#11 Future of Autonomous Vehicles – “Future of Logistics” Series

#11 Future of Autonomous Vehicles – “Future of Logistics” Series

Ben Thomas

Ben Thomas

Director, National Valuation

t: +44 207 182 2663 Ben.Thomas@cbre.com

Judy Zhu

Judy Zhu

Associate Director, National Valuation

t: +44 207 182 2683 Judy.Zhu@cbre.com

In the last blog post, we looked at the current development of autonomous vehicle (AV) technology. In this post, we are going to explore the potential ways AVs could operate in the future and the benefits.

 

Possible stages of AV adoption in logistics

When we talk about an autonomous vehicle, the first impression is usually a self-driving car, but autonomous vehicles include self-driving trucks, vans, cars, robots, etc. Autonomous vehicles can be used on as well as off road, and even in warehouses and construction sites.

There are many players in this field at moment and we have briefly summarised the companies which are developing autonomous trucks and their latest technology.

AV Stages

Stage 0 – This is today, where all driving and deliveries are done by humans.

Stage 1 – Next, truck drivers will operate semi-autonomous cabs. Last-mile driving and delivery will still be carried out by a human. As mentioned in the last post, autonomous trucks are easier to adapt than other vehicles because driving on motorways is considered less complicated than urban streets.

The immediate benefit of using an AV at this stage is that truck driving hours could be extended. With motorway driving performed by an AV, truck drivers are only required in complicated driving situations. Therefore, with time for drivers to rest on the motorway, driving hours could be extended.

Stage 2 – At Stage 2, autonomous trucks operate independently. Last-mile drivers will operate semi-autonomous vehicles and deliver manually.

At this stage, big-bulk goods transport from airport, ports, national/regional distribution centres by trucks can be performed 24/7. The benefit is that motorway traffic in the day could be reduced, since trucks can carry out deliveries during night hours.

Then, by using semi-autonomous vehicles for last-mile delivery, van drivers can provide better customer service. With vans doing the bulk of the driving, the main job for humans will shift to delivery, and they can spend their time during the journey communicating with customers or other team members.

Stage 3 – Finally, all vehicles used in the delivery process are autonomous. Even delivery to doors could be performed by robots or drones.

The benefit of using an AV at this stage is that everything could be transported and delivered 24/7, regardless of size or type. 24-hour last-mile delivery can include non-food packages, meal orders, grocery and anything else.

 

Other possibilities

In the future, vehicles could be mixed-use and flexible.

Mixed-use vehicles

In the future, we may have mixed-use vehicles. Passengers and delivery orders could travel in the same vehicle. The travel route for passengers will be spontaneous and customised to their destinations. On the same route, drones will take off and deliver orders when approaching near the delivery destinations. On top of this, if the vehicles are autonomous, the transportation service can run 24/7.

With this model, transportation capacity can be maximised, so the fuel consumption and the damage to environment can be minimised. On the other hand, for passengers and delivery customers, they can enjoy faster travel and faster delivery.

Indeed, each compartment could be made flexible, depending on requirements.

Other Benefits

Once all the vehicles in the logistics process are autonomous, the distribution and delivery will be much more efficient. AVs will reduce the waiting time for customers to receive orders and will provide the flexibility to receive orders at preferred timing. Together with the use of blockchain, robotics and AI, AVs can make the journey of goods from manufacturers to customers fully autonomous.

If all the vehicles on the road are autonomous and follow the orders from a central hub, traffic lights will be redundant and traffic congestion will be reduced. The central hub will give driving/braking orders to vehicles, so overall traffic can run in the most efficient order, making traffic lights unnecessary. Since all the vehicles would be controlled by the same central hub, vehicles can accelerate and brake at the same time, which saves time between vehicles as they start moving.

AVs can also potentially reduce human mistakes. With all the possible driving scenarios being built in the central database and being updated with live data collected from vehicles in the network, the central database will be much more knowledgeable than any individual human driver.

Summary

Autonomous vehicles will probably be adopted into the logistics network over a period of time in phased stages. At each stage, the adoption will bring more benefits than the last and the maximum impact of these benefits will be seen when the entire transport network is automated.

But it’s not all plain sailing and in the next post, we will look at the potential risk and impact of AVs on the logistics industry.


If you are interested in more details of this report or our other logistics reports, please contact Ben Thomas, Director of CBRE National Valuation – Logistics & Distribution, or Judy Zhu, Associate Director of CBRE National Valuation.

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One Billion Packages in One Day

One Billion Packages in One Day

Ben Thomas

Ben Thomas

Director, National Valuation

t: +44 207 182 2663 Ben.Thomas@cbre.com

Judy Zhu

Judy Zhu

Associate Director, National Valuation

t: +44 207 182 2683 Judy.Zhu@cbre.com

In China, Singles’ Day (11th November) is an annual shopping festival, like Black Friday and Boxing Day in the western world. Alibaba has successfully turned this day, which is a celebration of being single, into the world’s biggest online shopping event.
2018 Singles’ Day was a milestone for Alibaba, as it was the first time single-day package volumes surpassed the 1-billion benchmark. This blog post is going to look at the numbers, which in turn reflects the logistics network working behind the scenes of this shopping fiesta.

 

2018 Singles’ Day
Singles’ Day Sales and Packages Volume from 2009 to 2018

Singles’ Day Sales and Packages Volume from 2009 to 2018

2018 Singles’ Day Sales by Time of the Day and Comparison to Previous Years

2018 Singles’ Day Sales by Time of the Day and Comparison to Previous Years

Click to expand                            (source: www.alizila.com, wallstreetcn.com)

The total sales of 2018 Singles’ Day was CN¥213.5 billion, which is £23.6 billion or US$30.7 billion. By Comparison, in the UK, the one-day total sales of 2017 Black Friday was £1.4 billion and 2017 Boxing Day was £4.5 billion (source: BBC, Daily Mail).

In the US, 2017 Thanksgiving Day, Black Friday and Cyber Monday combined sales was US$19.6 billion, where US$14.5 billion was online (source: Practical Ecommerce)

The Logistics Network

Alibaba, not only as a platform for retailers but also for logistics partners, was able to cope with this large volume of packages mainly thanks to its own logistics data network, called Cainiao (means “Rookie”). Cainiao was established in 2013 by Alibaba to assist its retailer clients provide better delivery experience to their customers.

Cainiao is a large network of 3PL partners, drivers and warehouses, which expands to the most remote areas in China and beyond the border to rest of the world. However, what really empowers the network is not the physical network, but the enormous data it captures in the network. It uses big data to predict product stocks, plan driving routes, create package sorting solutions etc. Without all the elements of Cainiao working together, Alibaba would be unable to meet its Singles Day delivery commitments.

About Cainiao Network (by 31st December 2017)

About Cainiao Network (by 31st December 2017)

Click to expand

Summary

The Chinese economy is evolving from export-focused to consumer-focused. Previously China leveraged the large population as a source of manufacturing labour to support the export economy. Now China is turning this resource into an advantage again, as a source of generating demand and pumping up the consumer economy. Alibaba, together with many other technology businesses, has seized the opportunity to grow its own business as well as contributing to push the transition forward.


If you are interested in more details of this report or our other logistics reports, please contact Ben Thomas, Director of CBRE National Valuation – Logistics & Distribution, or Judy Zhu, Associate Director of CBRE National Valuation.

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Do investors get the full picture from corporate real estate accounting?

Do investors get the full picture from corporate real estate accounting?

Dominic Burke

Dominic Burke

Senior Director

t. +44 (0)20 7182 2596
e. dominic.burke@cbre.com

Lorraine Howells

Lorraine Howells

Director

t. +44 (0)20 7182 2054
e. lorraine.howells@cbre.com

CBRE are launching a series of three thought pieces challenging the practice of how corporates account for their owned real estate. Our first piece considers current practice, why this method is adopted and the risks that are associated.

Accounting guidelines allow companies to hold their owned real estate assets at either Fair Value or at cost. Typically, most corporates account at cost, which would be the price that they either bought or built the property for, this figure is then depreciated down to a residual land value over a period of 30 to 50 years.

This method of accounting ensures that there is no significant variance to the annual accounts caused by swings in property values and is also a more cost-effective approach negating the requirement for annual asset valuations. However, whilst this method may be appropriate for other items of a balance sheet, where there is a limited usable life and little to no secondary market, real estate does not operate in the same manner. Therefore, in the majority of instances the figures which corporates are providing in their financial statements bear no reflection to what the properties are actually worth.

Real estate funds and REITS value their properties at least annually, if not more frequently and account for their properties at Fair Value in accordance with IFRS. Fair Value is recognised as being in line with the IVSC and RICS definitions of Market Value, which estimates the actual price a property would sell for on the market. As a result, funds hold their property on their accounts at a “real value”.

The largest owners of commercial real estate across the world are global corporates. They own a vast number of office, industrial, logistics and retail properties. The value of these properties is in the trillions of dollars, though by accounting for their real estate at cost there is a significant danger that companies are not showing their real value on their balance sheets. The fundamental principles that cost does not equal value is not being considered, nor is the volatile nature of the property market.

The real estate market operates in a cyclical manner, values can change distinctly and by not reflecting this, organisations are at risk of either grossly under or over assessing the worth of their assets. This can be especially true when considering land. Land is a finite resource and amendments to planning policy over time, can result in drastic fluctuations in value. Cities across the globe have changed dramatically over the years. There are numerous examples of industrial sites owned by manufacturing companies across the globe which now have higher and better uses. In these instances corporates could be sitting on real estate with values significantly higher than what is being reported.

A considerable number of companies are publicly listed on stock exchanges and traded for and on behalf of institutional and private investors. The decision to invest in these companies is made based on the information corporates provide, particularly their accounts. When the balance sheet does not reflect the true value of real estate by showing a value either higher or lower, there is a danger that investors are being misled and companies are either over or under valued. It is taken for granted that the audited accounts are accurate but if the real estate is not being considered in line with the market, are they?

#10 Driving into the Era of Autonomous Vehicles – “Future of Logistics” Series

#10 Driving into the Era of Autonomous Vehicles – “Future of Logistics” Series

Ben Thomas

Ben Thomas

Director, National Valuation

t: +44 207 182 2663 Ben.Thomas@cbre.com

Judy Zhu

Judy Zhu

Associate Director, National Valuation

t: +44 207 182 2683 Judy.Zhu@cbre.com

In the last few posts, we covered the topic of Drones. From this post onward, we are going to have a look at the use of autonomous vehicles in the logistics industry. In this first post, we will focus on the current development before we move on to the future outlook in the later posts.

 

Autonomous vehicles on the road

When we talk about an autonomous vehicle, the first impression is usually a self-driving car, but autonomous vehicles include self-driving trucks, vans, cars, robots, etc. Autonomous vehicles can be used on as well as off road, and even in warehouses and construction sites.

There are many players in this field at moment and we have briefly summarised the companies which are developing autonomous trucks and their latest technology.

 

Trucks

Car manufacturers

For car manufacturers, developing autonomous vehicle is a natural progression. They have first mover advantage, and should have more know-how and existing resources than new entrants into the automobile industry.

In January 2011, Volvo participated in the SARTRE (Safe Road Trains for the Environment) project, in which truck platooning technology was firstly demonstrated. Truck platooning is where a line of trucks automatically follow a lead truck which is driven by a human driver. This technology is an early initiative paving the way for today’s autonomous vehicle.

Platooning

Platooning

In September 2018, Volvo introduced the autonomous and electric concept vehicle – Vera. Other than being autonomous and electric, Vera can connect with others of its kind. Because of this connectivity, Vera is ideally suited to logistics areas, such as ports, factories and logistics parks, where all the autonomous vehicles in the same place can be controlled centrally.

Connectivity

Connectivity

In July 2014, Daimler announced the “Mercedes-Benz Future Truck 2025” plan. The latest update on this plan is the launch of the new semi-autonomous Actros truck in September 2018. These are installed with Active Drive Assist technology, which can operate automatic braking, accelerating and steering. This technology “paves the way to automated driving”.

In November 2017, Elon Musk, CEO of Tesla, unveiled its electric semi-autonomous truck prototype – Tesla Semi, having first mentioned the concept in the Tesla 2016 Master Plan. Compared to the autonomous vehicles by other manufacturers, Tesla claims “Semi is the safest, most comfortable truck ever” thanks to its advanced software and hardware design.

Tech companies

A lot of tech companies have also joined the game, since nobody wants to miss out on this opportunity. The competition of designing autonomous vehicles should also drive improvement in software development.

In August 2016 Uber acquired Otto, the tech start-up focuses on autonomous long-haul trucks. Otto set the record of the longest continuous autonomous truck journey (212 km) from Colorado Springs to Fort Collins in October 2016 (Embark is the latest record holder). This is one of the earliest initiatives of tech companies in developing autonomous trucks. However, this autonomous truck project was cancelled in July 2018, with an aim to focus the resources on developing autonomous cars, before it could be utilised in the Uber Freight business.

Other tech companies like Nvidia and Baidu have also entered this field. They work with existing truck manufacturers to make their trucks autonomous. In the collaboration, they develop software and offer technical solutions by utilising their in-house resources, such as technical talents and databases. For example, in March 2017, Nvidia announced that it is working with PACCAR, the global truck manufacturer, to develop autonomous trucks. In April 2018, Baidu’s Apollo, the open platform for autonomous vehicle developers, collaborated with CiDi, a Chinese truck start-up, to complete its first autonomous geo-fenced highways drive.

 

Technology

Current autonomous truck tests mostly take place on motorways or controlled areas. Compared to autonomous cars, autonomous trucks generally face less complicated driving scenarios, such as pedestrians, traffic lights, cyclists, etc.

Various technologies are being used and developed to enable autonomous trucks to operate certain driving tasks. These include: identifying lanes, keeping distance from the nearby vehicles, changing lanes, responding to emergency vehicles, braking in case of obstacles detected, etc. At present, autonomous trucks still require human drivers to sit in the driving seats. This requires the software to identify moments when they must alert the human driver to take back control.

Identifying lanes

 

 

 

 

 

Changing Lanes

 

 

 

 

 

Braking in case of obstacles detected

 

 

 

 

Keeping distance from the nearby vehicles

 

 

 

 

Some of the fundamental hardware required to develop autonomous trucks include: Camera, Radar, Navigation, LiDAR Sensor, IPC. LiDAR sensors measure distance by illuminating the target with pulsed laser light and measuring the reflected pulses. IPC is an industrial scale computer.

 

Summary

Most car manufactures are considering autonomous vehicles now, as are companies from other industries. There are many start-ups to have been established with an attempt to take a piece of the pie in this industry. Next time, we will take a look at the other autonomous logistics vehicles on the road and off the road.


If you are interested in more details of this report or our other logistics reports, please contact Ben Thomas, Director of CBRE National Valuation – Logistics & Distribution, or Judy Zhu, Associate Director of CBRE National Valuation.

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Valued Insights | The Business Park Blog Part 2 | Key Themes

Valued Insights | The Business Park Blog Part 2 | Key Themes

Virginia Woodger

Virginia Woodger

Associate Director

t: +44 207 1822 680

e: virginia.woodger@cbre.com

 

David Ingham

David Ingham

Director

t: +44 207 1822 878

e: david.ingham@cbre.com

 

In the coming months on Valued Insights we are going to touch on the UK Business Park Sector, its current investment volumes, who the investors are and what’s driving them.  While examining the current Business Park market as an investment vehicle, we are also going to consider the feasibility of the Business Park as a workplace of the future and if they will appeal to Millennial workers and beyond.

This blog series is by no means exhaustive, but it will hopefully provide a thoughtful precis and unearth some themes for ongoing discussion across the sector.

Part 2: The Business Park Series: The Investors.

In the first part of our series, we established that over 2017, total property investment volumes reached £65.48 bn for the UK, while £32.27 bn, or just under 50%, originated from overseas investors.

If we turn our attention purely to Business Parks, the numbers tell a very similar story, albeit on a smaller scale. Total property investment volume in the Business Park sector, reached £3.25 bn, while £1.814 bn (55.8%) was attributed to overseas investors.

Looking a little closer at the £1.814 bn attributed to overseas investors, the top two groups were the Far East (44.2%) and the USA (27%).

Who are these investors –  and what is attracting them?

Notable Transactions in 2017

  • In August last year, TPG Real Estate (US) acquired Arlington Properties and its UK business parks from Goodman Group and Legal & General, in the region of £450m. The portfolio comprised 250 acres of consented land and 57 buildings, occupied by the likes of Emirates Airlines, Centrica, Harley Davidson, Mondelēz, and Harley Davidson. At the time of the transaction it was considered that it represented a high-quality portfolio with a convincing opportunity for enhancement through asset management and development.
  • In September last year –Singapore based Frasers Property International acquired a portfolio of 4 UK Business Parks (Winnersh Triangle, Chineham Park, Watchmoor Park and Hillington Park) from Oaktree Capital for £686 million, and agreed under a separate deal to acquire the Maxis Business Park in Bracknell for £57 million – subject to conditions. At the time of the sale Frasers justified the purchase of the parks as forming part of their overseas growth strategy, harnessing the synergistic benefits for their other holdings. They also noted the growth prospects of these properties, with rental income underpinned by long term leases to diverse and reputable tenants with long WAULTS. The size, depth and transparency of the UK property market was also a key factor.

Diversification is key. For these buyers, these transactions complement their wider strategies. Simply put, foreign buyers are motivated by more than just a paucity of investment grade office stock in Central London. While it is without a doubt that Business Parks are competitively priced relative to Central London and the UK’s Regional office centres, they offer scope for rental growth, aggressive asset management and substantial lot sizes. According to CBRE Research “High quality, well located buildings let to a strong tenant will outperform the rest of the market in 2018. Buildings with a lot size of circa £100 million are expected to see the most interest, especially from private investors’. This brings us to our third instalment – the future.  In Part 3 of this blog we explore the fact that not all business parks are created equal, and examine what qualities they need to embody in order to become futureproofed workplaces.

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The National team has unparalleled experience of valuing business parks, building up specific market insight into the key parks across the UK. If you are interested in more details of this report and our Business Park series, please contact David Ingham, Director of CBRE National Valuation, or Virginia Woodger, Associate Director of CBRE National Valuation.

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