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January 6 2020

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116 The Journal of Commerce | Januar y 6 2020 Logistics 2020 ANNUAL REVIEW & OUTLOOK the new approach. They will have to account for the leverage a particular BCO brings to the transaction, but also assure the freight buyer that contracted service levels are on par. It's hard to separate other mar- ket developments — the rise of new forwarding entrants that tout their digital capabilities and container lines inching into the territory of forwarders, for example — from the growth of electronic quoting tools. With so many individual carriers and 3PLs offering quotes, not to mention ocean freight rate marketplaces, it will be incumbent upon those pro- viders to make buyers feel as though such tools are more than just purely transactional. One theory about instant quoting is that it drastically reduces the amount of human resources required to produce and accept a rate. But those counting on shippers to see a reduction in costs associated with procurement as a driver to move contract volume to instant quoting may be in for a rude awakening. While in theory most shippers would like to reduce the length of their procurement cycles, one shipper told The Journal of Commerce that the human resource costs of ocean freight procurement are negligible compared to the benefit of ensuring that a shipper is using the right mix of service partners and at a price that's roughly in line with what the market is paying. Indeed, shippers have more rate pricing transparency than ever. There are public and private rate indexes, crowd-sourced contract rate benchmarking software, and forward contract vehicles, such as Maersk Spot and the New York Shipping Exchange (NYSHEX), that allow shippers to gauge rate levels. That transparency eventually might drive a greater degree of com- fort with the use of instant quoting tools, but that will take time and is more a cultural shift than a techno- logical one. THE TORRID PACE of industrial real estate absorption of the past six years is expected to soften in 2020 as retailers and third-party logistics providers (3PLs) encounter limited options for new space, and tenants choose to renew their leases rather than move to new warehouse and logistics facilities. Nevertheless, the average rent increase for industrial properties Significant developments also are underway on the technological side, with procurement software guided by machine learning and artificial intelligence getting traction, albeit on a small base. These systems enable the use of procurement bots, programs that learn freight buying and selling patterns and make purely data-driven decisions about accept- able rate levels, how to split volume among container lines and NVOCCs, and even weekly allocations to each of those providers. Instant ≠ Dynamic There's another wrinkle to this nationwide is expected to exceed 5 percent for the fifth straight year, commercial real estate services and investment firm CBRE Group said in its 2020 Real Estate Market Outlook report. "Despite some softening in the market, CBRE forecasts rent growth of 5 percent in 2020, on par with previous years. Rising rents will be driven by newer product and infill industrial space in supply-con- strained markets," the report stated. Retailers, 3PLs and manufactur- ers in 2019 were on track to occupy 200 million square feet of industrial property, the sixth consecutive year that level was achieved and the lon- gest period of such sustained demand growth on record, according to the Q3 2019 Marketbeat US Indus- trial report published by Cushman & Wakefield. "Net occupancy growth in 2019 has moderated from 2018's all-time high, but it remains at elevated lev- els," Cushman & Wakefield stated in Within the next three years, 30 million TEU of ocean freight could be transacted through digital channels. Rents on the run Warehouse lease rates to rise again in 2020 despite a soer market By Bill Mongelluzzo

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