centres. This accommodates ‘final mile’ parcel
distribution companies who move goods from RDCs to individual consumers. These tend to
focus on meeting the distribution needs of online retailers who lack the scale to have their
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own distribution networks, and are known as ‘fulfilment centres’. Each of the three key activity
types has a distinct set of property and floorspace requirements, to be discussed.
Table 6.1: Scale and characteristics of Distribution Centres
National Distribution
Centres
Regional Distribution
Centres
Local/ ‘Final Mile’
Distribution Centres
Characteristics Main distribution/
processing centres.
Processing and sub-
division of (largely via
road freight) to a series
of regional distribution
centres.
Distribution of goods
from strategic regional
locations to end users or
to the local/ or ‘Final
Mile’ distribution
centres.
Last stretch of a
business-to-consumer
(B2C) parcel delivery.
Locational
Drivers
Located close to major
strategic roads such as
Motorways.
Located close to major
strategic roads.
Proximity to costumers
on accessible/well-
networked sites.
Site / property
requirement
Tend to be large
warehouse spaces.
Size dependent on
business scale yet
floorspace dominated
by large warehouse.
Small/Medium (typically
located within urban
fabric).
Examples Sainsbury, Tesco and
DHL’s national
distribution centre at
DIRFT.
Shaw National
Distribution centre in
Crompton Moor.
Supermarkets and other
businesses also likely to
have regional
distribution units.
Smaller, more regional
businesses i.e. fresh food
serving restaurants.
Source: Case study NDC, RDC and Local Mile
Types of Employment and Job Density
6.6 The following analysis sets out the key overall trends within the warehouse and distribution
sector, to understand the factors driving the sector’s growth and identify the resulting
occupier trends and space requirements. Emphasis is placed on the importance of
understanding the distinction between strategic and local distribution, which suggests there
may be a requirement to consider an alternative way of considering densities within the
warehouse and distribution sector. This is also contributed to be the Large Scale and High Bay
Warehousing use type which is identified to exhibit “wide variations….arising from scale and
storage duration” and seems too broad to capture the nuances in the floorspace use of
warehouse uses depending on the type and scale of their activity. Occupier Market Drivers
and Characteristics.
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6.7 Traditional supply chains within the retail sector have been focussed on supporting the
physical ‘high street’ functions, however as new forms of demand arise, traditional distribution
networks are being broken down to enable a more flexible and efficient, often technology
based, form of servicing a wider customer base.
6.8 As indicated above, the growth of the distribution sector is creating demand for a new type of
‘fulfilment centre’ distribution space. The need for these new fulfilment centres is principally
underpinned by the changing nature of the retail sector, with an increasing share of consumer
demand being realised online and hence requiring direct home delivery or ‘click and collect’
service. These retail changes and their impacts on the distribution sector have been explored
in detail in a number of industry-focussed publications, most notably the Cushman &
Wakefield’s 2013 White Paper7.
6.9 In effect, whilst supply chains are becoming more global distribution networks are increasingly
more ‘local’ with a greater need for more urban locations to ensure the expected delivery
timescales can be achieved. The need to increase the scale and priority of retail driven
logistics is driving the location and space requirements of distribution units servicing these retail
consumers.
6.10 Larger, predominantly online retailers are able to undertake their own logistics activities and
therefore have their own property requirements. However, the increasing number of smaller
online retailers rely more heavily on third party distribution companies (such as Yodel, Hermes,
DHL, UPS etc.) to fulfil their distribution requirement, enabling them to benefit from existing hub
networks to ensure goods are delivered within specified windows.
6.11 Alongside these general distribution activities and requirements large food retailers have their
own specific set of distribution needs. These are underpinned by two key changes in the food
and grocery retailing sector and drive two distinct requirements within food retailers’
distribution network.
6.12 The first driver is the increasing scale of online grocery shopping demand which is now so
significant it is inefficient to service demand from within existing supermarkets, as had
historically been the case. Instead the major food retailers are now distributing orders from
bespoke centres which are not open to the public. These so-called ‘dark stores’
accommodate the full range of goods found in a conventional supermarket but are picked
and packed by staff and distributed directly to consumers by a fleet of small light goods
vehicles.
7 The Changing World of Trade – Cushman & Wakefield (2013):
http://annualreview.cushwake.com/downloads/02_trade_white_paper2013.pdf
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6.13 The second driver stems from changes within the ‘high street’ convenience retail market. One
of the biggest growth areas within the grocery retail sector has been the small convenience
store, where new store formats such as Tesco Metro/Express, Sainsbury’s Local, M&S Simply
Food and Little Waitrose have all become established within high streets, transport hubs and
district centres across London.
6.14 By their very nature and unit size these smaller formats lack the on-site storage capacity and
loading facilities of the large supermarkets requiring more frequent re-stocking by smaller
vehicle fleets to ensure stock is replenished on time. Similar to direct sales activity the small
convenience format requires servicing from a nearby fulfilment centre, demanding the same
site characteristics as the ‘dark store’ offer.
6.15 Direct distribution and click and collect have also created a market for space driven by
traditional high street and new online retailers, which are seeking to meet the increasing
consumer demand for short delivery time periods, with a priority on ‘next day’ delivery.
Fulfilment Centre Property Specifications: Type and Size
6.16 Focussing specifically on newly emerging Fulfilment Centres, the space requirements fall
broadly into two categories, large single occupier fulfilment centres and smaller third party
parcel distribution hubs. Both types of activity are essential to service growing consumer
demand for direct delivery.
6.17 The major online retailers and food-stores seek to increase efficiency by occupying space that
is large enough to accommodate a large range and volume of goods which are delivered
from their national centres. Space is required so that these bulk-deliveries can be stored,
broken down, repacked and then be distributed directly to consumers or stores. These units
tend to be upwards of 200,000 sqft aligned to a large yard area that can accommodate the
vehicle fleet, this tends to be significant given the focus on ‘final mile’ fulfilment into urban
areas using light goods vehicles.
6.18 At the other end of the scale are the third party operators who solely focus on delivering
smaller packages direct to customers, largely from smaller retailers. Their floorspace
requirements are more modest and given the scale of their operation and the relative
simplicity of their package make-up, their space requirements tend to be less specific than
larger ‘in-house’ fulfilment centres.
6.19 The building requirements reflect the advanced storage, picking and packing techniques
present within the industry. Whilst some elements of fulfilment centres are customised to
individual user needs, speculative development tends to be delivered to institutional
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standards (i.e. at a grade that would meet the requirements of the UK investment market).
The primary concern of occupiers is that space is of high quality and high specification.
6.20 Fulfilment Centres in particular require a much greater level of bespoke design and fit out as
such speculatively developed units to this ‘institutional standard’ are unlikely to meet their
needs or attract occupier demand. Their space requirements are underpinned by an
increasing shift to technology based stock management and picking techniques in order to
create greater cost efficiencies and enable shipments to be consolidated to reduce the
number of ‘empty’ van miles.
Influences on Warehouse and Distribution Densities
6.21 As a part our research for Housing and Communities Agency Density Guide 2015 update8,
GVA undertook an extensive review of employment density literature. Our update to the 2010
density guide provided new categorisation definitions for the logistics sector. The 2010 density
guide identified two forms of distribution activity: the General Warehousing and Distribution
category and the Large Scale and High Bay Warehousing category, both falling within the B8
use class. The 2010 Guide suggested that “technological developments and restructuring in
most industrial sectors is setting a trend for an increase in floorspace per head so that average
density is likely to become lower over time”.
6.22 However, our analysis suggested that whilst some factors have decreased the density of
employment (such as increased automation within the order picking activity) these have
been more than offset by the wider range of job roles required to ensure the distribution
facility functions. Similarly changing shift patterns towards 24 hour working as distribution needs
increase are also offsetting reductions in the number of workers per shift.
6.23 The research also highlighted that the rise in zero-hours contracts has been a recent trend in
the employment conditions of the distribution sector, particularly where activity is linked to the
retail sector and therefore staffing requirements more seasonal. However, consultation with
the industry has suggested that the impact on total staffing levels has been relatively small to
date, and certainly outweighed by wider drivers of change.
6.24 The warehouse and distribution sector provides a range of employment opportunities at a
range of skill levels. This is supported by research by Prologis9 undertaken with occupiers of
their own sites, indicating the following activities:
Warehouse Staff (including forklift drivers);
8https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/484133/employment_density_guide_3rd_edi
tion.pdf 9 Prologis: Technical Notes 2011 – Do Distribution Warehouses Deliver Jobs? (http://www.prologis.co.uk/pdfs/technical-notes-
1.pdf
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Drivers;
Admin;
Managerial; and
Other (inc. ICT, customer service, sales and engineering).
6.25 This increasingly diverse range of employment opportunities within the distribution sector was
supported by research undertaken by Skills for Logistics on behalf of the South East Midlands
Local Enterprise Partnership (SEMLEP10).
6.26 The Prologis research was originally completed in 2010 and benchmarked findings against a
similar study by Cranfield University in 2003, allowing some degree of objectivity in the data
and research approach. Comparing the two studies shows a number of trends that suggest
employment densities have changed within the sector. Firstly, the data shows a broadening of
activity types between the two surveys, with a greater range of activities in the ‘other’
category, most notably ICT support. Furthermore, the data shows a reduction in the proportion
of workers employed at the lowest levels of ‘warehouse staff’ decreasing from 68% to 43% of
the total workforce. This fall has been offset by increases in the share of workers within admin,
managerial and ‘other’ roles. Given the shifts in the sector’s occupational profile it is
unsurprising that actual employment densities have risen in recent years.
6.27 When calculated by Prologis in 2006 they estimated distribution activity employed one person
per 95sqm, however by 2010 density had increased to one person per 77sqm. This is a
significant increase in employment density for the distribution sector, highlighting the
increasing number of employees that can be supported by new, modern high quality
distribution floorspace, even with significant increases in the scale of floorspace. Despite
increased mechanisation and deployment of technology the data suggests that as logistics
becomes more specialised both a greater number of employees and range of skills are
required to operate a modern distribution facility.
6.28 A later update to the Prologis research was published in May 2015 which suggests that
densities have increased even further to around 69sqm per employee, largely driven by an
increased share of jobs within office-based activities. Despite this research having tested this
through consultation with others involved in the industry and based on our own understanding
of the sector through a range of agency and employment land projects it would appear this
level of density is not yet the ‘norm’.
6.29 The new categorised definitions in the latest HCA density guide acknowledges that imports of
both finished products and production components from a range of global locations (most
10 http://www.semlep.com/resources/uploads/SEMLEP_LOGISTICS_REPORT_2013_final.pdf
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notably China and the ‘Far East’) have driven demand for a reconfigured network of
distribution spaces within the sector that focuses on National, Regional and Final Mile
Distribution Centres, as described previously.
6.30 As a result of this research, the latest HCA density guide provides following sets of standards for
Logistics.
Table 6.2: Storage and Distribution Employment Densities
Use Class Sub-
Category
Sub-Sector Density
(sqm)
Notes
B8 Storage &
Distribution
National Distribution Centre 95 GEA
Regional Distribution Centre 77 GEA
‘Final Mile’ Distribution Centre 70 GEA
Source: HCA Guide 2015
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7. Drivers of Growth
7.1 Delivery and logistics firms added significant number of jobs in the last ten years, which has
enabled e-commerce companies to ship higher order volume and reach more customers
across the UK.
7.2 Trucking and warehousing companies saw the highest increase in jobs, likely helped along by
increased demand for speedy shipping among consumers. As the e-commerce market
continues to see higher sales, and consumers expect their orders in less and less time, the
logistics industry is being pushed to adapt in order to satisfy the growing fulfilment needs.
7.3 To underpin what has provided a growth drive to this sector, the following sets of point present
key change drivers for the logistics sector:
Growing E-commerce: The UK is one of the biggest markets for online retail sales in Europe.
According to Forrester Researcher, the UK is likely to see a Compound Average Growth
Rate of 10% by up to 2017 (see Figure 7.1).
Figure 7.1: Forecast European Online Retail Sales by Country 2012 to 2017
In the recent years, there has been a significant rise of e-commerce sector. The graph below
shows that the e-commerce sales have been consistently increasing in its share, with 2016
having 15.7% of the total retail sales to e-commerce compared to 13% in 2014. This growth is
likely to continue in the future with growth of e-commerce expected to be 19.3% of total retail
sales in the UK.
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The rise of e-commerce has had a huge
influence on the Logistics sector with it having a
direct impact on growth of parcel delivery
companies. The UK courier and parcel sector
generates around £5.40 billion in revenue each
year. The sector has experienced an annual
growth rate of 2.8% for the period 2010 to 2015. A
key factor in this growth is the increasing
expansion of online retailing. Revenue in the
courier, express and parcel sector is forecast to
grow by over $6 billion by the end of 2015.
Rise of mega e-commerce companies and their growing investment and reach in logistics
sector: Logistics is primarily a commercial, market-driven activity and investments are
made by the private sector in accordance with commercial business criteria. The vehicles
and distribution centres are owned and
operated by companies seeking to meet
market demand on a commercial basis.
In the recent years the industry has seen a
significant boom in the parcel industry, a
segment of the shipping sector that deals
with the transportation of packages to
consumers. As a result of this the rise of
companies like Amazon, Alibaba and
Walmart are able to handle more of their
own shipping and big retailers are well
positioned to disrupt the parcel industry.
According to a recent report by BI
Intelligence, Amazon, Alibaba, and
Walmart have so far focused on building
out their last-mile delivery and logistics
services but are increasingly going after the middle- and first-mile of the shipping chain11.
Although these trends are currently more prevalent in the US, however, it is most likely to
gain impetus in Europe.
Rapidly Changing Technologies and Rising Efficiencies: Sector-related technological
change shows potential to shape the future and success of logistics in the UK. The
11 http://www.businessinsider.com/e-commerce-drives-growth-in-logistics-industry-jobs-2016-8?IR=T
Figure 7.2: UK Retail Ecommerce Sales, 2014-
2019 (billions of £, % change and % of total
retail sales)
Figure 7.3: Top 10 online retailer in the UK
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increasing role of automation and Smart technology in Warehousing and storage enabling
companies has already proved to reduce significant costs and streamline storage.
Other interventions like EDI (Electronic Data Interchange)- tractability of components,
installation of telematics in vehicles to facilitate tracking, other incremental changes such
as the uptake of hybrid engines, alternative fuels, retrofitting fuel-saving technology and
eco-driving have been key to increased efficiency and optimising growth.
New forms of technology such as ‘Driverless Lorries’ are a key example of rapidly
changing forms of automation within the sector, which is likely to first be utilised by the
sector in the form of platooning. Through the use of telematics and ‘dynamic wireless
power transfer’ (DWPT) vehicles can group in chains that can improve aerodynamic
performance, create steady traffic flow, lower fuel consumption and reduce the risk of
traffic collision. Highways England is trialling the technology which is currently used in
countries such as the Netherlands.
Other radical technology is relevant to the sector but likely to be more disruptive.
Concerning transport, drones have the potential to upset current logistics networks and
undermine the advances noted above. Drones for deliveries are intended to be self-
navigating by means of GPS and react to other objects in the air; to avoid incidents they
will be capable of being programmed to deliver a parcel to a specific address. Yet there
are a series of challenges to be overcome if drones are to be taken up commercially.
Another technological innovation that has the potential to be disruptive is 3D printing. The
uptake of downloadable schematics that can enable the printing of products within the
homes and businesses of consumers would likely reduce the need for logistics. A range of
products can be produced by means of 3D printing and has existing commercial uses,
such as the manufacturing of aerospace parts. Widespread use requires further advances
to reduce costs and technical constraints yet the possibilities for small batches of products
and individual orders, or deliveries to remote locations are clear. The most value would
likely be achieved by replacing the express delivery of high value components, something
that currently is often carried out by air. Nevertheless, the materials required for the printing
itself will still need to be delivered.
In order to capitalise on the possibilities offered by these new technologies, and to
navigate compliance responsibilities that will invariably accompany them, the logistics
sector will need to have access to the right talent and adequate systems to support skills.
Further, take up of technology and interaction with regulation should be considered by
policymakers, particularly concerning emissions and sustainability targets.
Infrastructure Investment: In recent years the UK logistics sector has received increasing
attention from policy as it continues to lag behind competitors. This was reinforced in 2015
budget with £100 billion being committed in all types of infrastructure to create “long-term
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certainty and increased funding to the most productive areas of infrastructure spend.” The
2014 Government paper on interventions for the logistics sector and Infrastructure Delivery
Plan 2016-2021 provides a status update.
Figure 7.4: Recent Government Interventions
Measures Recent Interventions
Freight
Interchanges
The Government has developed a National Networks National policy
Statement, which provides parliamentary endorsement to the
Government policy on Strategic Rail Freight Interchanges. The
government in the last few years have also extended support of £55 m to
Network Rail to invest in the Strategic rail freight network to help remove
bottleneck. These are: the Ely – Soham doubling scheme; Gauge
clearance of additional rail freight routes in the Midlands
Investment
in Ports
Airport Capacity Investment – substantial investment is underway at
airports around the UK including a £1 billion investment programme at
Manchester Airport and over £4 billion at Heathrow and Gatwick as part
of their regulatory commitments
Port Capacity Investment – there is also significant investment activity at
ports including the new Liverpool 2 deep-sea container berths,
construction of a third berth at London Gateway, a major acquisition of
land that will allow expansion at the Port of Tilbury, ongoing improvements
at Teesport, as well as the Dover Western Docks Revival scheme and the
development of the Green Port Hull project
Strategic
Roads
The government has established a ‘Road Investment Strategy' (RIS):
setting out a stable, long-term plan for the Sustainable Road Networks N,
with a clear vision, performance requirements and multi-year funding. The
Government has turned Highways Agency into a government-owned
Strategic Highways Company.
The Government is also supporting over a £1bn investment in the most
growth-critical roads (M25, M1, M6 north of Birmingham, M3 in Surrey, A14
near Kettering, M1/ M6 junction nr Rugby, M45/46 Junction Coventry, A14
nr Kettering)
Pinch Point Fund of £220m to make step changes in the performance of
the network including improvements in congestion, journey time reliability
and safety ring-fenced £20m for small scale schemes on the A14’s
Cambridge to Huntingdon corridor
Longer term solution for the A14 corridor to trigger the launch of a large
scale engagement programme – the A14 challenge - aimed at
generating new ideas for solutions to the problems faced by this road.
Surface Access Improvements – to ensure that airports and ports are
better integrated into the wider transport network. This includes road and
rail measures: – A6 Relief Road to Manchester Airport – M42 Junction 6
supporting access to Birmingham Airport and also HS2 – M23 Junctions 8
to 10 Smart Motorway which serves Gatwick Airport – Gatwick Airport rail
station will also see significant improvements and new £145 million trains
with 108 carriages to specifically cater for airport traffic – A5036 to the
Port of Liverpool – A14 Cambridge to Huntingdon – to improve access to
the Port of Felixstowe – A160 / A180 Port of Immingham Improvement –
A63 Castle Street to the Port of Hull
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Measures Recent Interventions
Trialling of
improved
capacity
and loading
Carry out trialling of longer-semi trailers, with the anticipated value to be
£33m to operators.
Deliver technology improvements on a number of key routes, including
the M5, M40, M3 and M54, to assist drivers – particularly those in the
haulage sector - in managing their journeys.
Fuel
efficiencies
and Low
Carbon
technologies
Funding of £11m on low emission HGV technologies.
Exploring opportunities to support Green Technologies through changes
to the operator licencing regime
Skill for
Logistics (£4
million)
Four projects were launched by Skills for Logistics to improve training and
skills in the logistics sector in April 2012 to promote careers in Logistics as
employers in sectors find it hard to attract new employees.
HS2 As a response to a industry-wide request to ensure that freight sector gets
a share of release capacity, the DfT and HS2 Limited have considered
proposals such as build early to Crewe to release existing capacity which
could be used by freight.
Operator
licensing
The government is examining a number of issued raised about reducing
bureaucracy by maximising digital services and to improve
communication
Oil Prices: In recent years the logistics sector has benefitted from falling oil prices. By the
end of 2015 Brent Crude was at $39 per barrel which had filtered through to reduce
annual vehicle operating costs for the second year in a row12. Yet the price is now $50 per
barrel and the fall in the value of the Pound Sterling has left spending on oil less cost
effective. With fuel contributing to 20-40% of operating costs, this rebound presents
potential strain for the logistics sector which has yet to regain pre-crash productivity levels.
Yet benefits emerge from rising oil prices, principally concern renewed investment in
achieving efficiency gains and reducing dependence on fossil fuels through green
technology. Given the falling costs of carbon neutral technologies and the volatility of the
oil market, diversified energy strategy will strength the sector in the long-term and aid the
meeting of national emissions targets.
Brexit: The national logistics sector is influenced by economic conditions that operate at a
supra-national level. The outcomes of the leave vote, although a national decision, will not
play out in a vacuum and has so far resulted in a fall in the value of the Pound Sterling. A
weakened Pound Sterling is expected to increase import and transport costs (oil traded in
12 FTA Logistics Report, 2016
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dollars) while increasing the competitiveness of exports and the attractiveness for
international investment in logistics related development.
Key Challenges
7.4 Lack of Supply of grade A quality Logistics Space: A recent study on Logistics Performance
rated the UK’s performance as 10th, with many European competitors ranked above (The
World Bank, 2012). The noted supply has been specifically acute within the East Midlands
where less than one years’ supply is currently available.
7.5 Skills Shortage: Like other sectors, a further constraint for UK logistics is skills and attracting HGV
drivers. In 2001 the age of the average truck driver was 45.3 which has since increased to 48.
The shortage of HGV drivers is currently estimated at 45,000 and for every individual seeking a
HGV role, there are up to 18 positions being advertised. In a survey of logistics firms, 75% said
they faced difficulty when attempting to recruit for driving positions. When discussing the
reasons for this difficulty, firms highlight a lack of applicants with technical, communication,
and technical handling skills, a lack of funding for vocational training, and the
unattractiveness of the industry with regard to pay, work hours and career progression. (FTA
Logistics Report, 2016).
7.6 Lack of Infrastructure Investment: The UK ranks 29th in the world for the quality of its road
infrastructure and is consistently viewed as unreliable by the logistics companies. The Asphalt
Industry Alliance estimates £12 billion is required for the local road network alone. In response
the 2015 Budget committed £100 billion in all types of infrastructure over the course of the
current Parliament, “giving long-term certainty and increased funding to the most productive
areas of infrastructure spend.” Although businesses feel this is a step in the right direction, 62%
are unsatisfied with the rate of progress, particularly with a backdrop of existing staffing
constraints and the need to take an economically sustainable approach to the use of such a
large injection of funding.
7.7 Competition and Low Margins: The sector is already extremely competitive, with many small
firms and very slim profit margins of around 1 to 3%. Any actions to improve the sector’s
productivity will result in cost reductions that will, in part, be recycled for much-needed
investment in capital and innovation across the sector but will also translate into reduced
costs of production and transport of goods and reduced prices for the consumer.
7.8 Political Uncertainty: The fallout of the UK decision to leave the EU has yet to become fully
evident, given that the departure process could carry on until at least 2019. Yet how trade
continues with international partners through the negotiation process and following it will have
a direct effect on the sector. In a recent statement Paul Drechsler, president of the CBI, has
warned that the potential complexities tied to new trading rules in the wake of Brexit are likely
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to drive up warehousing and infrastructure demands as more goods require storing on-site. A
smooth exit from the EU will enable the industry to better adapt to the changing trade
environment.
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8. Understanding the Potential
8.1 Analysis of the logistics sector nationally, regionally and locally has confirmed its important role
at the heart of the UK economy, acting as a critical component of the way businesses
function and consumer demands are serviced. It is clear that, as global, national and
regional supply chains continue to evolve and UK consumer habits change there will be an
increased reliance on effective distribution networks across the country to service demand.
8.2 Given the strength of the sub region within which South Northamptonshire lies in the logistics
and distribution sector it is likely that at least some component of the district’s economic
prospects will be tied to its ability to attract and accommodate activity.
8.3 Within this section of the Report we consider the potential impacts the continued success and
growth of the sector, and in particular its concentration along the M1 corridor, may have on
the scale of employment within South Northamptonshire and the potential requirements for
employment land these would generate.
8.4 It should be noted that, at the time of preparing this report, there are considerable unknowns
which will potentially impact the future shape, scale and nature of the logistics sector in South
Northamptonshire. As such, whilst growth projections are prepared in good faith and based
on the best available information available, they should be considered with appropriate
caution.
Baseline Projection
8.5 In line with the Employment Land Study the projections within this Report draw from the
Experian Local Market Forecast model, with base projections drawn from the Quarter 4
release (December 2016). As noted elsewhere with this Report projections for the sector are
based on the “Land, Transport and Storage” sector definition within the model, which
captures all relevant activities within the logistics and distribution sector. For simplicity and
consistency throughout the wider report, we continue to refer to the Experian sector as
“Logistics and Distribution”.
8.6 Using the Experian forecast it is possible to project the scale of employment growth that could
be expected within South Northamptonshire given the current level of activity within the
sector and the strategic prospects for growth within Logistics and Distribution activities.
8.7 As shown in Figure 8.1 below, employment within South Northamptonshire within the Logistics
and Distribution sector is anticipated to grow between 2016 and 2036.
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Figure 8.1 - Base Growth Projection
Source: GVA Analysis of Experian Data, 2016
8.8 Over the period 2016 to 2036 Experian expects employment to grow within the Logistics and
Distribution sector by approximately 300 jobs, an increase of 14% over the current employment
level. Assuming that floorspace was, on average, occupied at a density of 75sqm per
employee this would generate need of approximately 22,500sqm of additional floorspace.
Alternate Future Projections
8.9 What has been made clear within the previous sections of this report is that the Logistics and
Distribution sector activity within South Northamptonshire is driven by a regional and national
scale of activity. In essence the sector seeks growth opportunities within a much wider area
and locates on sites which offer the most advantageous conditions for operators.
8.10 As such, whilst a district level projection is useful as a starting point, the potential for South
Northamptonshire needs to be considered much more closely with that of both the SEMLEP
area and the ‘Golden Triangle’ of sector activity. By understanding the scale of potential
growth in these wider market areas decisions can be taken to understand what role South
Northamptonshire may play in the future and the potential employment and land implications
of these.
8.11 Within the following sub-sections we consider a number of alternate growth projections which
draw much more on the sub-regional growth prospects. Again these are not meant to
provide ‘predictions’ of what will happen, but provide a reasonable base for understanding
future opportunities for the district.
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8.12 Alternate forecasts are prepared in the context of two alternate market definitions, as set out
below.
Table 8.1 - Market Definitions
SEMLEP Golden Triangle Market
Corby Bedford
Daventry Central Beds
Kettering Daventry
Northampton Northampton
South Northamptonshire South Northants
Bedford Milton Keynes
Luton
Central Bedfordshire
Aylesbury Vale
Milton Keynes
Cherwell
Source: GVA
Enhanced Employment Growth Rates
8.13 When taken in context of the wider growth expectations of the market area, the anticipated
growth of employment within South Northamptonshire is lower than both the market area and
the SEMLEP area.
8.14 In terms of Full Time Equivalent jobs between 2016 and 2036 South Northamptonshire is
anticipated to see a 24% increase in FTE employment, SEMLEP 28% and the market area 34%.
This suggests there is a much more significant level of growth that could be achieved within
South Northamptonshire even if it behaved much more like the wider averages. The impact
of growing at different rates is shown below.
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Figure 8.2 - Enhanced Growth Rate Projection
Source: GVA Analysis of Experian Data, 2016
8.15 Growth in line with the SEMLEP average would see employment grow by 590 additional jobs
between 2016 and 2036 over current employment levels, this would require an additional
circa. 45,000 sqm of floorspace to be delivered in addition to current stock.
8.16 Growth in line with the market area would see employment increase by 722 additional jobs
between 2016 and 2036 over current employment levels, this would require the provision of an
additional 55,000 sqm over the current stock.
Restored Employment Share
8.17 South Northamptonshire has traditionally played an important role in the Logistics and
Distribution sector in the wider region. However data suggests that growth in other locations
has meant that its relative importance has decreased in recent years, meaning it is
contributing less to the wider sector than previously.
8.18 Historically South Northamptonshire has accommodated up to 4% of total employment (FTE)
across the SEMLEP area within the Logistics and Distribution sector however in recent years this
has fallen to almost 3%, a level that the Experian base model expects it to continue at until
2036.
8.19 When compared to the market area the fall has been even more significant, decreasing from
approximately 6% of total employment (FTE) to under 5% by 2016 with the decline expected to
continue through the forecasting period to below 4.5% by 2036.
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8.20 The South Northamptonshire Economic Development Strategy recognises the importance of
the Logistics and Distribution sector to the district and the potential role the district could play
within the SEMLEP region in this key sector. As such a decline in the role of the district within
the LEP economy or wider market area is unlikely to be a desirable outcome.
8.21 To explore the implications of maintaining the district’s historic role in the sector in relation to
the wider areas two projections have been developed that, over time, re-establish the same
level of employment share when compared to each respective area.
Figure 8.3 - Restored Employment Share
Source: GVA Analysis of Experian Data, 2016
8.22 As shown in Figure restoring the relative share of employment within South Northamptonshire
in relation to the two wider areas will have significant impacts on the scale of employment
within the sector. By retaining the historic relationship with SEMLEP the district would see
almost 1,800 additional jobs (FTE) provided within the area, requiring almost 130,000sqm of
floorspace.
8.23 Restoring the historic role in the wider Golden Triangle market area would mean an additional
circa 1,500 jobs (FTE) being provided in the district, slightly below the scale required to retain
presence in SEMLEP. This would result in a need to provide an additional 110,000sqm of
appropriate floorspace.
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Conclusions
8.24 Using Experian trend based projections it is clear that there is potential for the growth of the
logistics sector, however in relative terms trend-based growth could result in the District playing
a relatively minor role in the wider market. If the District were to seek to retain its current role,
or even enhance it to previous levels, then additional space would be required within the
District.
8.25 In reality, however, none of the trend based projections provide a particularly good reflection
of how market led demand for space has historically been delivered or how the sector itself
sources or responds to opportunities. As such the potential for growth in the sector in South
Northants will be determined as much by the availability of suitable space as it will any
projection of future growth.
8.26 In the next section we consider the potential supply led opportunities for different forms of
logistics sector growth within the District with the implications of these approaches being
considered in the final chapter.
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9. Employment Land Supply
9.1 In order to provide a clear picture of the available employment land supply that could
accommodate future logistics sector demand it is necessary to review the capacity of existing
and potential future supply. We have therefore considered both the existing and potential
future supply of land that is appropriate for logistics sector use. For the avoidance of doubt this
Study has not included an update of the 2013 ELR.
9.2 Table 9.1 below provides a desk top assessment of existing employment land and premises
(B1, B2 and B8) in South Northamptonshire that currently provides accommodation, or the
potential to, for businesses in the logistics sector. Further information on the occupants of these
properties is provided in the Council’s Business Accommodation Guide.
Table 9.1 – Existing Employment Land and Premises
Site Name Size (ha) Vacancies
JBJ Business Park
Northampton Road, BLISWORTH, NN7 3DW
1.7 None
Home Farm Building
Northampton Road, STOKE BRUERNE, Towcester, NN12 7XU
0.5 1 Unit
Heyfords
BUGBROOKE, NN7 3QB
1.84 None
Old Tiffield Road
TOWCESTER, NN12 9PF
12.02 None
Mount Mill Farm
Stratford Road, WICKEN, Buckinghamshire, MK19 6DG
2.03 None
Rectory Farm
St John’s Road, Tiffield, Towcester, NN12 8AA
3.09 None
Chapel Farm
Hanslope Road, HARTWELL, NN7 2EU
1.18 1 Unit
Grange Park
Cheaney Drive, GRANGE PARK, NN4 5EZ
27.67 None
Ashton Lodge Farm
Hartwell Road, HARTWELL, NN7 2JT
0.66 Unknown
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Stratford Road Business Park
Stratford Road, ROADE, NN7 2LP
1.33 Unknown
Plainwood Business Centre
Blisworth Road, ROADE, NN7 2LN
0.84 Unknown
Buckingham Road Industrial Estate
BRACKLEY, NN13 7EJ
27.05 Vacant Units
(quantity
unknown)
Northampton Road
BRACKLEY, NN13 5AU
6.78 Unknown
Charlton House Farm
NEAR CHARLTON, OX17 3DT
1.54 Unknown
Appletree Industrial Estate
CHIPPING WARDEN, OC17 2HB
16.68 Unknown
Park End
CROUGHTON, BRACKLEY, NN13 5LX
1.62 1 Unit
Greenacres Farm
STEANE, FARTHINGHOE, BRACKLEY, NN13 5PB
1.16 None
Greatworth Park
Welsh Lane, GREATWORTH, OX17 2HB
2.95 2 Units
Cherwell Valley Business Park
KING’S SUTTON, TWYFORD, NEAR BANBURY, OX17 3AS
5.9 None
Home Farm
Warkworth Road, WARKWORTH, OX17 2JH
0.54 None
Burgess Farm
Farthinghoe Road, MIDDLETON CHENEY, OX17 2NE0
1.05 None
Warkworth Farm and The Courtyard
MIDDLETON CHENEY, OX17 2AG
0.75 1 Unit
St James Road Industrial Estate
BRACKLEY, NN13 7XY
10.58 None
Glebe Farm
STEANE, FARTHINGHOE, BRACKLEY, NN13 6DN
0.95 None
Source: GVA various 2017 and SNC Business Addendum Guide 2015
9.3 In the absence of undertaking a thorough review and update of the existing supply of
employment land in the District via site visits it is not possible to provide a full position of the
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level of vacancies and current occupancy of these sites. Notwithstanding this our assessment
indicates a supply that is well utilised with few vacancies. Any vacant units do not remain on
the market for long.
9.4 This supply meets the needs of local and regional businesses and accommodates the ‘churn’
in the property market when businesses look to move to alternative premises within the local
area to obtain more favourable terms or as part of a growth strategy.
9.5 This stock is on the whole of a secondary nature with quality varying from older to more
modern property with rents reflective of this. Businesses within this segment of the market move
for a number of reasons which include better rental terms, more space, improved accessibility
to the highway network and customers.
9.6 Whilst these local companies undertake an important role in the local economy and
employment for local people this segment will not be a driver of growth in the future nor is it
likely that these companies will have requirements for new build facilities on strategic
employment land.
9.7 Table 9.2 below identifies those existing properties that are subject to development proposals
through either the expansion of existing provision or comprehensive redevelopment for
alternative uses.
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Table 9.2 – Development Proposals
Site Occupants Vacancies Planning
Application
Ref
Application Comments
Old Tiffield
Road,
Towcester
NN12 9PF
Stable
Fabrication,
Fanuc, South
Northamptonshir
e County
Council,
Porsche Centre
Silverstone,
Albaco Systems
None S/2016/1788
/MAF
Extension to existing
production unit and
additional vehicle parking
Proposals for a 3,717 sqm
(40,000 sqft) detached
warehouse/industrial unit
and 1,858sqm (20,000 sqft)
of phased commercial
office accommodation.
Awaiting approval.
Rectory Farm,
St John’s
Road, Tiffield,
Towcester,
NN12 8AA
A&M Services,
AC Jeffery,
Anglian Water,
Blackies
American Car
Shop, BW
Precision, MVC
Mikron Vehicle
Services Ltd,
Smart Waste
Recycling Ltf,
Wickham Plant
Hire
None S/2015/0064
/MAF
Variation of condition 4 of
the planning permission
granted in accordance with
S/2013/1430/MAF.
Northampton
Road,
Brackley,
NN13 5AU
23 Businesses
across 4 sites
Unknown S/2012/1557
/MAO
Permission granted for the
re-development of the site
as a change of use to
residential use for 180
dwellings and associated
infrastructure.
Source: GVA
9.8 As with the existing employment property we feel that this supply will meet the needs of local
and sub-regional businesses. The continual availability of vacant stock is an essential part of
the property market ensuring that grow on space is available to accommodate both growth
and churn. Our desktop assessment indicates there to be a healthy availability of alternative
space available to accommodate this.
9.9 We turn now to consider the strategic employment land that will provide the supply to drive
economic growth in South Northamptonshire, the capacity to accommodate demand and to
give the District a competitive edge over competing locations along the M1 corridor. In a
growing market the availability of ‘fit for purpose’ and readily available employment land is
essential for the District to be able to market itself as an area ‘open for business’ and to
respond quickly when both indigenous and inward investors present themselves.
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9.10 Table 9.3 below identifies both current and potential future employment sites that will
contribute to the future land supply for the District that will accommodate demand in the
logistics sector.
Table 9.3 – Employment Land Supply
Site Occupants Vacancies Planning
Application
Ref
Application Comments
Towcester
Sustainable
Urban
Extension
15.5ha
N/A B1: 22,000 sqm
(236,806 sqft)
B2: 10,500 sqm
(113,021 sqft)
B8: 4,600 sqm
(49,514 sqft)
Total:
37,100 sqm
399,341 sqft
S/2007/0374/O
UTWNS
Allocated in
Local Plan
Outline application for
the creation of a new
mixed use
neighbourhood
comprising 2,750
homes, with
employment land to
support B1/B2/B8 uses,
and a main local
centre.
Not big B8 – site not on
motorway corridor
Northern
Gateway,
Towcester,
NN12 6GX
16ha
Tove Valley
Business Park,
Tesco,
Homebase
and Porsche
Unknown N/A
Allocated
The site has been
previously allocated for
industrial and
commercial
development but
despite approval to
prepare a planning
brief in March 2014, no
subsequent
application has
followed.
Not big B8 – ‘final mile’
or manufacturing
orientated.
Grange Park,
NN4 5EH
8.41ha
Cotters
Insurance
Services, BDW
Trading Ltd,
Wilson Browne,
Lambert Smith
Hampton Ltd,
Hanson,
Clipper
Logistics Plc,
Private Tenants
Unit A: 28,253
sqm
(304,000 sqft)
Unit B: 15,050
sqm
(162,000 sqft)
Total:
43,303 sqm
466,000 sqft
S/2014/2513/M
AF
Allocated
2 distribution units
totalling 43,293 sqm
(466,000 sqft). Currently
closing down
conditions attached to
the permission.
Limited further
capacity, but location
for RDC scale B8
Cheaney Park,
NN4 5EZ
9.66ha
N/A N/A N/A Due to the proximity of
Grange Park
development
proposals for 2 new
distribution units are
considered to be
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Site Occupants Vacancies Planning
Application
Ref
Application Comments
linked to Cheaney
Park.
Limited capacity, but
location for strategic
B8
Midway Park,
J16 of M1,
Harpole
167.93ha
N/A Unit 1: 24,740
sqm
(266,300 sqft)
Unit 2: 39,953
sqm
(430,055 sqft)
Unit 3: 34,605
sqm
(372,485 sqft)
Unit 4: 74,044
sqm
(797,000 sqft)
Unit 5: 28,533
sqm
(307,127 sqft)
Unit 6: 18,537
sqm
(199,530 sqft)
All indicative
Total: 222,412
sqm
2,372,497 sqft
S/2016/EIA
Allocated –
mixed regional
distribution
and
manufacturing
Indicative Masterplan
highlights 6 warehouse
units, lorry park and
green space.
Location for strategic
B8 – limited by cap on
unit sizes in planning
permission?
Prologis
Pineham
59.7ha
Sainsbury’s,
Dalepak,
Poundland,
Carlsberg,
BMW, Levis,
Pets at Home,
Royal Mail,
Morrisons, The
White Paper
DC5: 45,342
sqm (488,056
sqft)
DC7: 19,631
sqm (211,304
sqft)
DC6: Pre-let to
Sainsbury’s,
30,240 sqm
(325,500 sqft)
Total: 64,973
sqm
1,024,860 sqft
CC/2013/0802
Allocated
Construction of
buildings to be used for
B1, B2 and B8
purposed with
associated works.
Suitable for large B8,
limited remaining
capacity?
Brackley East
Sustainable
Urban
Extension
(Land north of
Turweston
N/A B1a: 38,000
sqm (409,028
sqft)
B1c: 20,000
sqm (215,278
S/2008/1648/P
O
Allocated
Work is yet to start on
site, however, planning
consent was granted
in 2011.
Not strategic B8 –
potential final mile
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Site Occupants Vacancies Planning
Application
Ref
Application Comments
Road) sqft)
B8: 15,000 sqm
(161,458 sqft)
Total:
73,000 sqm
785,765 sqft
and/or manufacturing
linked
Roxhill, J15 of
M1
N/A Up to 468,000
sqm (5,037,510
sqft) of
warehousing
and ancillary
building,
155,000 sqm
(1,668,406 sqft)
of additional
floorspace
(mezzanine)
Total: 468,000
sqm
Total
Floorspace:
623,000 sqm
6,705,916 sqft
N/A
An application is being
consulted on at
present and is likely to
be submitted in
summer 2017.
Strategic B8 location
Source: GVA
9.11 Table 9.3 indicates that South Northamptonshire has 8 strategic employment sites that provide
significant capacity to accommodate demand from the logistics sector with 1,092,028 sqm
potentially available.
9.12 All of these sites provide fit for purpose employment land that will be attractive to the logistics
market either as strategic B8 sites or smaller ‘final mile’ manufacturing facilities and will give
the District a strong competitive edge as it looks to position and market itself as a location for
logistics sector investment.
9.13 Of these 8 sites two allocated sites, providing circa 287,205 sqm of potential floorspace, are in
prime locations to accommodate strategic B8 logistics demand namely:
Prologis Pineham – 64,793 sqm; and
Midway Park – 222,412 sqm;
9.14 Logistics companies in the main seek the following from new sites:
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Accessibility to the highway network to maximise efficiencies in drive times and
accessibility to both markets and customers;
Large rectangular shaped sites;
Access to workforce with appropriate skills; and
Sites away from residential accommodation.
9.15 These sites meet this essential criterion that will drive investment decisions.
9.16 The demand analysis provided in Section 8 of this report shows, via a number of scenarios, that
there is likely to be demand from the market for between 22,500 - 130,000 sqm of additional
floorspace over and above current stock. Even assuming that the maximum amount of
forecasted demand is required these sites provide twice as much supply.
9.17 Assuming that demand is forthcoming this supply will raise the profile of the area as a location
for investment and is likely to drive further demand as South Northants is increasingly seen by
the market as an alternative location for logistics sector investment to other location along the
M1 corridor.
Role of Rail Access Sites
9.18 In addition to the sites contained within the Joint Core Strategy two additional sites need to
be considered as providing potential future supply given they will provide in excess of 1 million
sqm of floorspace namely:
Roxhill, J15, M1 referred to as Northern Gateway (623,000 sqm); and
Milton Malsor, J15/15a, M1 referred to as Rail Central (800,000 sqm).
9.19 A planning application is currently being prepared for the Roxhill scheme which will provide in
excess of 600,000 sqm of logistics floorspace. The scheme is a major Strategic Rail Freight
Interchange (SRFI).
9.20 A speculative proposal has been brought forward for a major rail freight interchange near
Milton Malsor (Rail Central) which would exploit the range of connections offered via the M1
at junction 15/15a, the A43, the West Coast Mainline and Northampton Loop.
9.21 In total the proposed site covers 250 hectares of largely greenfield land, development would
create almost 800,000sqm of distribution space and also offer the potential for wider amenities
including a hotel, leisure facilities and conference centre. Logistics activity would not solely
be linked to rail-freight users, with a number of units being more typical storage and
distribution space.
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9.22 To understand the scale of the proposals the following table provides a summary of the scale
of other rail freight interchange proposals within the Midlands.
Table 9.3 – Employment Land Supply
Location Status Scale
DIRFT I Existing 390,000sqm
DIRFT II Existing + under construction 185,000sqm
DIRFT III Proposed (permitted) 731,000sqm
East Midlands Gateway Under Construction 600,000sqm
Radlett Outline Consent approved 332,000sqm
West Midlands Interchange Proposed 800,000sqm
9.23 Beyond these sites there are also proposals for a new SRFI at Burbage (floorspace unknown
but c.315ha) and Magna Park Peterborough (c. 135ha) which could add significant additional
capacity to the rail freight network.
9.24 Taken in this context Rail Central would provide the single biggest uplift in capacity outside of
DIRFT, and would potentially be larger than DIRFT III if it were a standalone development. This
would dramatically change the role of the District within the logistics sector, potentially
providing a new market differentiator that sets it apart from other locations in the M1 market.
9.25 Given Rail Central proposals have come from a recognised private sector operator/investor
there is clearly an anticipation that there is demand for such a development in the area. This
aligns with the DfT research which states that “Whilst a number of new terminals have opened
in the last 10 years, there is still a shortage of rail connected freight terminals and distribution
hubs in key locations, especially serving several urban areas” (DfT, 2016, Pg 38), however it is
unclear given other developments in the area, whether the South East Midlands market is
satisfied.
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10. Conclusions and Recommendations
Strategic Trends and Their Influence on South Northants
10.1 The analysis presented within this study reinforces the importance of the logistics sector to the
UK economy. Logistics companies on a global scale, underpin all sectors in the economy. In
the UK the industry accounts for 4.3% of GVA output and 5% of employment, sustaining jobs for
over 1.6 million people.
10.2 The sector has been one of the success stories of the UK’s economic recovery. Since the
financial crash UK logistics has created over 100,000 jobs and additional GVA output of £6
billion. Such growth is expected to continue with investors remaining confident in the industry
and projections forecasting both employment and output to increase at higher rates than for
the overall economy. The interconnectedness of the industry with all sectors indicates that the
success of logistics will directly facilitate growth across the UK.
10.3 South Northamptonshire is well positioned to take full advantage of forecast logistics growth.
The authority is located on two major freight routes, the M1 and M40, and in proximity to the
A14 East-West route which forms part of the European route E 30 connecting the Irish port of
Cork to the Russian city of Omsk. Lying at the heart of the logistics Golden Triangle, South
Northamptonshire has access to five airports within a two hour drive, the ports of Liverpool,
Felixstowe, London Gateway and Southampton within a three hour drive, and 90% of the
population of England and Wales within a four hour drive.
10.4 This competitive advantage is demonstrated by the fact that the district has enjoyed higher
rates of logistics employment and GVA output growth than that found for the East Midlands
region and the UK over the last 15 years. The sector is a key area of focus for the growth
strategies of both the Midlands Engine and South East Midlands LEP, with a range of
investments and interventions planned to support its growth.
10.5 However, future success cannot be taken for granted. The sector itself is being transformed by
changing technology and increasing consumer demands changing the spatial dynamics of
distribution centres.
10.6 Major hub and spoke networks are emerging that allow online retailers in particular to meet
increasing demands for rapid delivery turnarounds. The demand for more urban logistics
activity is increasing with ‘final mile’ deliveries via smaller light goods vehicles, the potential of
drone delivery will also increase opportunities for urban logistics activity. As greater
efficiencies are sought and the costs of congestion and air pollution become more important
inter-model distribution channels are becoming increasingly important to the sector.
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10.7 Whilst these shifts are driving an increase in demand for distribution space they are also
increasing the range of location opportunities that are available to logistics operators. Whilst
traditional locations remain popular, businesses appear to be more footloose and prepared to
locate where the strategic connections exist and land is available.
10.8 Increasing automation and reliance on technology within the sector is increasing the skills
requirements of its workforce, requiring workers in the sector to adapt and develop a much
high level and mix of skills in order to operate lines and machinery. Future labour shortages
could be exacerbated by the UK’s decision to leave the EU with a high number of warehouse
operatives and drivers coming from other EU countries.
10.9 With the UK’s trading position with the rest of the world unclear at present there a range of
impacts Brexit could have on the logistics and distribution sector beyond the availability of
labour. On the one hand increased barriers to international trade could limit scale of
importing to the UK from the EU (and potentially other nations) driving down the demand for
logistics space. On the other hand, there is the potential for the UK to expand its trading
relationships and, alongside a refocusing on high value manufacturing, see an increase in
demand for ‘reverse logistics’ – reorientating the sector to service a growing export market for
UK businesses. This latter trend may in turn influence the spatial distribution of logistics activity,
drawing it closer to clusters of industrial activity, which may have a positive influence on
demand in South Northants.
10.10 What is clear across all of these strategic trends is that there are significant opportunities to
accommodate greater levels of activity within South Northants, however if this potential is to
be realised it will require proactive support and promotion. This will need to cut across a range
of intervention themes including planning policy, skills and training, inward investment
promotion and supply chain development.
Sub-Regional Dynamics
10.11 Our review of the logistics sector in the South Northants sub-region has confirmed that there is
an established ‘hierarchy’ of logistics activity within the County (and the M1 corridor more
widely). DIRFT (Daventry) is an established national distribution hub, with significant capacity
for further growth; as such it is the focus for the majority of future activity within the County
whilst Milton Keynes provides the major focus for the broader LEP area.
10.12 Other areas provide a supporting role by offering a considerable quantum of space and
expansion potential and providing choice within the market, these second tier locations tend
to attract mid-scale units usually focussed on regional distribution or third party logistics
activity. The prime centres provide national hubs for major retailers such as John Lewis or
Tesco.
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10.13 South Northants operates within this second tier attracting a mix of third party and direct
distribution activities that have a mixed focus between regional and national distribution.
These have been attracted by:
Key road network improvements across the district to support increasing demand;
A strong connection with other sectors, including motorsport and high value engineering;
Wider regional linkages through rail and air freight connections; and
The potential of ‘one off’ assets such as freight interchanges.
10.14 The nature of land available and therefore the scale of development achievable has meant
that despite its obvious locational advantages it has not attracted the largest scale activity.
10.15 The nature of activity has enabled South Northants to balance the economic opportunity with
wider priorities. Future growth in South Northamptonshire will need to be balanced against a
range of other factors, including the impact on the quality of life, open space and protected
habitats, junction capacities and the actual local employment impact and benefit in the
District.
10.16 These are critical considerations as there are significant risks to the wider economy of the
District of not managing the growth of the sector. Many other businesses are attracted to the
District as a result of the quality of life on offer to their workers as well as the availability of a
highly skilled, highly motivated workforce. Providing significant amounts of new distribution
space may, in the long term, have negative impacts on both the perceived quality of place
and the availability of labour.
SNC’s Growth Potential
10.17 As highlighted within this report the logistics and distribution sector is anticipated to continue
growing over the next 20 years, expanding both its employment base and economic output
across Northamptonshire and the wider SEMLEP area. Within this context South Northants is
expected to experience only modest growth, reducing its role within the wider market.
10.18 However, whilst the trend led projections provide a reasonable basis for understanding the
sector they are not the only way of understanding future demand. More often the sector is
‘opportunity driven’, delivering space and occupiers in locations that provide a suitable
combination of accessibility and land. A supply led approach in the borough (alongside
wider promotion activity) could enable the District to achieve higher levels of growth.
10.19 Private sector led proposals are already creating this supply led scenario with over 950,000sqm
of additional space being promoted by developers and benefiting from an allocation in
planning policy. Adding the unallocated (but privately promoted) Rail Central opportunity
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would mean the potential to deliver a further 800,000sqm of floorspace. All of these
developments would be focussed on strategic distribution activity, with some further space
available in other locations for more local scale operations.
10.20 This would dramatically alter the ‘position’ of South Northants in the spatial hierarchy, placing
it in line with national hubs at Milton Keynes and Daventry in terms of its scale and focus. This
supply driven approach would provide significantly more space than appears to be required
when the Experian projections are considered.
10.21 The significant scale of potential growth would deliver a major step change in the demand for
labour in South Northants. Based on the ratios in the HCA Density Guide the developments
could provide over 20,000 new FTE jobs which, given the largely ‘full employment’ position in
the District, could create some significant challenges.
10.22 Whilst the range of employment opportunities provided may give new opportunities to those
currently unemployed or not engaged in the District’s economy the most likely outcome is that
there will be insufficient supply locally so the District will need to become a net importer of
workers. This could have significant impacts on congestion, emissions and other environmental
conditions. In the long term it may also have implications for housing demand and supply.
10.23 A further risk would be that, over time, the availability of significant ‘easy to access’
employment could have a detrimental effect on labour availability for the other sectors that
South Northants wants to attract and retain. This has been an evident trend in other locations
where single industries or employers dominate a market, making recruitment for other parts of
the economy more difficult.
Future Considerations
10.24 South Northants have an almost unique opportunity to decide the type of location
(economically) they wish to become in the future. There is strong demand across a number of
sectors that can all bring benefits to the District in terms of employment and enhanced supply
chains.
10.25 The opportunity to make a ‘step change’ in logistics activity is driven by the opportunity to
exploit a distinct asset and differentiate the offer from a number of competing locations.
However, despite significant focus and discussion nationally the rail freight industry remains
somewhat unproven. Whilst other locations are looking to bring forward facilities these have
been slow to come forward. Even DIRFT, the UK’s leading freight interchange, has been slow
to deliver its growth potential and there are questions about how integrated the interchange
and distribution facilities truly are.
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10.26 As discussed in this report the logistics sector relies on its network of locations to be effective
and efficient, at present the rail freight network is somewhat immature. To realise the potential
of Rail Central as a true inter-modal facility, it is likely to be necessary that a wider range of
similar facilities come forward. This will require coordinated country wide lobbying and
promotion to support infrastructure delivery and development.
10.27 A key barrier is the rail capacity around London, which currently prevents ports moving more
freight by rail from the point of entry into the UK. Again a coordinated approach to lobbying
government to address these issues appears to be critical in making the most of the Rail
Central opportunity. Without this broader approach it is unlikely that Rail Central will be
sufficiently different to support such a significant expansion when there are large allocations in
other parts of the area.
10.28 The majority of this study has focussed on the strategic land opportunities, however the
broader range of employment sites provide a range of opportunities to accommodate
elements of the logistics sector or its supply chain.
10.29 The wider activities undertaken within the District and the SEMLEP area will also drive demand
for ‘reverse’ logistics providing specialist delivery of high value components and products
developed within the high performance engineering sector. This offers a unique niche
opportunity to accommodate a different form of distribution activity that may also support a
high value and higher skilled level of employment. These are likely to require smaller premises
and also a closer alignment with other employment uses, potentially allowing them to
populate other sites.
10.30 The smaller and existing sites also provide space to accommodate final mile activities, which
will require much closer integration with a dense urban population to achieve efficient and
fast delivery times. Further opportunities will be driven by integrated production and
distribution activities that combine B2 and B8 activities. There are a high number of these
within South Northants that will need appropriate land provision.
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