The trick is to 'fall in the canal and come up with a salmon'
August 1st 2011 Much of the investment in warehouse and logistics operations is spent on people and materials handling equipment, with less on the warehouse facilities themselves, at least after rent or acquisition. But you ignore premises at your peril. Neglected warehouses can become significant cost burdens while those that are well looked after and presentable can boost a company’s reputation and help drive revenue.
While all warehouse operators are under extreme cost pressure at the moment, it pays to bear these fundamentals in mind. That’s why the Government’s Green Deal is worth a look. Under this scheme, The Carbon Trust and Siemens Financial Services are offering loans to warehousing and logistics businesses to upgrade energy-using equipment such as low energy lighting, energy-efficient motors, low carbon air conditioning and biomass heating.
It’s not as good as a grant, but if you feel your logistics business will, at some point in the next few years, need to upgrade these sort of systems anyway, this may prove a cost effective way of financing it.
The scheme is designed to take the sting out of repayments as the energy saving kit installed should cut down energy bills. Obviously interest rates will be key, as will the actual savings delivered by upgrading kit, but I think it is an interesting opportunity for those prepared to look beyond the current slow economic conditions (see the news story on page 6 for more details).
The warehouse can also be the source of surprise costs. Take water rates, for example. Changes in how these are calculated mean that occupiers with larger buildings like warehouses face much higher water bills.Mantra Learning’s Mark Currie is campaigning hard against this unwelcome hike in prices, as you can read on page 55. He makes a persuasive point about the rates that must be paid in comparison with those of high occupancy, low footprint buildings and I hope the Government is persuaded to revisit how these formulas are calculated.
As we’ve seen, economic conditions are making it difficult to earmark cash for investment and of course, rising costs for basic utilities make the equation even more challenging.
Equally legislation has increased the cost burden on operators, for example, regards recycling. However, this can be turned into a positive, with many companies earning revenue from recycled materials and, more importantly, boosting their image by not simply complying but excelling in this field. See our recycling feature from page 50 for the latest equipment in this area.
Warehouse managers and operators need to be flexible and show ingenuity when coping with these challenges to the extent that it sometimes feels they are expected to ‘fall in the canal and come up with a salmon’. But the truth is warehouse operations are extremely flexible and adept at rolling with the punches and I’d bet on them to cope with the admittedly tough and varied challenges ahead.
Simon Duddy, Editor More articles from Handling & Storage Solutions: | 
