Season 5, Post 37: Get on the train!
For a chance to spend four hours learning about the future of work, energy, mobility, AI and global supply chains, your author tuned in to Groundbreakers last week. Now in its third year (we also attended in 2022), this is a superb event hosted by Prologis – the largest owner of big box warehouses globally – that allows its stakeholders to understand key developments across the ecosystem. Our main takeaways follow:
Almost every conversation came back to the topic du jour of AI. Hamid Moghadam, Prologis’ Chief Executive perhaps made the case most forcefully, noting that “if you’re not on the [AI] train, then you will get run over by it.” For many businesses within the Prologis ecosystem, retailers particularly, AI can and should be leveraged as a forecasting tool, to allow for better business planning. Every retailer, we were told by one panellist, will “have to become a data company.” In such a future world view – and one with which we broadly concur – mass anonymity will be replaced by mass personalisation. Another speaker described AI as being “a senior executive in a box.” Give it data, and the device will give you answers.
There was much passion also on show at Groundbreakers for the concept of ‘ACES’, a new acronym for your author. It describes how the future of transportation will be autonomous, connected, electric and shared. AI, of course, will be an enabler in this journey. Laudable words, in our view. The problem, however, is the time it will take to implement. Even in California (where Prologis and many of its stakeholders are based), consensus opinion seemed to be that just to electrify last mile logistics may take 3-5 years. Charging stations are, at least, currently being installed in Long Beach Port in LA. The journey for middle mile logistics will likely take even longer, especially given ongoing concerns about range anxiety. Some made a fervent case for drones.
The metaphorical elephant in the room which unites both the topics of AI and ACES is the grid. We highlighted last year just how significant chronic underinvestment in electricity infrastructure has been. With demand only heading one way, the problem will intensify. Better energy storage, we were told, is “the name of the game” and almost every business is seeking to embrace and integrate all forms of alternative power, as much as anything to embed reliability. Fear of outages or power failures seemed significant, or, as one speaker put it, “the cost of inaction is just not affordable.”
5 October 2023
The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Heptagon Capital is an investor in Prologis. The author of this piece has no personal direct investment in the business. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.
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Alex Gunz, Fund Manager
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