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The State of E-Commerce & B2B Fulfillment & Dead Storage in Los Angeles

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The State of E-Commerce & B2B Fulfillment & Dead Storage in Los Angeles

December 06, 2022 John Wie

Summary: With the threats of a recession and lingering inflation on the horizon, the latter half of 2022 has brought new issues for small businesses to contend with including the rise of dead storage. In this blog post, we will share the best ways to find space for your product

Introduction

The latter half of 2022 has brought a host of new challenges for small businesses to contend with. The range of these new issues include the lingering inflation rates; the aggressive hike rates by the Federal Reserve; and the threats of a hard landing and recession fears in 2023 with a lack of knowledge on the length of harder times ahead. These challenges have created tighter budgets and some pullback from consumers and have additional ramifications in terms of storage of lingering items that are not being sold in Los Angeles. Small business owners need to be aware of the new nature of how dead storage plays a key part in navigating the next few months leading into the usually busy holiday period and into the beginning of 2023. Here, we will address why this challenge is happening as well as the best ways to make sure that your small business, whether in e-commerce or B2B, can avoid these issues. 

How the Second Half of 2022 Flipped Logistics Issues

Going into these last few months of 2022, there are several key issues that have become important key points for small businesses in particular to be aware of: lingering inflation rates and the looming threat of a ‘hard landing’ that would mean a high chance of a recession. From the beginning of 2022, we have seen global economies react to lingering inflation rates that have either increased or stayed high due to continuing supply chain issues and the push and pull factors that the pandemic continues to impact in several key markets. In the US, for instance, inflation rose to a high of 9.1% in June 2022 before holding steady at 8.2% in October 2022, much higher than the Federal Reserve’s goal of hitting a 2% inflation rate. The current inflation rate is one of the highest rates in over four decades. Because of this, the Fed has continued to push up the US federal funds interest rate by .75 of a percentage point for four consecutive quarters. 

This aggressive policy to combat inflation has started to have the intended ramifications of tampering down demand in the economy, but many businesses and consumers are bracing for a possible recession. On the one hand, less demand means less vessels clogging up traffic in the ports and less wait time for goods, which was a large issue from 2021. Ship volume has decreased nearly an average of 9% since last year. On the other hand, many businesses overprepared for the coming Q4 holiday period as they based their planning around 2021 figures of unprecedented pent-up consumer demand and very laggy shipping times. With sales down due to the economic situation, businesses have an overabundance of their products in the marketplace. 

This current situation has caused the current dead storage issue, meaning a long-term storage of product that has been at a standstill over 90 days. Because of lower than expected sales mixed with this dead storage, warehouses in Los Angeles are full. Businesses of all types, including e-commerce and B2B, are hoping to move and sell their product by Q3 in 2023 depending on how the impact of the higher federal funds interest rate plays out and barring any other shakeups. Full warehouses mean that many small businesses will be scrambling to look for locations to store any new product they may be wishing to sell and a battle of rising rates to occupy such spaces in another twist to the supply chain issues. 

Finding Open Storage Available in Los Angeles 

To those small businesses looking for storage space during these difficult times, it is important to make sure you are well connected with a strong fulfillment partner who keeps you up-to-date on the best locations with open storage as well as helping their clients find the best rates possible. Here at TRG, for instance, we have helped our clients both stay up-to-date, keeping them informed about the latest and best information such as open warehouse capacity that just opened up in Torrance and Gardena. If you are interested in learning more about the latest logistics and fulfillment news and open warehouse space, contact us here

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Patti Regan

Patti Regan

310-327-7321
patti@trgfulfillment.com

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