Managing warehouse space has always been a critical concern for businesses. In recent years, this part of the supply chain has been put under the spotlight within markets around the world due to several factors. These factors include sustainability, cost-controls, and the availability of labor to manage the needs of businesses. Disruptions in global supply chains, ripple effects of COVID-19, conflict, energy, and economic uncertainty, have challenged business leaders to think critically about every aspect of their operations.

We’ve spoken with several Ranpak employees representing members of our Asia-Pacific Sales organization on the trends they have observed impacting the warehouse, as well as how Ranpak’s solutions are adapting to address these realities for our customers. This includes our recently developed FillPak Trident Mini™, combining our materially efficient Trident void fill with a smaller converter footprint optimized for the needs of the modern warehouse. Representing Korea, Japan, and Australia, our team members shared their insights on their home markets along with the region at large.

Market conditions in Asia-Pacific are increasing the competition for warehousing, especially those around key urban centers.

Within Korea, the pressures facing warehouse space mirror those of other Asia-Pacific countries as well as global pressures. Jin Yoo is a Senior Account Manager for Ranpak in South Korea. He observes that “the value of warehouse space in Korea has grown partly due to the aftereffects of COVID. Online shopping adoption was greatly accelerated—even my mom who didn’t know how to order anything online knows how to purchase online after the pandemic and lockdowns.”

Jin also points out that warehouse pressures are particularly pronounced in and around urban centers. “There are many warehouses in Korea, but the challenge is that, like many major urban markets, there is a lot of population concentrated in Seoul. In my hometown, I can go outside and see the new warehouses being built as capacity is increased around that major market. Keeping up with the demand is harder because of the need to service the population centers.”

Far from being a trend isolated to Korea, pandemic-driven pressures to adopt e-commerce have led to warehouse growth around urban centers around the world. In Japan, Account Manager Masashi Nakamura has observed similar forces at work, even if the impact on the actual costs of leasing warehouse space has been less pronounced. “In Japan, we can see a trend of new warehouse building especially around our capital cities, for example, Tokyo, Osaka, Nagoya, because of the boom of e-commerce business. While warehouse space prices are rising, in Japan we currently have very limited inflation at around just 2-3% and energy prices have risen by about 10%, which means that our warehouse prices are rising but less significantly than in other markets.”

Whether costs are stable or being driven up by demand, the fact remains that physical space within the warehouse is a precious commodity that is limited by geography. In Australia, a much larger landmass than either Korea or Japan, concentrated demand around population centers means that warehouse spaces remain a big factor. Peter Forsyth, Ranpak’s General Sales Manager for Asia-Pacific, is based in Australia and has observed the consistency of this trend. “Australia is a very large land mass which is not too much smaller than America, but with a population of roughly 25 million people. About 90% of the country that’s in the middle has very low population, and the majority are centered around the outsides of the country mainly within the main cities—in terms of population we have 5 million in Melbourne and in Sydney 5.3 million. This is where the most warehouses are, and the land price is high.”

The growing prevalence of e-commerce and the need for space on the part of 3PLs contributes to competition for warehouse space.

The e-commerce businesses that have continued to expand around key Asia-Pacific markets don’t just require warehouse space near to metro centers as a convenience for their own operations. As the standards of customers increase, they expect much shorter delivery times for their online purchases. In Korea, Jin Yoo mentions that major brands are driving a race for ever-shorter delivery windows, and customers are quickly coming to expect these faster delivery times. “People have grown accustomed to purchasing items using e-commerce markets like Coupang, and the trend is here to stay,” Jin says. “Coupang and their Rocket Delivery network specialize in same or next-day deliveries, and that has really impacted what customers expect within the Korean market today. Delivery times have shrunk now so that it’s not uncommon for certain items to have a six hour or even three-hour delivery time. I think this trend is more developed in Korea than it even is within the US, where a lot of online orders still take multiple days to arrive.”

The challenges of meeting e-commerce demand and cutting down delivery times are compounded by smaller physical spaces and a reliance on packing benches within many of the warehouses serving Asia-Pacific’s commerce hubs. Peter Forsyth has seen a much higher preponderance of packing tables within most facilities that he has visited. Based on his experiences, he recognizes that solutions within these environments need to have certain characteristics to be effective. “We do have a lot of pack benches, rather than end of line packing setups within the warehouses that I see. It’s much more common. The cost of warehousing is very expensive and the smaller the machine, the better by far. Another factor is the integration of products into the warehouse environment. There is a big difference between something at the end of a packing line versus a table mounted solution that conserves floor space.”

Movement towards more spatially efficient packaging materials is a consistent theme across Asia-Pacific.

The Trident Mini was created in part to address the challenges being experienced by warehouse managers in the Asia-Pacific region. While the countries within this area are very diverse in terms of culture and geography, there are strong commonalities in their packaging needs that echo those of e-commerce and third-party logistics providers around the world.

Because of physical space constraints, solutions need to maintain as low a profile as possible within the space of the warehouse, including the packaging materials that they use to operate. “For the Trident, the way that we can fix it to a bench or apply it to a pack bench situation allows more space because you don’t have anything on the bench. We can actually suspend it or have it on a stand next to the pack bench,” Peter explains. However, more important even than the physical footprint of a solution is the profile and performance of materials in the box. Peter is clear that “the most exciting quality of the Trident is maximizing the paper volume in the box. This machine will actually give customers more bang for the buck by producing more volume out of the same paper as what we were doing beforehand. The ability to do more with less is the most attractive quality for warehouse managers.”

The assessment is shared by Masashi. “Some customers are recorded with up to 50% less paper needed to fill their void using the Trident, which is a very significant reduction that is even more appealing than product size, which is also a nice factor. In Japan, box sizes can vary but there are many medium sized boxes in use for their versatility. For this reason, void fill that can perform with less material over a larger space is highly relevant.” Aesthetics were also cited as particularly important in Asia, with the unboxing moment and a sense of quality prompting brands to opt for what they consider more luxurious or attractive materials.

Sustainability is progressing, albeit at a different pace within each country.

On top of performance and looks, sustainability is another concern for countries within the Asia-Pacific region, many of which are oceanic countries which rely on maritime trade, tourism, and fishing to support their economies, making the impact of plastic pollution that much more visible to their populations. Masashi mentions that in Japan, public perception has reached a notable turning point in favor of reducing plastics. “Since Starbucks changed to paper materials in their stores in 2017, sustainability has been a mainstream trend in Japan.”

In Korea, sustainability might currently be taking a back seat for some businesses as they push for delivery speed and cost optimizations, Jin admits. “A lot of price focused businesses are still using a lot of plastic in their packaging, and the Korean government so far has not put a lot of pressure on businesses to cut down,” he shares, before mentioning the elephant in the room—the possibility of government action against plastic materials that threaten the environment. “Personally, I’m curious to see if changes in other markets to reign in plastic will come to Korea, either indirectly, or as a result of direct changes. Coupang itself is registered in the United States, in Delaware, so there is a chance that changes created by the US government could wind up impacting them.”