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Warehouse capacity has become tight: A new digital answer to the growing capacity shortage

The industry is coming down off of a highly anticipated peak season. With e-commerce demand higher than ever, and newly-imposed trans-Pacific trade tariffs put in place over the summer, logistics companies foresaw the need to compensate by moving higher-than-average levels of inventory from east to west to avoid costly tariffs in anticipation of the holidays. As a result, real estate has become a hot commodity and warehouse capacity has become tight.

A new trend is emerging in logistics to accommodate the current squeeze that is reminiscent of digital-era apps like the room rental service Airbnb, but for logistics. It is being referred to as “mobile warehousing.” In essence, it’s the same concept as renting an Airbnb, but instead of renting a person’s apartment or home on your vacation, the concept refers to renting real estate for your short-term trailer storage.

Mobile warehousing allows shippers to shirk these responsibilities by storing inventory on their own terms. But even the industry’s giants are utilizing the solution.

The solution is perfect for midsize retailers and smaller startups that want to avoid signing onto long contracts, which equate to higher costs and longer-term commitments. Mobile warehousing allows shippers to shirk these responsibilities by storing inventory on their own terms. But even the industry’s giants are utilizing the solution.

As Justin Schuhardt, senior director of operations for Walmart e-commerce was cited saying at an industry conference in 2018 in an article from the Wall Street Journal, “You don’t always want to build the church for Easter.” Now, you don’t need to enter a long-term contract in order to store your goods.

The idea emerged early last year, around the time of fast food giant KFC’s infamous supply chain disaster in which it ran out of its main ingredient, chicken, for its restaurants in the United Kingdom. KFC was able to utilize the new solution with a mobile warehousing company called Stowga in order to soothe its supply chain discrepancies while it sorted out its regional operations.

“They needed eight warehouses. We typed into the search and we had them instantly,” Stowga founder and Chief Executive Charlie Pool said at the time.

It’s true that optimizing your network of storage facilities is key to maximizing your bottom line and gaining customer rapport. The goal is to achieve your fastest possible delivery times and while still considering keeping spending as low as possible.

In the case of one of our Portland, OR-based e-commerce furniture customers, for example, we found that the client would be able to decrease its delivery time by opening an additional warehouse in the Northeastern U.S. The new warehouse would decrease transit days and lower the overall freight costs netting in a lower cost per pound for the business. Since the cost per pound is their main key performance indicator, this discovery was a huge advantage. As a result, we reduced their delivery times and gave them the foundation to continue increasing revenue. — Follow this link to read the in-depth synopsis.

As we wrap of peak season, the industry is not out of the woods yet. Now, it’s time to handle the predictable wave of the post-holiday season returns, commonly referred to as reverse logistics. As shippers prepare to deal with this host of challenges, they can now consider a new option that could help minimize costs and expand their logistics networks with a new digital answer to the growing capacity issue.