What’s Driving the Demand for Global Logistics Warehousing?
According to a recent survey, demand for logistics warehousing is high and expected to continue to grow through 2024—and perhaps beyond. In the United States, specifically, logistics warehousing growth was expected to stabilize over the next year or so. New forecasting, though, suggests that U.S. growth will likely accelerate, as well.
So, what is causing this increasing demand for warehouse storage?
Leading the pack is the e-commerce industry. According to the U.S. Census Bureau’s Annual Retail Trade Survey (ARTS), e-commerce increased by 43% in 2020, the first year of the pandemic. In dollars, it went up by $244.2 billion from $571.2b in 2019 to $815.4b the following year. Then, in 2021, e-commerce grew another 14.2% over 2020 figures. Shopify notes that global e-commerce sales will likely reach $5 trillion in 2022 and $6 trillion in 2023.
Why this increase? During the early pandemic years, lockdowns led to people ordering from home and, once this trend began, it continued. Some experts believe that this e-commerce momentum will cause some brick-and-mortar retailers to close their doors and sell online only. For example, In March 2021 the Paper Source had store closures as well as a drop in demand for stationary as weddings and other events were canceled due to the pandemic.
For each retailer that transitions from brick-and-mortar to exclusively online sales, they will likely need three times the amount of warehouse space as they once did. In their physical store, they could display some of their goods and store others while, with e-commerce, each item is located in warehouse storage. Plus, stores that continue to maintain brick and mortar space will typically have e-commerce options available.
Although big retail names may jump to mind—from Amazon to Walmart—the need for warehousing goes far beyond their needs.
Here’s another consideration. The growth of e-commerce really has two huge aspects. First, the retailers themselves may use third party warehouse and logistics (3pl warehouse space) to store goods that they’ve ordered from wholesalers. Second, as the need for additional warehouse storage for e-commerce retailers expands, so do the requirements for the package delivery companies that will transport these goods to consumers. One report suggests that nearly one fifth of warehouse space during a pandemic year was taken up with parcels from the United States Post Office, FedEx, UPS, and so forth.
Besides retailers and package deliverers, other companies are demanding additional warehousing space including third-party logistics companies that support businesses in their storage, distribution, transporting, and fulfillment services; health care, including pharmaceuticals; construction companies; and food companies.
Warehouse Space Scarcity
Ideally, more warehousing storage facilities would be built in an era when retailers and other companies want to stockpile goods to avoid supply chain deficiencies. Focusing on the United States as an example to illustrate a global problem, there is little space available. The New York Times therefore calls warehousing space the latest thing to become hoarded.
Solutions being employed include locating facilities in places further away from traditional spots near ship ports and airports; building taller facilities to take advantage of unused airspace; storing goods in vacant storefronts; and more. As another solution, some third-party warehouse facilities are being built underground. Construction prices are cheaper with greater savings on utilities.
Because of the scarcity (and the likelihood that this will continue to get worse), owned and 3pl warehouse space is being grabbed up at rates that are 50% higher than current needs, adding to shortages.
Some solutions, such as using vacant storefront properties, present a new problem to address. To run a cost-efficient warehouse, these facilities need state-of-the-art technology, including robotics and other modern automated solutions. To ensure sustainability, a warehousing company needs to look towards renewable energy sources to power their warehousing and distribution facilities.
Moving Industry and Warehousing and Distribution
Another industry impacted by storage space shortages is the relocation industry. From a micro point of view, even storage units can be harder for people to find when they need to store belongings during a transition. When large companies are relocating, the need for storage space is even greater. From a macro perspective, when people and businesses move internationally, logistics can get quite complicated.
When warehousing and distribution space was readily available, this was more easily addressed. Nowadays, it’s harder. That’s why today, more than ever before, you’ll want experienced logistics professionals on your side.
Choose NXTPoint Logistics
For more than a century, NXTPoint Logistics has been a trusted name in logistics—and we’re now a $736 million dollar company, specializing in global transportation, relocation management, and logistics. When you select NXTPoint Logistics, you’ll benefit from our nearly 3.5 million square feet of 3pl warehouse space. With 45+ locations, we’ll provide you with the global reach to get you wherever you need to go.
We’re proactively addressing warehouse and distribution challenges so you can focus on your logistics without worry as we provide you with the support you need. With global logistics by NXTPoint Logistics, you can count on a comprehensive, flexible solution: from warehousing to distribution and fulfillment. Because we own our warehouses, you can seamlessly scale up and down, as needed, when demand shifts and seasonal fluctuations occur. This means you won’t be stuck with long-term costs for space you don’t need or be required to pay for an extra layer of markups—and, overall, our customers benefit from 30 to 40% savings.
The result: stronger logistics without compromise.
NXTPoint Logistics services small startups and large multinational corporations—and companies of all sizes in between. From ecommerce to manufacturing and from technology to food, medical, defense, and more, we’ve got even your most complex logistical situations covered. To discuss how we can help you, please contact us online or call (888) 697-4079 today.