A crowded supply chain is making warehouse shortages in the US worse – News Couple

A crowded supply chain is making warehouse shortages in the US worse

(Bloomberg) — Record numbers of cargo ships are bobbing in waters off Southern California, unable to unload. A belated shipment of patio furniture is moved – three times – before a winter home is found. With no warehouse space, the crew assembles holiday packages in the parking lot in an effort to get them to customers on time.

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It’s all fallout from the global supply chain crisis clogging US ports, pushing warehouses to capacity and forcing logistics managers to scramble for space. And it makes already scarce warehouse space even more valuable.

Take P.J. Patterson, CEO of Pacific Mountain Logistics in San Bernardino, California. It had to make way for new merchandise coming in, so the patio furniture, which arrived from China too late for the summer sales season, had to go. It was transported first to Nevada, then to Arizona, and finally to Texas.

“It will stay there until spring comes and they will try to sell it,” he said. “There will be a lot of cheap patio furniture out there.”

A complex web of factors, exposed by the Covid-19 pandemic, is hampering supply chains: acute labor shortages, outdated infrastructure, containers in the wrong places, and free-spending American shoppers spurring increased imports have all disrupted the world’s usual synchronized flow. trade.

“I think things are going to get worse,” Hamid Moghadam, CEO of industrial owner Prologis Inc., said during a company presentation last month. “I think the short-term problem will be with us until 2023.”

His company and other major warehouse owners such as Blackstone Inc. They are the winners in this logistical predicament, with rents soaring more than 30% in some of the hottest US markets. Vacancies of 1% or less are not well known in portals such as Southern California.

Blackstone is also booking gains on its properties as valuations rise. Since September, the company has spent nearly $1.3 billion by refinancing a mortgage on industrial property, according to reports from Moody’s Investor Service and Fitch Ratings. One of the company’s portfolio companies, Link Logistics, is spending $5 billion to build 30 million square feet of new space.

Developers can’t build fast enough. CBRE Group Inc. estimates. Each increase of $1 billion in online sales equates to the need for an additional 1 million square feet of storage space. U.S. suppliers will need an additional 800 million square feet to store spare stock in the event of a shortage of critical auto parts and other products, according to Prologis.

Congestion is evident in Southern California, where redistribution and fulfillment centers handle Asian imports for the likes of Amazon.com Inc. and Home Depot Inc. In the Inland Empire, east of Los Angeles, about 20 million square feet of new space is under construction in a market that needs 50 million square feet to meet demand, said Ian Britton, managing director of CBRE.

Another impact of supply chain hurdles: delays in shipments of building materials such as doors and conveyor belts hinder the construction of new logistical properties.

Fran Inman, Senior Vice President, Majestic Realty Co. , a Southern California-based warehouse owner: “Our subcontractors cannot keep their bids with prices or delivery dates because they simply do not know when they will receive the materials.” “It’s a giant rubik’s cube for co-dependence.”

The Marine Exchange of Southern California reports that about 100 ships are waiting to unload in the Los Angeles and Long Beach ports, nearly double the number docked at the sprawling complex. Once unloaded, cargo remains on docks for days, with 18 containers per truck available in the area, according to CH Robinson Worldwide Inc. , the largest third-party logistics manager in the United States.

Warehouse shortages forced Robinson’s crew to unload containers in a parking lot last month, because there wasn’t room inside to repack merchandise in time for customers.

Workers combed boxes to beat Halloween deadlines, said Jim Mancini, the company’s vice president of surface transportation for North America, “turning on Christmas lights right now and pulling witches on brooms to be shipped.” “There in the parking lot, we built displays that can go right into the storefront.”

Patterson, who founded Pacific Mountain Logistics in 2009, raised employee wages by 36% in addition to paying at least 30% for storage space. More than a dozen empty shipping containers are waiting to be removed from his parking lot, depleting needed real estate for incoming goods.

“A lot of spring goods got here late and not sold, and then a lot of Christmas stuff came early because they were afraid of being late,” he said. “This is the biggest challenge I’ve faced in my career.”

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