It’s become a common refrain in the age of Covid-19: with people mainly confined to home, and with many retail outlets either temporarily closed or going out of business altogether, consumers have turned to the internet to supply even their most basic needs. E-commerce spending had already been surging — rising between 13 to 15 percent over each of the last five years (as compared to one to five percent growth in traditional retail sales), but that spending has now kicked into overdrive. What’s more, those shopping patterns don’t look to be changing anytime soon.
With the holidays approaching, this explosion in online sales has many shippers worried about securing enough warehouse storage space — and rightfully so.
As reported in the Wall Street Journal, online shopping is already above typical holiday levels — with consumers spending a record $73.2 billion online in June alone. That’s an increase of 76% over the same period last year. The same article points to a survey in which “60 percent of consumers plan to shop less in stores this holiday season for fear of Covid-19 exposure.” This surge threatens to strain a supply chain that’s still transitioning from a legacy model.
The rise of e-commerce has necessitated a different approach to retail fulfillment. The old single channel system served companies well in the days before Amazon. But now that customers have been conditioned to demand almost instant gratification, that structure no longer works.
Instead of centralized distribution centers that served as one-stop “hubs” for shipping, the new model calls for multiple locations to target key markets. Omnichannel ordering means organizations need to have the right product on-hand and ship it immediately after a customer checks out. There’s a constant push for faster and faster delivery — which means companies are competing for warehouse space near major population centers.
According to real estate consulting firm CBRE Group, Inc., rents for smaller warehouses (between 70,000 and 120,000 square feet) rose by more than 33.7% over the past five years. At the same time, availability for those spaces dropped from 11.3% to 7.4% — which is the largest drop in any segment of the warehouse market. It’s also more than twice the rent increase seen by larger industrial spaces (more than 250,000 square feet) in the same time period.
All of which was before the pandemic.
And the real-estate firm Jones Lang LaSalle Inc., revealed e-commerce was the single largest driver of second-quarter industrial leasing activity — accounting for 31 million square feet. That’s up from 24.9 million square feet the previous quarter. Logistics and distribution users accounted for 15.3 million square feet, making them the second-largest category in the quarter. Trailing far behind was leasing for traditional retail use, which came in fifth, at 11 million square feet.
Obviously, demand for temporary warehouse space has risen dramatically. When Mark Twain said, “buy land … they’re not making it anymore,” he wasn’t far off. Although warehouse spaces have continued to pop up nationwide to meet this growing demand, there are only so many existing options to go around. And shippers are competing for a limited supply.
This is where Gorgo Logistics comes in.
In addition to having available, on-demand warehouse space, Gorgo also offers a variety of trailer storage options — providing an ideal temporary solution that can ease the burden on your own supply chain during the holiday crunch. From New Jersey, to Pennsylvania, to Maryland, to Delaware and New York, we can help you solve your warehousing concerns.
So, don’t risk the supply chain mishaps that could turn the holidays into a headache. Let Gorgo Logistics help ensure that your customers have the best possible online shopping experience.
Reach out today to learn how we can help get your products in shoppers’ hands. Quickly, efficiently, and smoothly.