The Warehouse Pricing Index report from WarehouseQuote indicates that national warehouse storage rates remained elevated in the fourth quarter of 2022, although they did not rise compared to the previous quarter. According to Jordan Brunk, Chief Marketing Officer of WarehouseQuote, this stability in rates can be attributed to warehouse inventories not significantly decreasing in November and December.
Warehouse pricing and inventory data offer valuable insights into consumer strength and its impact on supply chain dynamics. Despite a slowdown in supply chain inflation, warehouse rates have remained high due to abundant inventory levels, resulting in reduced available space and higher pricing. When consumer demand is strong, retailers withdraw more inventory from warehouses, putting pressure on warehouse rates.
Recent data from December’s Consumer Price Index (CPI) release showed expected signs of inflation easing as supply chains normalize. The overall CPI for a broad basket of goods and services fell by 0.1% in the month, marking the largest month-over-month decrease since April 2020. Excluding volatile food and energy prices, the core CPI increased by 0.3%, in line with expectations.
Historically high inventory levels were observed last year as companies anticipated sustained consumer demand. However, with the decrease in stimulus funding and a broader economic slowdown amid high inflation, consumer spending has slowed. Shoppers have become more selective, leading retailers to offer steep discounts to move their products.
Inventory builds have started to decline, although it will take some time to return to “normal” inventory levels, as stated in the WarehouseQuote report.
The report notes that retail inventories remain elevated, with a 17% increase over the 12-month period from October 2021 to October 2022.
Despite the downward trend in inventory levels and easing supply chain inflation, Brunk expects warehouse storage pricing to continue its upward trajectory. This is due to a combination of factors, including low vacancy rates, rising industrial real estate rents, labor costs, and a slowdown in the development of new warehouse capacity due to increased capital costs and an economic slowdown.
A regional breakdown of price increases over the last three quarters of the year shows that the Northeast experienced the highest percentage increase at 12%, relative to the baseline of the first quarter of 2022. The Midwest and West Coast regions also saw increases of 8% and 7%, respectively.
The Northeast’s increase can be attributed to the diversion of trade, as overseas cargo volumes shifted from California to East Coast ports, particularly those led by New York. This shift in port traffic also led to an increase in warehouse pricing in the Northeast region.
New York has emerged as the nation’s busiest port, surpassing California, as concerns over labor union and port management disputes led shippers to divert trade away from ports like Los Angeles and Long Beach.
The Southeast, on the other hand, saw a decrease in pricing overall. However, Georgia, which has handled a significant amount of trade diversion containers, experienced an increase, particularly at the Savannah port. General capacity and lease rates in the Georgia market saw a 5.37% year-over-year increase between 2021 and 2022, according to the data.
In conclusion, the latest data from WarehouseQuote’s report offers valuable insights into the complex interplay of factors affecting warehouse pricing, consumer demand, and supply chain dynamics, with regional variations adding to the complexity of the situation.
Your source for supply chain report news updates: The Supply Chain Report. For international trade insights and tools, head to ADAMftd.com.
#WarehousePricingIndex #WarehouseQuote #NationalWarehouseRates #SupplyChainDynamics #WarehouseInventory #ConsumerDemand #SupplyChainInflation #CPIData #RetailInventory #IndustrialRealEstate #NortheastWarehousePricing #WestCoastWarehouseRates #MidwestWarehousePricing #PortShifting #NewYorkPort #GeorgiaWarehouseRates #SupplyChainInsights #EconomicSlowdown #RetailTrends #WarehouseCapacity #WarehouseCostTrends #RegionalPriceVariation
