Freight Frenzy Sparked by $200 Billion in New U.S. Tariffs on Chinese Imports

Recent talk of more tariffs fueled a frenzy to ship freight from China before the tariffs could take effect.  From sea to sky, the U.S.-China trade wars have resulted in surging demand for cargo vessels to transport goods to the United States from China.  Cargo vessels are at full capacity. California ports are packed and cargo rates for ocean transport across the Pacific are at a four-year high.

With the holiday season less than three months away, Chinese shippers pushed to move goods from toys and bicycles to vehicle parts to American shores in advance of tariffs.  Goods are being moved ahead of schedule.  Some shippers are paying extra for air freight to avoid paying the new round of tariffs.

3PLs Lead List of Largest Warehouse Leaseholders

A revolutionary change has occurred in the 3PL industry.  Ignited by the need for larger warehouse facilities for omnichannel fulfillment operations, 3PLs and e-commerce companies were found to hold 56 of the 100 largest warehouse leases in the first six months of 2018.  Of the 56, third party logistics providers held the largest number of leases at 33.  These facilities ranged from 417,000 to 2 million square feet.

This is significant because it marks the first time that third party logistics providers were the leaders on large warehouse deals.  Typically, food and beverage companies and e-commerce businesses were the highest on the lists.

 

On Demand Warehousing Sets up to be a Game Changer

The main industry example of on demand warehousing, Fulfillment by Amazon has been successful and enabled smaller companies to sell on the Amazon platform.  Fulfillment by Amazon lets smaller operations rely on Amazon to pick, pack and ship orders.

Companies that lack warehouse capacity for their inventory often use on-demand warehousing.  On-demand warehousing makes use of underutilized warehouse assets on a flexible basis.  The concept is similar to that of Uber or Airbnb, matching clients to available warehouse space.

There are a variety of different on demand warehousing options including:

• Warehouse space + order fulfillment by 3PL
• Warehouse space with order fulfillment handles by client staff
• Warehouse space used by multiple shippers, each staging and fulfilling orders with their own labor