The warehousing, transportation and logistics industry is the backbone of the U.S. economy. When the COVID-19 pandemic hit, major changes affected every industry, especially warehousing and shipping.
As online shopping became the new normal, warehouses started to play a more significant role in logistics than they already did. Effective warehousing strategies can help boost a company’s profitability and keep employees engaged and clients satisfied with their goods or services.
However, the pandemic and other factors caused a massive spike in warehouse demand, which will continue into 2023.
Skyrocketing Demand for Warehouses Entering 2023
Since the onset of the global pandemic, warehouse owners have expanded their reach, increased rates and become highly competitive with each other.
In particular, companies in the e-commerce industry have made significant investments in warehousing facilities to meet increased customer demand for products.
E-commerce is driving the warehousing industry, requiring owners to expand their square footage, adopt the latest technologies and implement tracking and forecasting solutions.
In addition to the historic pandemic, these challenges have forced warehouse owners and employees to adapt.
Despite rapid growth and increased demand for warehouse space, the industry may face a slowdown in the new year. Consumer spending is down, and inflation is steady, meaning the e-commerce sector will continue to cool off in the post-pandemic era.
How to Handle Increasing Warehouse Demand in a Competitive Business Landscape
Every business should know about the high demand for warehouse space, especially if they ship products to customers. Without ample storage space, how can companies turn a profit and get products shipped efficiently?
Here are some ways businesses can adapt to the increased demand and competition in the warehousing sector.
1. Optimize Current Space
When warehouse capacity reaches 80-85%, operational efficiency tends to drop, causing snarls in the general supply chain. Before hitting maximum capacity, it’s crucial to implement space optimization strategies.
Here are some ways to optimize warehouse storage space:
- Use overhead space and build vertically
- Consolidate groups of items where possible
- Have various sizes of picking slots and match them to product sizes
- Consider adopting a drop shipping model
- Design warehouses with minimum aisle widths
- Combine shipping and receiving docks to create more space
Any warehouse employee knows how important it is to optimize warehouse space whenever and wherever possible. However, not every optimization strategy is effective for every warehousing business. Warehouses might need to try multiple techniques before finding the more suitable one.
2. Add Space to Existing Warehouses
In addition to optimizing warehouse space, owners should consider adding more space to existing facilities. Some warehouses are transforming from a single-story design to a multi-story design for additional space. Businesses can also consider installing additional fabric structures.
These structures can solve many of the warehouse sector’s pain points, like limited warehouse availability and increased transportation costs. Additional fabric structures for a warehouse often range in size, expanding 32 feet wide and up to 250 feet high.
3. Identify Land Space for New Warehouses
Another way to manage increased warehouse demand is for business leaders to scout their local communities — or regions within target markets — and identify potential space for a new warehouse.
Building a new warehouse is an ambitious yet highly rewarding opportunity for owners. At first, it will seem intimidating, but creating a brand new space can often alleviate the issues warehousing companies face in a tight market.
4. Leverage Digital Warehouse Solutions
The pandemic accelerated many companies’ digital transformations. As the business world becomes more digitally driven, warehouses must follow suit and incorporate new and emerging technologies into their operations.
There’s a lucrative market for digital solutions, meaning warehouse owners or managers should have no issue finding the right solution to fit their specific needs. Warehouse execution systems (WES) are popular software warehouses use for their operations. These platforms help with warehouse tasks, such as managing inventory, optimizing space and scheduling physical labor processes like picking and packing.
5. Diversify Locations
Aside from building warehouses in locations close to product destinations, warehouse owners should consider choosing more diverse areas. During the pandemic, many products that typically arrive in Los Angeles or Long Beach, California, were sent east to other ports.
As the supply chain expands internationally and domestically and city populations grow, warehouses can infiltrate other communities to help owners create a diversified portfolio of facilities. The need to be close to product destinations is fading, meaning that warehouses can operate from virtually anywhere.
Another way to keep up with the increased demand for warehouse space is by adopting a combined cross-docking and backorder strategy. Cross-docking is an effective way to handle e-commerce fulfillment issues.
This method involves taking products off a delivery truck and packing them to ship directly to customers. Traditionally, warehouse workers store incoming products in shelving units and other warehouse areas. Skipping this step can help open up shelf space, boost efficiency and keep workers productive.
Warehouses can also consider taking backorders. Accepting backorders offers can help in a few ways, including:
- Keeps generating revenue
- Manage resupply frequency
- Allows owners to invest in building warehouse infrastructure to handle the demand
7. Hire Temporary or Seasonal Employees
Finally, a surefire way to maintain productivity and warehousing efficiency is to hire temporary or seasonal employees when necessary. Large corporations with thousands of employees and warehouses use this strategy, especially during the peak holiday season.
Warehouse professionals can use various recruitment strategies to hire part-time employees. For example, they can work with a staffing agency specializing in temporary staffing solutions or use the latest online platforms like ZipRecruiter, LinkedIn and Indeed.
Anytime businesses deal with increased demand, changes must be made. It’s crucial for warehouses to handle sharp spikes in demand to ensure their clients are taken care of and meeting their bottom lines.
High warehouse space demand is an ongoing trend in the general warehousing industry. The demand for space will likely increase as we enter 2023. Instead of taking a reactive approach, warehouse owners can be proactive and use some of the tips above to prepare for increasing demand.
As demand for warehouse space increases and available space decreases, companies must find alternative logistics solutions. Keep these tips in mind as demand increases and stay abreast of the latest trends in warehousing.
Emily Newton is the Editor-in-Chief of Revolutionized, a magazine exploring how innovations change our world. She has over five years of experience writing articles in the industrial and tech sectors.