As the Economy Starts Back-Up, so does Warehouse Demand

The increased use of e-commerce during the pandemic is a contributing factor to why extra warehouse space is needed. E-commerce is the buying and selling of goods on the internet. This type of transaction affects the way we live and shop dramatically. From small businesses to global enterprises, e-commerce has impacted sales, expanded brands, and increased the need for having an online presence. Thanks to e-commerce, businesses can now reach new and global customers. However, many businesses have been facing challenges due to COVID-19 as a result of the lack of warehouse space.

Online shopping habits have significantly increased during this pandemic, which led to a disruption in the supply chain for businesses and has created less space for companies’ inventories. The demand for warehouse space is surging with only a limited supply of available lots for new construction.

“Right now we’re guessing companies are increasing safety stock by about 5% to 15%,” boosting their need for warehouse space in order to mitigate the risk of running out of inventory, said Pete Quinn, Collier’s National Director of Industrial Services. “We don’t see a lot of companies downsizing their distribution.”

Distribution Networks

Many super-regional distribution markets, such as the Dallas-Fort Worth metropolitan area, are working on warehouse projects to expand their space for increased inventories and e-commerce. A lot of these distribution markets are within good standing due to the centralized area they’re located in, however, distribution networks in business supply chains and established e-commerce hubs are subject to change due to automation regardless of location.

Just-in-time (JIT) production networks are complex supply chains that transfer goods internationally through different transportation channels. As a result of the global COVID-19 pandemic, these JIT production networks may close manufacturing facilities since they cannot reach as many borders and are now being seen as more fragile.

Companies’ supply chains are complex and the pandemic adds even more challenges. To make the process of getting goods from factories to the consumer easier, even with borders closed, there is a need for larger warehouse space to avoid shortages and eliminate transportation delays. According to the Wall Street Journal, the demand for major warehouses soared 51 percent within 6 months of 2020. This pandemic-driven increase led many companies to quickly find more space for products to be stored and delivered. On top of the need for warehouses, companies in the United States need an outlet for domestic supply chains. Especially for .. markets with seaports that previously relied on trade.

E-Commerce Surge

Almost every product is available through e-commerce. Purchasing items online is very convenient for consumers since it’s available 24 hours a day and seven days a week. It’s also easier to navigate and sort through products online than in-store due to the wider range of items available and the useful search button. Many online shoppers have contributed to the rise in e-commerce and the urge for warehouse space. Everything from apparel to groceries to electricity items is now within one touch due to smart devices. As a result of the pandemic, the trend of online shopping increased.

The COVID-19 pandemic has impacted lives and businesses. The demand for warehouse space will surge since the U.S economy is reopening. This shift to e-commerce is driving the demand for warehouse space. As the demand for warehouse space continues, there will be an equal need for warehouse workers. Luckily, the gig economy is finding creative ways to find solutions for our supply chains. There are companies like HapiGig that help warehouse managers find workers to cover shifts when demands fluctuate so that distribution markets do not get disturbed.