The last twelve months has brought 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.
Southgate Global shares its expectations and predictions for those operating in the supply chain, and how organisations can best adapt to these in 2025.
Rising Costs
The new Labour government’s October budget has meant rising costs for businesses operating across all sectors in the UK. The increase in Employers’ National Insurance Contributions (NICs) from 13.8 per cent to 15 per cent along with an upcoming rise to the minimum wage in April, has added a significant financial burden on the upfront running costs for organisations, 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 organisations looking for ways to cut costs or look at 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.
According to Southgate Global, organisations will instead look at how they can improve the efficiency of their warehouse operatives and maximise their 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 they are running at optimum efficiency.
Iain Lennard, Chief Commercial Officer at Southgate Global, 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.”
This is an area that Southgate works hard to offer solutions to in both its Design Service Team, which helps to identify bottlenecks and streamline workflows, and its equipment provision. For example, its Mobile Powered Workstation (MPW) is specifically designed to boost workforce productivity. With its own integrated power system used to power laptops, barcode printers or scanners, the MPW allows operatives to walk and work anywhere in the warehouse, maximising efficiency and streamlining workflows.
Logistics and Supply Chain Challenges
Global instability has also caused uncertainty within the supply chain over the last year, 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 at Southgate Global said: “Global instability is likely to continue well into 2025, sustaining the current increase in lead times to Europe from Asia and 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 facilitating 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. So the Southgate Dock Levelling Ramp, together with the Southgate Van Loading Trolley solution, not only speeds up cargo handling times but also ensures fewer final mile journeys with more optimally loaded vehicles. “This provides logistics operations greater agility, affordability, faster delivery, and improved sustainability. A real win snatched from adversity,” he concludes.
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. And with warehousing activities contributing roughly 11 per cent of the total GHG emissions generated by the logistics sector across the globe, it’s more important than ever for businesses to consider how they can incorporate sustainable practices into their warehouse workflow.
Heading into 2025, Southgate Global predicts its customers will shift their focus from replacing broken or damaged parts in machinery and equipment to repairing them instead. Harshad Gorasia, Chief Operating Officer at Southgate Global 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. For example, Southgate’s Technical Services Team offers servicing for packing and material handling equipment, whether the product is supplied by Southgate or not, as well as renovation and repair services, helping its customers meet their specific fulfilment challenges while reducing their impact on the planet.
The new year will bring new pressures, priorities and demands for all businesses in any sector. It’s now more important than ever for organisations to be ready to adapt and plan ahead to mitigate operational challenges in 2025.