Tariffs and economic uncertainty have U.S. warehouses stocking fewer goods

Earlier this month, a survey of supply chain managers called the Logistics Manager’s Index found that companies stocked fewer goods in warehouses in November than they did the month before. That’s the first time warehousing utilization has contracted in the history of the survey.

A big reason why companies haven’t been stuffing as many goods in warehouses this holiday season is because they already did that earlier in the year, according to Dale Rogers at Arizona State University.

“Because of the tariffs and uncertainty, we saw, really, the fourth-quarter surge happen in the early summer,” he said.

As a result, Rogers said companies are focusing on emptying out their warehouses and said they’re not likely to restock them any time soon, “because of real nervousness about the economy.”

That’s because in some sectors, consumer demand has been weakening.

That includes manufacturing, which uses a lot of warehousing space to store inventory, said Jason Miller at Michigan State University.

“So, essentially, you have a soft manufacturing sector right now, and that means you’re going to be needing, essentially, less warehousing space.”

Other sectors simply aren’t sure where consumer demand is headed, Miller added.

“Do things start to point up a little more? Do they stabilize at the current, relatively low, blah levels? Or do they even start to potentially turn down a little bit more?” he said.

That means warehousing vacancy rates are likely to stay elevated well into the coming year, he said.