Major U.S. retailers have warned that sales of clothing, electronics, furniture and other goods are slowing. At the same time, shipping giants also issued warnings…
Inland Empire warehouse is full
The latest news is that the Inland Empire, the largest warehouse district in the United States, is now full, and major U.S. retailers have warned that sales of clothing, electronics, furniture and other goods in the East Los Angeles distribution center are slowing down.
This area known as the “Inland Empire” is located east of the Los Angeles metropolitan area in Southern California. The vast storage space in the hinterland is almost 44 times the size of New York City’s Central Park.
In the past few months, due to the continuous influx of goods and delays in picking up goods from importers, it has been almost full, and the situation will get worse.
Due to its proximity to the Port of Los Angeles and the Port of Long Beach, the major ports on the U.S. West Coast, warehouses in the region, centered in Riverside and San Bernardino counties, have expanded rapidly in recent years to meet surging demand and the logistics storage of goods imported from Asia.
As we all know, the ports near Los Angeles and Long Beach handle 40% of the United States’ imports.
Much of the cargo is shipped off the ship and quickly moved to warehouses in the Inland Empire, where it is then shipped across the country from approximately 720 “big box” storage facilities, each of at least 300,000 square feet. storage.
However, such an astonishing behemoth in the warehousing field is now almost “full”.
U.S. supply chains are already feeling the sting of the bullwhip, according to a supply chain professor at the University of Tennessee. A pullback in consumer spending could threaten these warehouses with more goods than they can store, triggering a domino effect.
Some time ago, truck drivers at U.S. ports went on strike. Containers shipped from Asia to the United States could not be transported from the port in time, and the goods were seriously piled up at the port.
And as major retailers like Walmart and Target find themselves in an unprecedented inventory crisis, warehouse capacity across the U.S. remains tight and excess inventory continues to pile up.
It is reported that the vacancy rate of warehouses nationwide in the United States is about 3%, while in the port market, the available space is about less than 1%.
According to data from Cushman & Wakefield, the world’s leading private real estate advisory services company, warehouse vacancy rates in the Inland Empire region are currently the lowest in the United States, at a record 0.6%, compared with the national average of 3.1%.
U.S. retailers ordered most of the goods months ago, with many shipped to already-crowded warehouses in the Inland Empire, where huge amounts of inventory are still piling up.
Performance Team, a subsidiary of Maersk, has 22 warehouses in the greater Los Angeles metropolitan area. “This has created a domino effect,” said Scott Weiss, vice president of the company. “Now the inventory is getting more and more accumulated.”
Maersk warns of slowing container demand
Recently, shipping giant Maersk warned when releasing its financial report that global demand for shipping containers will slow down this year due to weakening consumer confidence and supply chain congestion, and inventories at ports and warehouses continue to increase.
Sales of consumer durables have stalled, with Maersk Chief Executive Thomas Skou saying “consumers have bought the new sofas, kitchens, flat-screen TVs and garden furniture they need.”
Maersk, considered a barometer of global trade and with about 17% market share, said the number of containers loaded on ships fell 7.4% year-on-year in the second quarter, prompting it to revise its full-year container business outlook.
“Shipping volumes have softened as continued traffic congestion and the conflict between Russia and Ukraine weighed on consumer confidence,” Chief Executive Soren Skou said in a statement.
The company lowered its forecast for global container demand growth to the low end of the -1% to 1% range.
Maersk warned that the slowdown was particularly pronounced in Europe, where inventories at ports and warehouses have been building as consumer demand weakens.
The company added that the Russia-Ukraine war and anti-epidemic lockdown measures would only exacerbate this congestion problem.
On the supply side, Maersk said delivery times remain long and “it remains uncertain when capacity constraints, including land transport and warehousing bottlenecks, will subside.”
The aforementioned senior shipping industry expert also said that declining demand in the United States, high inventories, and full warehouses have slowed down the delivery of goods.
The backlog of cabinets in the warehouse cannot be emptied in time and occupy the racks. There are fewer racks circulating in the market, causing the containers to continue to be backlogged in the yard. This is a vicious cycle.
Currently, the strike has resulted in a labor shortage at the port, and truck and rail capacity has also been greatly affected.
The serious shortage of inland freight capacity directly increases the cost of cargo warehousing and may cause some perishable or short-shelf life goods to face more threats.
We would like to remind our freight forwarding friends to pay attention to freight logistics delays. In addition, due to the recent decline in demand and high inventory, the possibility of buyers abandoning goods will also increase.
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