The future of big retail
The pandemic lockdown has forced businesses to rethink modes of distribution and introduce automation in response to an increase in online shopping for essential items. Qube and Goodman Group have welcomed the opportunity to expand operations with some of Australia’s biggest retailers.
Integrated port and logistics provider Qube is at the forefront of driving automation in our own backyard with its Moorebank intermodal terminal in Sydney.
Qube’s management announced that they had secured a 20-year lease with Woolworths for the automated warehouses that are expected to transform the company, automating their supply chain and drastically reducing their distribution costs.
Qube will fund construction of a 40,700 square metre national distribution centre, and a 34,600 square metre regional distribution centre at a total cost between $420 to $460 million. It is due to be completed in 2023 and 2024, respectively, with both expected to be running at full capacity by 2025.
It will receive upwards $30 million in annual rental revenue under initial 20-year leases. The deal with Woolworths will see that its major suppliers will likely seek space in the terminal.
“Woolworths’ long-term commitment will reinforce the commercial appeal of this nationally important infrastructure and freight project,” Qube managing director Maurice James says.
Woolworths is planning to invest $700-780 million in the technology and fit-out of the new distribution centres.
Morningstar senior equity analyst Adrian Atkins says: “This is a large investment, even for a company as big as Woolworths, which we think shows it is embracing Moorebank’s vision and potential. These high-tech, mostly automated distribution centres should be able to process huge amounts of goods, thereby maximising use of Moorebank’s rail terminals.
“Woolworths’ commitment supports our positive view on Moorebank which is based on expected supply chain costs savings of up to 15 to 25 per cent for tenants.”
The terminal located on the Southern Sydney Freight Line and will have a direct connection to Port Botany which will alleviate congestion and drive efficiencies in the distribution supply chain.
Woolworths chief supply chain officer Paul Graham says: “Cutting-edge automation will build tailored pallets for specific aisles in individual stores – helping us improve on-shelf product availability with faster restocking, reducing congestion in stores, and enabling a safer work environment for our teams with less manual handling.
“The new facilities will also help progress our localised ranging efforts, with the ability to hold many thousands more products centrally than we can in our existing facilities.”
UBS analysts say that despite this, the shares have outperformed around 20 per cent since the raising and have reduced its recommendation to neutral with the stock now trading in line with its valuation.
Amazon, who also has a distribution centre in Moorebank NSW, announced plans for a new warehouse in Brisbane on a site owned by Goodman Group.
The new centre will be the same size as two rugby league fields and will house over 500,000 products including the most popular items purchased by Queenslanders on Amazon.
The centre will benefit small and medium-sized businesses who use Amazon’s fulfilment services to supply customers across the country.
Local sellers will soon be able to send their products to the centre where Amazon will then pick, pack and ship orders to customers, provide customer service support and manage returns on behalf of the seller.
According to the Australian Financial Review, Amazon is setting up a mega facility in Western Sydney and searching for another bigger space in Melbourne.
It is reported that Amazon will occupy a 190,000 square meter multi-level fulfilment centre at Goodman Group’s Oakdale West Estate in Kemps Creek.
The fulfilment centre in Brisbane, along with its centres in Sydney, Melbourne and Perth, will allow Amazon to handle current and future customer demand and speed up delivery to customers across the country.