It’s that point of yr once more, when logistics improvement powerhouse Prologis takes a shot at predicting what the brand new yr will deliver for international provide chains—and opinions its personal predictions from 12 months earlier.
In Seven Provide Chain Predictions for 2024, the corporate makes some appropriately large-scale forecasts.
Primary, Prologis says, “The worldwide freight recession will reverse,” as foreshadowed by double-digit progress in each port and truck visitors.
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Floor zero for this restoration is probably going Southern California, the place import volumes on the Los Angeles and Lengthy Seashore ports will exceed pre-pandemic ranges. Between them, the ports noticed a 46 % restoration in imports for the reason that February 2023 nadir.
Port volumes for Los Angeles and Lengthy Seashore, Calif. Chart courtesy of Prologis Analysis
The quantity two prediction is that the development bust will worsen, “with international begins hitting the bottom stage for the reason that 2008 monetary disaster.”
Increased building prices virtually all over the place besides Europe are in fact an element, however added to these are increasing cap charges (that are going up internationally), which in flip has slowed improvement begins. Prologis experiences that in this yr, speculative improvement begins have been down by 65 % year-over-year within the U.S.
Prologis’s third and fourth predictions focus exterior the U.S. Rents in Latin America are anticipated to develop at “greater than double the worldwide common, pushed partially by nearshoring.” Throughout the Pacific, “demand in China will attain the second-highest stage on file, serving to work by extra provide from the previous few years,” the report says.
Quantity 5, better use of expertise—synthetic intelligence particularly—will enhance power wants in logistics services, encouraging their homeowners to double photo voltaic capability. As well as, the usage of autonomous cellular robots and automatic storage/retrieval methods in warehouses, together with the rising want for electrical car charging, will push this development.
Electrical truck registration and gross sales. Desk by the Worldwide Power Company, courtesy of Prologis
Quantity six, Prologis is taking a bullish place on interest-rate cuts and predicting that these will double personal fairness funding in actual property in 2024. “We anticipate the U.S. 10-year Treasury yield to dip beneath 4 % in 2024, forward of consensus views for round 4 %.”
And quantity seven, the forecast predicts that cap fee traits will reverse, with U.S. and European cap charges compressing as growth rotates to Asia.
Principally correct
So if these are the predictions for subsequent yr, how did Prologis’s forecasts for 2023 fare? A bit blended, however extra proper than fallacious.
The corporate provides itself 5 inexperienced examine marks and three crimson X’s for its seven 2023 predictions. The highest prediction for this yr simply ending, about warehouse improvement slowing, was proper as to path, although off on magnitude (therefore the mixed thumb-up and the thumb-down).
Predictions about limitations to improvement in California, demand in Mexico, build-to-suit rents and sustainable warehouses all hit their marks, whereas predictions about India’s stage of improvement begins and e-commerce’s restoration missed.
