Southgate Global, of King’s Lynn, share their expectations and predictions for the supply chain industry, and how organisations can best adapt in 2025.
Last year saw continued significant political and economic change globally. Major shifts in power in the US and the UK, coupled with a significant overhaul to economic policy has led to uncertainty for many businesses heading into the new year.
Rising costs
The October budget has meant rising costs for businesses operating across all sectors in the UK, adding a significant financial burden on upfront running costs, with some specifically impacting the supply chain.
From April 2025, it’s expected that employers will have to pay an additional £770 in NICs for each minimum wage worker, or an extra £900 for each employee on median earnings. These changes have left many companies looking to cut costs or find increased efficiencies.
While automating operations can help reduce labour costs significantly in the long term, for many companies, the expected ROI from automation projects is too low, according to McKinsey and Company, with the payback period more often longer than the lease on the warehouse being automated.
Organisations will instead look at how they can improve the efficiency of their warehouse operatives and maximise productivity. Southgate understands that automation is not a ‘one-size-fits-all’ solution.
Instead, by optimising manual tasks through innovative but relatively inexpensive equipment (when compared to automated alternatives) and ensuring the interface between warehouse operatives and implemented automation is streamlined, companies can enhance productivity and ensure running at optimum efficiency.
Iain Lennard, Chief Commercial Officer, said, “Rising costs will be a problem for every business across any sector in 2025. So, it is more important than ever for organisations to ensure that their people and equipment are maximised.
“We’re expecting businesses to undertake significant reviews of how they’re currently operating, and in doing so, identify any major touchpoints costing them time and money. This could take a variety of forms, from reviewing equipment readiness to analysing workflow processes.”
Logistics and challenges
Global instability has also caused uncertainty within the supply chain, which is expected to continue well into 2025. War in the Middle East and Eastern Europe has placed an additional strain on organisations internationally, impacting key shipping routes. For example, the rerouting of ships around Africa’s Cape of Good Hope equates to a roughly 30 per cent increase in transit times. This has impacted the supply chain on an international level and added substantial additional cost and time pressures on businesses.
Gavin Rawson, Head of Logistics, said, “Global instability is likely to continue into 2025, sustaining the current increase in lead times to Europe from Asia, adding to global shipping challenges.
“Southgate has navigated this too through forward planning, ensuring it has the capacity to carry a greater volume of stock of material handling equipment and packaging equipment, as well as diversifying its sourcing strategy, bypassing many of these supply chain issues and related costs.
“In terms of UK trends and impacts, transport companies are struggling to cope with the reduction in volumes following the post-pandemic boom and several have gone out of business as a result. Therefore, innovation will remain a priority, players investing in improved shipment tracking and communication, as well as greater choice for customer consignments such as smaller vehicles or vans will be the winners.”
Southgate is dealing with these market changes with products such as its Dock Levelling Ramp designed to enable vans and trucks up C1 7.5-tonne classification to easily access full-sized loading docks. In recent years vans have become one of the fastest-growing category of delivery vehicle, and the ramp – together with a loading trolley – “provides logistics operations greater agility, affordability, faster delivery, and improved sustainability. A real win snatched from adversity,” Gavin adds.
Sustainability
Following the United Nations Climate Change Conference (COP29), where global leaders discussed sustainable development, there is now even more of a pressing focus on organisations to consider how they can operate more sustainably. With warehousing activities contributing roughly 11 per cent of the total GHG emissions generated by the logistics sector across the globe,2 it’s more important than ever for businesses to consider how they can incorporate sustainable practices into their warehouse workflow.
Southgate Global predicts its customers will shift their focus from replacing broken or damaged parts in machinery and equipment to repairs. Harshad Gorasia, Chief Operating Officer, noted, “Sustainability has become an integral part of business strategy. Companies will focus on reducing carbon footprints and using recycled materials.
“This in part will be pushed by government regulation as well as business customers and consumers becoming more prescriptive on what and how they expect suppliers to behave.
“However, cost reduction will still be a major consideration when it comes to the final decision. Nevertheless, given that sustainable practices can also lead to reduced capital costs in some instances, it is clear why this will be a trend into 2025 and beyond.”
According to Southgate, while it has previously been the default response to replace rather than repair equipment such as trollies and carts, the feasibility of repairing means it will become a first response.
