Inside Tesco's Energy-Efficient Distribution Centre

Tesco plans to establish a future-forward distribution center at DP World London Gateway by 2029, highlighting its dedication to a robust and eco-friendly supply chain strategy across its UK store network.

With substantial financial backing, this initiative is set to cater to rising demand, ensuring the reliability of the supply chain while prioritizing environmental standards. Tesco emphasises that this new center will be a state-of-the-art, energy-efficient facility designed to align with future growth ambitions while minimising environmental impact.

The center is anticipated to attain "BREEAM Outstanding" certification, a prestigious acknowledgment of sustainable building practices. BREEAM, or the Building Research Establishment Environmental Assessment Method, is the UK's premier standard for measuring a building's sustainability, and the "Outstanding" rating is reserved for the top 1% of structures assessed.

Partnering with logistics expert Witron, Tesco aims to refine its logistics framework effectively. Witron's experience in retail-centric supply chain systems is set to be instrumental in developing a facility tailored to handle dry grocery products, essential for Tesco's ambitious expansion goals while adhering to rigorous sustainability objectives.

Andrew Woolfenden, Tesco UK Distribution & Fulfilment Director, says the new centre will play a critical role in future growth: “Our distribution network is vital for ensuring customers receive products at the right place, time and condition.

"As demand grows across our store network, we're excited to partner with Witron and DP World to develop a distribution centre that leverages the latest technology, enhancing our supply chain and supporting our decarbonisation goals.

"By locating at London Gateway, we can also take full advantage of the seaport and rail infrastructure."

Helmut Prieschenk, CEO at Witron, calls it “an honour and pleasure” to be involved, saying: “With the latest technology and machinery, once fully operational, this represents a large-scale project for dry grocery distribution.

"In terms of end-to-end integration this is a lighthouse project for Witron - which ensures premium store service, an ergonomic, safe and sustainable environment and benefits the whole value chain.”

London Gateway’s strategic importance

London Gateway stands as the UK's most comprehensive logistics hub. Currently managing more than two million containers annually, with more than 60 weekly rail services, and 9.25 million square feet of logistics park space, the site is crucial to UK trade.

The port manages over half of the UK’s deep-sea temperature-sensitive imports and hosts numerous logistics and manufacturing enterprises. Current tenants include industry leaders such as DHL, CEVA Logistics, Currys, COSCO, UPS, and SH Pratt Group.

Sultan Ahmed bin Sulayem, DP World Group Chairman and CEO, says the investment marks an important step forward for the site. “DP World London Gateway is helping to make Britain’s trade flow by sea, road and rail, connecting businesses across the UK with global markets and boosting the resilience of national supply chains.

"The significant investment announced today by Tesco, one of the world’s leading retailers, is a proud moment for DP World and a vote of confidence in the growing role London Gateway plays in the UK economy.”

While there is optimism for long-term growth, London Gateway currently faces operational challenges.

Operational challenges at the port

Even as Tesco progresses with its plans, London Gateway is encountering disruptions. Power failures and equipment setbacks have led to delays and limited container handling capacity.

For instance, a late June outage saw only half the cranes operational, followed by a rail shunter accident which caused infrastructure damage and halted rail services temporarily.

The ensuing backlog meant more than 500 containers missed their scheduled shipments, significantly affecting logistical operations. Hauliers have reported extended wait times and have had to adapt to new measures like "Operation Stack", which stages vehicles before port entry.

These disruptions, with wait times exceeding five hours, have affected the haulage sector, leading to inefficiencies and added costs. Some companies are implementing "London Gateway surcharges" while grappling with extended logistics schedules.

This investment in the distribution center signifies Tesco's commitment to advancing its supply chain's sustainability and dependability while navigating these operational hurdles.