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If You Build It The Supply Chain Will Flow: The Long-Term Benefits of Warehousing

If the last two years have taught the industry anything, it is that importing cargo by multiple modes and ports of discharge is crucial for any business to survive. However, figuring out what to do with the cargo once it has arrived has become the most recent puzzle.

Typically, an importer would be able to put their container on either a train or truck and have it shipped to them; however, that option has become unpredictable due to terminal congestion, a lack of drivers, and a lack of available chassis. As a result, the next possible practical solution has become importing large quantities of goods early and storing products in warehouses until they are needed, thereby creating a consistent and more predictable buffer supply stateside.

This has become a more attractive option for many products with long shelf lives—sparking a potential warehouse building boom throughout America, particularly within two hundred miles of major ports. Southern California, rural Pennsylvania, and Delaware are highly targeted areas.

“Companies have realized that a comprehensive warehouse strategy is a highly effective method to beat port congestion,” said Anthony Fullbrook President of OEC Group’s Northeast Region. “Even automakers like Toyota, who created the just-in-time supply chain strategy, are adjusting operations to prioritize inventory over specialized efficiency.”

Unfortunately, this is a long-term strategy and does not offer much relief in the near term as warehouse space has become very difficult to find. Last November, real-estate firm Coldwell Banker Richard Ellis (CBRE) found that only around three and a half percent of warehouse space across the United States was available, and warehouse space across Europe, including the United Kingdom, Germany, the Netherlands, and France is all but dried up. As a result, while the long-term solution of building more warehouse space has become evident, there will continue to be short-term difficulties for importers until sufficient infrastructure is in place to handle the influx of goods which has remained high even in the current economic climate.

It’s also important to note that direct retailers are not the only market players going after warehouse space. Conveniently located warehousing is also imperative for an effective last-mile delivery strategy for ecommerce, so ecommerce retailers are searching for available space, as well.

“The best way to deal with uncertainties affecting the industry is to partner with a logistics organization that can see the entire supply chain picture and coordinate appropriately so customers can have at least a one-to-three month inventory buffer,” said Logan Cooper, Senior Manager of Regional Traffic for OEC Group’s St. Louis branch. “Doing so will help with delivery timing and ensure short and long-term logistical viability for your company.”
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