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Amazon ameliorates Canada's severe warehouse shortage

AMAZON has been purchasing warehouses due to the pandemic driving a belated embrace of online shopping, pushing the vacancy rate in Toronto area down to 0

12 May 2021 - 19:00
AMAZON has been purchasing warehouses due to the pandemic driving a belated embrace of online shopping, pushing the vacancy rate in Toronto area down to 0.5 per cent, making it the tightest market in North America, reports Bloomberg.

The ecommerce giant has increased its logistics footprint 12 million square feet across nine major Canadian markets since the end of 2019.



Since the start of the Covid crisis, ecommerce saw its share of total Canadian retail sales to 10.4 per cent, government data show. The cost of leasing industrial space in the Toronto area went up 25 per cent in 2020.



'It's cheaper to go to a farmer and say, 'tell me how much you're going to make off a crop on a five-acre lot, and I will pay you that, plus 10 per cent, in order to drop containers here,'' said logistics consultant Richard Kunst.



Other major Canadian cities aren't far behind, with Victoria, Vancouver and Montreal rounding out North America's top four tightest warehouse markets.



With new warehouse supply lagging behind the soaring demand, Canada could run out of space entirely by the end of the year. Logistics costs amounted to nine per cent of gross domestic product.



Meanwhile, Toronto Region Board of Trade chief executive officer Jan De Silva commented on the matter.



'We become cost uncompetitive when we don't have a good availability of warehousing. There are fewer jobs, fewer permanent jobs that can be created, because companies aren't able to fulfill demand,' said Mr De Silva.



'Really well-intentioned levels of government have been saying, 'Okay, we have a housing problem, how do we solve that?' And in solving that, whoops, now we have a warehouse problem, how do we solve that? We've got this whole chicken and egg situation that we're trying to unravel,' said Mr De Silva.



Supply Chain Alliance managing partner Mike Croza declared how costs to manage the supply chain are going up.



'Costs to manage the supply chain of the business are going up. At some point in time as costs go up, there will be some kind of transfer of increase to the consumers,' said Mr Croza.


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