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Inside The Warehouse Supply Chain Crunch

December 17, 2021 Kevin Baxter

Warehouse shelves

A number of variables are at play when it comes to delays in getting goods to market, but the warehouse supply chain crunch is one that's perhaps snuck under the radar. With material and labor shortages, shipping container backlogs and more, a lack of warehouse space doesn't always make the top 10 list of reasons for supply chain issues. Warehousing capacity, though, is a necessary link in the chain. And with that space dwindling, it's another obstacle for those in freight and logistics to overcome.

What is the warehouse supply chain role?

The warehouse component of the supply chain involves storing and staging goods for future distribution. Once a load arrives, it typically spends time in a warehouse before moving to its final destination. A quick note: While a warehouse and distribution center (DC) are not the same - in short, storage versus distribution - the terms are often used interchangeably and will be in this piece, too.

In today's supply chain, it's important to have  ample warehouse space convenient to ports of entry and transportation arteries to avoid a more arduous additional step in the journey. And once at the warehouse, value-add services like labeling, repackaging, repalletizing, and cross-docking can further streamline goods movement. Why do goods need storage? Perhaps a load of products meant for the Christmas season arrives early, or another load meant for summer arrives in the fall. Those goods must be warehoused until their appropriate season arrives, whether that's in a few weeks or several months.

How bad is the warehouse shortage?

Warehouse space - already in the midst of a delicate dance before the pandemic - has hit full on scarcity in 2021. Among the worst areas for the warehouse shortage are those surrounding the heavily trafficked ports of Los Angeles and Long Beach. The numbers indicate less than one percent of warehouse space was available in Southern California during the third quarter - half the amount available the year before. This in turn has led to skyrocketing costs for those who can still find space - with reports of rents jumping 30 percent or more in these areas. In the meantime, measures to keep the supply chain moving include sending goods to warehouses further away from ports and parking lot distribution areas for products that need to move quickly.

While part of the culprit is an actual shortage of warehouse space, as with many other supply chain issues, there are other links that contribute. Labor shortages of warehouse workers and truckers mean loads can sit longer than intended - taking up valuable real estate. And container shortages make their presence felt similarly. These factors in addition to delays in the ports - and especially high consumer demand for products - have created a perfect storm of trouble, which many experts don't see dissipating anytime soon.

How to traverse the tricky supply chain

With warehouse shortages, labor issues, shipping delays, winter weather, and more, there are plenty of obstacles along today's supply chain. For those juggling numerous responsibilities or new to the logistics scene, it can be overwhelming.

If you're ready to take the next step, at InTek Freight & Logistics, we can help. Just tell us what you need and we'll discuss how our expertise can help with the unique shipping challenges your business faces. Rather do a bit more research first? View our Freight Guides for comprehensive articles and eBooks on all things freight and logistics.

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