Warehousing on the Rise

 LOGISTICS WAREHOUSINGThe rise of e-commerce is spurring growth in the industrial sector.

By Shani Atapattu

When it comes to America’s industrial sector, nothing is constant. This includes everything from manufacturing to warehousing. Just a few years ago, the industrial sector took a hit along with the U.S economy; however, in 2016, warehousing is on the rise across the country because of the increasing demand for outsourcing services. With the economy on the mend, more companies are investing in stronger distribution chains, where warehouses can reduce lead times by giving companies more distribution points to get products to customers faster. This gives companies the advantage of being able to have a leaner supply chain and keep up with the growing economy.

As a South Florida-based company, we’ve seen the industrial sector growing along with the real estate market boom. There is an overwhelming increase in industrial development thanks to the PortMiami expansion and improvements at the Miami International Airport. Being the first to complete these major projects, South Florida has become a distribution hub for the rest of the country, so warehouses are now an integral part of companies’ supply chains.

According to CBRE, there is about one million square feet of new warehousing space coming into Miami Dade County in 2016. With these improvements to its infrastructure, South Florida has become a desirable place to conduct business. Many companies, including ours, have been growing warehouse inventory to accommodate the demands of this growing sector year after year.

As other states begin to invest in their infrastructures, we will see further growth in the industrial sector. According to a recent report in the Wall Street Journal, companies said they expect to expand their number of warehouses by 2020, up from 48 percent in 2015. This has already been seen nationwide, with industrial rental rates rising 9 percent last year, according to Prologis, Inc. Higher demand leads to higher prices and an increased awareness about the importance of keeping up with the growing economy.

Contributors to Growth

E-commerce has probably played the biggest role in the recent growth of the warehousing sector. Companies are looking for warehouses to make it easy to deliver quickly and efficiently to customers. We are in an age where online shopping is the norm and customers expect their orders to arrive instantaneously. Having strategic warehouses placed in key markets will make it easier for companies to deliver on this challenge.

According to Forbes, the U.S. online retail sales are up 15 percent since last year and are expected to hit $370 billion by the end of 2017. Companies are taking advantage of the benefits associated with e-commerce - i.e. more customers and sales in a shorter period of time instead of strictly selling in a brick and mortar stores. With industry giants like Amazon dominating the market, companies large and small are beginning to invest in ways to increase their online presence and realize greater profits. By purchasing more warehousing space, these companies will have greater flexibility to grow and thrive.

With Growth Comes Change

This increase in warehousing space has not only influenced supply chains and real estate, but also technology. Innovative technology in these warehouses is necessary to keep up with the evolving needs of e-commerce. Companies are challenged with the task of fulfilling customers’ needs for faster delivery and convenience through their warehousing selection.

For this reason, we are seeing more companies investing in warehouse software that track orders or have real-time location services. According to a new global study by Zebra Technologies, 75 percent of the companies polled plan to have or be implementing a warehouse management system (WMS) by 2020. By having a strong system in place, these companies can be more effective and efficient in e-commerce and beyond.

Another important role that warehousing plays in the innovative supply chain is being a distribution point for drones and other advanced delivery methods that many companies have begun to put money behind. In order to get product to customers in the timeliest manner, companies need to be sure that they have the proper distribution centers in place to move product quickly and efficiently.

So What’s Next?

As more states invest in improving their infrastructure, we will continue to see growth in the industrial sector, including warehousing space. Companies will begin to take advantage of the availability and invest in the proper tools to increase warehouse optimization. E-commerce shows no signs of slowing down, so companies need to be able to keep up with the demand by purchasing warehouse space and running it as efficiently as possible and make their distribution chains stronger.

With an improved infrastructure also comes an improved job market. In Florida alone, the logistics and warehousing sector provides nearly 350,000 jobs. Nationally, we will begin to see an increase in job availability, especially in the growing warehousing sector. Overall, the growth in the industrial sector will help the U.S. economy and inspire infrastructure development. These are exciting and innovative times to be in the logistics business.

Shani Atapattu is vice president and head of the Miami Overseas Cargo, Inc. office, managing many of the day-to-day business operations including overseeing production, projects and sales, assuring quality customer service, reaching company benchmarks and monitoring the progress of employees. 

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