Marine terminal operators at the ports of Los Angeles and Long Beach are especially concerned about conditions in the 1.8 billion square feet of warehouse space in Southern California because the supply chain meltdown that occurred last fall started in the import distribution centres and backed up quickly to the ports.
'It's time to sound the alarm on the warehouse situation. They're full, and it's not just in Southern California,' said Scott Weiss, vice president of business development at Whiplash, a third-party logistics provider with 18 distribution facilities in Southern California; Seattle; Columbus, Ohio; New Jersey; Savannah; Jacksonville; and other locations.
Mr Weiss said he fields queries from shippers every week seeking 100,000 to 200,000 square feet of space for the next three months at his facilities across the country. 'The first question is, 'Can you handle it?' The next question is, 'Can you give me a referral?' The majority are at capacity,' he said.
Unprecedented import volumes have compounded supply chain disruptions such as vessel delays at Asian load ports; vessel bunching at major gateways such as Los Angeles-Long Beach, Oakland, Seattle-Tacoma, Savannah, and New York-New Jersey; and congestion at inland rail hubs, especially Chicago. These supply chain bottlenecks, in turn, have disrupted inbound shipments to hundreds of distribution centres and outbound shipments from the warehouses to the store shelves of retailers.
Now backups are building rapidly at warehouses and distribution facilities. 'It's all been in the last two to three weeks,' Mr Weiss said. Shortages of warehouse labour, which has been stressed for months because of Covid-19, and drayage truck capacity are limiting the ability of warehouse operators to move merchandise to stores quickly enough to accept the volume of inbound freight. This is also aggravating chassis dwell times at the warehouses as inbound marine containers sit on chassis in warehouse yards. When they can, Whiplash facilities are working three shifts a day to create space for inbound shipments from the ports.
The Q2 US Industrial Outlook from real estate developer Jones Lang LaSalle (JLL) that was released last week cautioned that tight warehouse conditions are a national concern that will carry through 2021 and most likely into 2022.
'Availability in the market is extremely tight, with all-time low vacancies and new market-high rates. Net absorption continues to outpace deliveries, warranting a potential supply shortage due to the surge in demand for industrial [warehouse] product,' the report said.
US imports from Asia have continued at record or near-record volumes for an unprecedented 12 consecutive months. Imports from Asia in the first six months of 2021 were up 38 per cent from the first half of 2020, according to PIERS.
These lofty volumes will continue through the August to October peak shipping season when holiday merchandise moves through the major US gateways. According to the Global Port Tracker, which is published monthly by the National Retail Federation and Hackett Associates, when July's import numbers are available, they will show an increase of 15.7 per cent from July 2020, which marked the beginning of the post-Covid-19 re-openings in the US last year.
Global Port Tracker projects that August imports will increase 12.6 per cent from August 2020, while September will be up 4.9 per cent year over year. Although it projects October will be down 3 per cent year over year, Global Port Tracker has raised its forecast from the projections made the previous month in each report since spring.