How 3PLs can help meet the growing demand for warehousing space in the US

The US warehousing sector is facing a significant challenge: how to meet the increasing demand for storage and distribution space in a tight and competitive market. According to Statista, the availability rate of warehouse space in the US has decreased from 7.4% in 2016 to 4.4% in 2022, indicating a scarcity of ready-to-occupy logistics space. This trend is driven by several factors, such as: 

The surge in e-commerce and online shopping, which requires more and faster fulfillment and delivery of goods to consumers. According to Savills, research from Prologis indicates that for every extra $1 billion spent online, a further 775,000 sq ft of warehouse space is needed to meet the new demand. 

The impact of the Covid-19 pandemic, which disrupted global supply chains and created inventory shortages and backlogs, forcing many businesses to stockpile goods and increase their safety stocks. According to MSN, retail inventories soared in 2022, eating up warehouse space as orders arrived from overseas and consumers cut back on spending. 

The shift in consumer preferences and behaviors, which demand more variety, customization, and sustainability of products, as well as faster and cheaper delivery options. This requires more flexible and responsive supply chain solutions, such as omnichannel distribution, reverse logistics, and last-mile delivery. 

These factors have increased the pressure on businesses to find and secure adequate and affordable warehousing space, as well as to optimize their warehouse operations and management. However, this is not an easy task, as warehouse leasing and construction costs have also risen significantly in recent years, due to high demand, low supply, and rising land and labor costs. According to Logistics Management, warehouse rental rates increased more than 40% in some US markets in 2022, while the development pipeline in November 2022 increased to more than 742 million sq ft, equal to just 4% of existing inventory. 

This is where third-party logistics (3PL) providers can play a vital role in helping businesses overcome the warehousing challenge and improve their supply chain efficiency and resilience. 3PLs are companies that offer a range of logistics and supply chain services, such as transportation, warehousing, fulfillment, distribution, and more, to other businesses. By working with a 3PL provider, businesses can benefit from: 

Access to a large and diverse network of warehousing facilities, which can provide them with the space, location, and capacity they need, as well as the specialized equipment, technology, and expertise they require. 3PLs can also offer shared or multi-client warehousing solutions, which allow businesses to share space and resources with other customers, reducing their fixed costs and increasing their flexibility. 

End-to-end visibility and control over their inventory and shipments, enabled by advanced technology and data analytics, which can help them monitor real-time inventory levels, locations, and statuses, as well as optimize their inventory and demand planning, replenishment, and allocation. 

Compliance and risk management, supported by 3PLs’ expertise and experience in handling regulatory requirements, safety standards, and quality assurance, as well as their ability to respond quickly and effectively to unforeseen events and disruptions. 

Sustainability and social responsibility, enhanced by 3PLs’ efforts to reduce their environmental impact and carbon footprint, such as using energy-efficient lighting and equipment, optimizing space utilization and layout, and minimizing waste, as well as their commitment to ethical and fair labor practices. 

However, not all 3PLs are the same, and businesses need to carefully evaluate and select the right 3PL partner for their warehousing and supply chain needs. Some of the key criteria to consider are: 

The size, location, and condition of the 3PL’s warehousing facilities, and whether they match the business’s current and future needs in terms of space, capacity, accessibility, and security. 

The range, quality, and reliability of the 3PL’s warehousing services, and whether they can provide the business with the specialized functions and solutions they need, such as temperature-controlled storage, cross-docking, kitting, labeling, packaging, etc. 

The level, type, and frequency of communication and collaboration between the 3PL and the business, and whether they can establish a long-term and strategic partnership that is based on mutual trust, transparency, and alignment of goals and values. 

The cost, value, and return on investment of the 3PL’s warehousing services, and whether they can provide the business with competitive and flexible pricing, as well as measurable and tangible benefits and outcomes. 

DXL3PL, a third-party logistics company located in Indianapolis, IN, is well-equipped to meet the growing demand for warehouse space. They offer tech-driven warehousing services that are available to all their customers 24/7. This means DXL 3PL can provide real-time data about the storage and movement of goods, which is crucial for businesses to manage their inventory effectively. 

Moreover, DXL3PL offers a range of value-added services such as contract packaging, point of sale displays, kitting, and assembly. These services can help businesses optimize their supply chain operations and focus on their core competencies. 

In addition to these services, DXL3PL’s leadership team has over 50 years of collective expertise in transportation, warehousing, logistics, and value-added programs. This wealth of experience allows them to provide timely and effective solutions for logistical needs, making them a reliable partner for businesses seeking to optimize their warehouse space utilization. 

3PLs can help meet the growing demand for warehousing space in the US, as they can provide businesses with access to a large and diverse network of warehousing facilities, as well as a range of warehousing services and solutions that can improve their supply chain efficiency and resilience. However, businesses need to carefully evaluate and select the right 3PL partner for their warehousing and supply chain needs, based on several criteria, such as size, location, condition, range, quality, reliability, communication, collaboration, cost, value, and return on investment.