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Warehouse space is getting tight

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A warehouse in Emeryville, California, in January.

Warehouse space is shrinking as the holidays approach. Virginie Goubier/AFP via Getty Images

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The Logistics Managers Index, is out today. It’s a monthly survey that measures, among other things, warehouse demand. And for September, it shows warehouses nationwide are filling up. One reason – retailers are stocking up in advance of the holidays.

The supply chain is more than just moving parts, like shipping, rail, trucking. There are also the places where goods just sit. 

“Warehouses are more full than they’ve ever been,” said Dale Rogers, professor of logistics and supply chain management at Arizona State University. And when warehouses fill up, there are also “dramatic increases in warehouse costs,” Rogers added.

Warehouse space is at a premium because some stores are bulking up on inventory for the holidays. And freight delays are slowing transportation from warehouses. 

So retailers are trying to showcase goods that are on hand. For example, an online shopper in Florida who wants running shoes might only be shown options available from warehouses nearby, said Zohar Gilad, CEO of Fast Simon, that works with online retailers.

“We see a lot of inventory-based merchandising,” Gilad said.

That’s retail speak for “don’t over promise.” Because in this supply chain moment, retailers have to manage consumer expectations. 

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