Commercial Real Estate

Excellent transportation access and clear traffic movement on a complex’s territory is the most important feature of any warehouse project, without which a logistics complex simply cannot operate properly. Despite the basic importance of this feature, transport problems specifically are often the stumbling block to warehouse projects, noticeably decreasing investment attractiveness. Accordingly, which solutions can optimize transportation flows, and what does it mean to avoid transportation log-jam?

Firstly, a developer must choose a land plot properly. Indeed, a logistics complex should be built in close proximity to the main transportation arteries, with the optimum location being directly next to a highway. In this case, the entrances and exits are directly from and onto the highway. “It is desirable that the road in the return direction were not burdened by distant turnarounds,” says Artem Pichugov, director of the client relations department at RosEuroIndustrial. “Otherwise, the advantage of being located close to Moscow is diminished considerably.” If a land plot is not adjacent to a highway, the length of the local roads must be minimal. “In this case, there is the rule of one turn, when the access roads should not have more than one turn to reach a complex,” believe the experts at Espro.

A complex located within close proximity to several large transport arteries has an additional advantage under various circumstances. In the event of a traffic jam on one of them, a truck driver can use a back-up route. “Most importantly, the roads should have quality covering and should be at least six meters wide. The lack of a lot of turns to the warehouse, steep grades or rises, to avoid sliding during the winter and to assure open passage, is important,” believes Maxim Sharikov, director of the warehouse and industrial real estate department at Colliers International.

When searching for a land plot, particular attention must be paid to researching the passage abilities of the transport arteries to understand whether it is worth it in general to build a warehouse at the location. “Prior to starting design work on a warehouse complex, the potential cargo and freight routes are analyzed, and the most convenient location for a facility is set based on the results obtained,” reports ILP. “Moreover, the local authorities, in turn, must analyze a facility’s possible effect on the transport situation, and, when necessary, must require a developer to render specific upgrades (for example, to build a division, someplace to widen the highway). If this is not performed, approval and permission for the design stage is not granted.” Furthermore, according to the experts at Espro, a developer can adhere to reconstruction and transport route construction plans, as well as hire consultants for designing such plans.

However, this is all theory, as, in practice, investors in Russia are guided foremost in their search for land plots by land costs, approval and permission complications, the absence of one or another burden and many other factors, then they consider appropriate transport features of the area. “A land plot’s location, its relief, configuration and transport routes are the most important factors when selecting a land plot,” says Peter Zaritsky, deputy director of the warehouse and industrial premises department at Jones Land LaSalle. “However, the Russian market is not like this, where a potential investor or developer could dictate the terms and conditions. It is often necessary to observe specifically how transport issues very negatively affect prospective projects, as either warehouse complexes are located on heavily traveled highways or there are problems with entering and exiting as well as with turnarounds. Consequently, capitalization and interest in the complexes noticeably decreases on the part of the tenants.”

Often it is pointless to research how heavily trafficked a complex’s adjacent transport artery is. Indeed, there are numerous examples today on the market, when warehouse complexes are built along typically heavily trafficked highways, but all premises in these projects have been snapped up by tenants as per preliminary agreement long before construction has concluded.

It is worth noting that experience of the past year-and-a-half to two years shows that many developers have consciously been acquiring plots located at a distance from Moscow. “However, these areas are along highways with excellent transport access, such as along Novorizhskoe Shosse and the new Simferopolskoe Shosse rather than along the typically heavily trafficked Ryzanskoe, Volgogradskoe, Leningradskoe and Yaroslavskoe shosses, respectively,” says Zaritsky. “In terms of distance, tenants in this case lose out, but in terms of travel time, they win, and substantially so.”

Narrow Entrance

The entrance area to a complex’s territory is the major headache of practically every logistics terminal, and checkpoint cannot always handle high transportation routes without halts and delays. The clear operation of the various services in the complex is very important in this instance, as one of the tasks of a management company is to set the vehicle traffic schedule with the warehouse operators. However, no-one can guarantee that the transport traffic will be divided evenly, given that there are also rush hours in a warehouse. And there is more. Prior to entering the warehouse territory, a freight forwarder or driver must complete the required registration of documents, and this also requires a set amount of time. A developer’s goal is to minimize the risks of log-jams arising, and, under no circumstances, as often happens, not to permit a line of trucks from forming along the highway.

There are several means for optimizing transport traffic. Indeed, developers must not try to save money on the entrance and exits, as the traffic passing through a checkpoint must be at least two-way. Therefore, the wider an entrance, the more transportation can pass through a checkpoint simultaneously in both directions, and this is very positive.

At the Krekshino logistics complex, there is a reserve entrance in addition to the main entrance (two traffic-control gates at the entrance and exit). “Usually, the reserve entrance is not in operation, but, during an indefinite situation, vehicles arrive specifically here,” says Pichugov. “We also plan to use it during rush hours to divide the cargo and freight traffic from light vehicles.”

Zaritsky believes that several entranceways are necessary for a warehouse complex to operate properly. According to experts, ideally there will be at least three entrances at a 200,000-300,000-sqm constructed facility. However, regardless of the width of the entranceways, insuring against log-jams at the checkpoint is not possible. There are two variants in this case: either all vehicles are permitted onto the complex’s territory then separated as per official business, or it they remain beyond the territory, but the developer must provide outside guest parking.

There are two entrances to ILP’s Leningradsky Terminal complex (the area stretches for two km), with one of them designated for vehicles with permits, while the second is designated guest parking for trucks and automobiles. There is a heated checkpoint, where guest passes are distributed. In addition to all of this, a developer must install at all of its projects turnaround areas for reversing direction in front of the checkpoints, thus allowing a truck to enter the guest parking lot and freeing up the entrance for other vehicles.

In general, the presence of outside parking serving as a sort of buffer zone today has become the standardized practice. “Outside parking lots are an additional advantage for any warehouse terminal, especially a regional one,” says Shakirov. “Today, many developers have begun planning for these areas.”

“There must be external parking, but it is not often included, inasmuch as a developer wants to develop fully all the available land and then lease out the premises,” comments ILP. “There is a large guest parking lot for trucks and automobiles in front of every ILP, not far from the checkpoint. The dimensions of the parking lot depend on the size of the complex. Our experience shows that for 200,000 sqm of warehouse premises, there should be outside parking for 15-20 trucks and around 40 spaces for automobiles.”

At the Krekshino logistics complex, a large general-access area is located in front of the complex, but inside next to the checkpoint. This is a fenced parking lot where a driver or freight forwarder can leave his truck to return to the checkpoint and fill in all necessary documents,” explains Pichugov.

Moreover, traffic must be organized on the approach roads. If the transport situation is not operated as non-stop movement, log-jams could occur. “In front of our complex, we have built an exact nine-meter access road,” says Pichugov. “However, one cannot predict how drivers will behave. If several trucks for some reason park opposite one another, the road narrows and becomes a single lane road.”

Also, a properly organized pass system, coordinated work of the management company and warehouse operators as well as a well-planned procedure for distributing passes play an important role in the smooth flow of traffic at the checkpoint

Seeking a Happy Medium

Furthermore, the time spent by trucks outside the warehouse territory should be minimized, and properly implemented organizational and planning solutions can handle this task. According to Shakirov, this process includes a properly located building on the territory, zones for maneuvering vehicles, parking spaces for trucks and light transport, organizing traffic in a clockwise fashion inside the complex as well as the necessary number of loading and unloading docks and entrance ramps. Specific time schedules are also important, such as for loading and unloading, scheduling in-house procedures, etc.

According to Andrei Khlus, managing director at Logistics Management, a developer tries to obtain the maximum financial return by fully developing a territory. “Quite often, we run into two problems. The first is not enough attention paid to the maneuvering area and internal parking, while the second is an improperly configured terminal. All of these factors negatively affect optimizing the traffic flow inside a complex,” says Khlus.

The specialists at ILP consider a circle or square to be the ideal geometric forms on a developed area. “But this is not what is most important, as a developer must find a happy medium depending on the respective plot, and even more so when there is a constant dearth of land for development,” say the experts at ILP. “The ratio between developed premises and the overall area of a plot is significantly more important, as these are the parameters necessary to consider when designing a warehouse complex project. According to the rules of warehouse development, there should be around one square meter of open space for every square meter of warehouse space. This ratio is necessary to organize effectively the equipment and machinery traffic on the complex’s territory, to load and unload goods and to park vehicles.”

If the area of a building is 30,000 sqm, the warehouse should occupy 50% of the plot’s territory, believes Zaritsky. If the building is larger, it may occupy 60% of the territory. The area for maneuvering must be a minimum of 35 meters in front of the docking bays, with the remaining territory for parking.

The depth of the area in front of the building is another important feature in terms of optimizing the traffic flow. According to the experts at Espro, the width of the area for maneuvering large trucks must be 40 meters, as this allows a truck to turn fully and leave enough space for another truck to park. According to Zaritsky, in accordance with European norms, the depth of the maneuvering area in front of a complex must be 50 meters. “Why specifically 50 and not 35 or 37 as is standard in Russia? Because the turning angle of a truck requires 25 meters, and only the European ratio allows a truck driver to complete any maneuver, without worrying about damaging other parked trucks. Although there is enough space with a 35-37-meter ratio, a driver must be more careful, thus spending considerably more time on maneuvering his truck,” concludes Zaritsky.

There absolutely must be designated parking spaces for large trucks and light vehicles on the grounds of a complex. “Looking at European norms, I can say that these zones should be separate,” says Zaritsky. “Parking for trucks, as a rule, is situated along the fencing opposite the complex (opposite the docking bays), while parking for vehicles is on the other sides of the building. Another European standard not adhered to in Russia so far is separately designated entrances to the areas.”

In terms of the ratio of parking spaces to project area, there should be one parking space for a transport vehicle for every 1,000 sqm and two spaces for light vehicles for every 1,000 sqm.

Upon further discussion of the differences between Russian and Western projects, the issue of traffic safety should be broached. Indeed, foreigners working in Russia are taken aback as to why nobody provides pedestrian zones on a warehouse complex’s territory. If a warehouse worker must get from point A to point B, he runs the risk of being hit by a truck. European warehouse projects always have separate pedestrian zones located between areas of vehicular traffic, where people move strictly along specially designated aisles. To date, this practice is rare in Russia, and in the best case scenario, security regulates speeding on the territory.

The loading and unloading docks are the key to any warehouse’s effective operation. If the number is less than needed, there will not be any smooth operation; however, a significant moment occurs when a developer is completing construction on a warehouse complex and simply does not know which companies will be the tenants. How does one estimate the number of docking bays required, given this number is directly connected to the specifics of the warehouse operators? “A developer should gauge this figure on a ‘worst case scenario,’” says Zaritsky. “This means one loading dock for every 1,000 sqm, although in most cases these will not be necessary.”

According to Shakirov, the following ratio is acceptable for a typical warehouse complex: one loading dock for every 1,000 sqm, while for a logistics distribution center, this figure is one loading bay for every 450-550 sqm.

However, Khlus has a different point of view on the number of loading and unloading docks. “Retailers believe that there should be one docking bay for every 1,000 sqm,” says Khlus. “However, we believe that the number of docks should not be calculated on the area of a building, but, rather, on the potential number of pallet spaces we could expect to use effectively at one time. A warehouse is a facilitator of goods, and if we have enough docks, some trucks will wait while the others are loaded and unloaded.”

ILP believes that limiting the number of vehicles on a territory at one time optimizes the flow of traffic. “Accordingly, we limit the number of parking spaces for each tenant, depending on the amount of space leased,” ILP’s experts state.

Let’s take a look at how traffic is organized on the grounds of the Krekshino logistics park: “We reviewed the possibility of organizing circular traffic on the complex’s grounds, but we ultimately decided otherwise,” says Pichugov. “If a vehicle is maneuvering and gets stuck in narrow spot, the entire operation of the complex could be paralyzed. Therefore, we decided to divide the territory into three sectors, each with its own access-control system. The first sector is located at the end of the complex, just beyond the checkpoint, and is considered a general-access zone. Moving on, transport is divided into two sectors located along the warehouse blocks, depending on the location of the warehouse operators, and these sectors are transit. There is more than enough space for maneuvering and parking located at the other end of the warehouse complex, and drivers head directly to the docks from this zone. Each warehouse block has its own rooms for drivers.”

Several words should also be said about another factor affecting traffic flow, although a developer is not directly connected to this.

For example, a traffic schedule for receiving vehicles must be followed. Ideally, each truck should be assigned a loading and unloading dock strictly according to a specific time; however, in practice, this is practically never observed, resulting in newly arrived vehicles ending up in a long line. According to specialists, this problem is not connected with a developer’s, manager’s or logistic company’s activities, but rather bears witness to a rather low level of service on the part of the transport companies. “The freight forwarders are not involved in transport, but, rather, outsource this operation to transport companies, among which are reliable and unreliable ones, and those with experience and those without it,” says Zaritsky. “There is not an ideal transport service provider on the market, and vehicles often are delayed without any objective reason.”

The effective work of a warehouse operator, a logistics company or a direct tenant is another factor decreasing freight loading and unloading time, thus avoiding traffic log-jams. The expediency with which goods are loaded and unloaded depends on the goods themselves and the volume; therefore, the time each truck is loaded and unloaded is relative, which also does not permit utilizing the “just in the nick of time” approach. A lot depends on the experience and professionalism of the operator at the warehouse. Moreover, a warehouse management system (WMS) economizes time, and not a single advanced operator is capable of managing goods reserves effectively without an advanced WMS. Also, these systems are complicated and an operator must learn to use them effectively.

Simulation Modeling

According to Khlus, creating a computer program simulation model of the future warehouse complex is one of the best means for optimizing traffic flow. In other words, a specific warehouse project can be virtually modeled using innovative technology.

“The parameters used by developers when constructing a warehouse complex, for example, the ratio of docks or parking spaces to the area of the warehouse, are not always correct,” believes Khlus. “Developers do not take into account the cross interests of several tenants operating in one warehouse complex.”

The features accounted for when creating a simulation model, such as the specifics of the land plot, the amount of traffic on the adjacent arteries, the specifics of the warehouse operators, the lack of responsibility on the part of the transport companies and many other factors, allow for incorporating or excluding certain design solutions. The simulation modeling could demonstrate how to determine properly the development of the territory, taking into consideration future traffic flows, how to attain the optimum ratio between parking and maneuvering zones on a complex’s grounds, the number of docks and many other factors. The main goal of the simulation model is to analyze the level of traffic for external and internal parking space and at the access-control points.

“For example, there is a 100,000-sqm warehouse complex with 10-15 tenants operating and each of them has his own understanding of handling freight and his own working hours with transport services,” says Khlus. “When we plan such a territory, we must take into account their specific lines of business. Typically, this is how sales works. They rest for nearly a month and fulfill the plan during the last week of the month. Accordingly, there will most likely be a giant push at the warehouse during the last seven days. Each company has its own daily sales peak, and all of these nuances are factored when creating a simulation model.”

According to Khlus, initially a simulation model could be used to plan a warehouse complex then could become the means for managing daily operations. “As part of negotiating with potential tenants, we enter their data, such as planned freight flow and logistics specifics, into the computer program and attentively see how they will affect the operations of the entire warehouse complex,” says Khlus. “This system helps us find the optimum tenants for a specific warehouse complex.”

So, it is clear how a simulation model works in theory. However, how is it used at the design stage, if a developer does not always know the specifics of a future tenant’s business? Even if a developer does know the name of a warehouse operator, it is still difficult to determine who his clients will be in the long-term.

“This is the most complicated question,” comments Khlus. “However, the design process must precede work on forming the concept, determining the potential client. A developer, based on researching the location and transport and engineering communications, can determine the approximate freight-flow features. In turn, this affects a warehouse’s configuration and ratio of the various zones.”

“Simulation modeling is a required step when developing a logistics complex project,” says Espro. “This allows for analyzing and predicting the operation of the future warehouse prior to completing construction, thus minimizing expenditures, including when using the warehouse. Currently, the most widespread computer modeling program is GPSS World, which is a complex modeling instrument with high interactivity and visual presentation of information. However, using Western modeling systems in Russia is not always practical, inasmuch as oftentimes there arise serious conflicts with GIBDD (traffic control) requirements as well as with Russian mentality overall.”