Optimizing the Supply Chain in a Time of Disruption
Conversations around the supply chain have dominated headlines as the pandemic’s ongoing effects have slowed everything from construction materials to flowers for summer weddings.
Here are a few key takeaways on what experts at NAIOP events, in Research Foundation reports, and in Development magazine are saying about how the supply chain impacts commercial real estate:
Ports are running out of space. Ports can’t unload the ships because they can’t get rid of the containers, said Peter Schultz, executive vice president, First Industrial Realty Trust, Inc., at I.CON East 2021. This backup at the ports could take a couple of years to resolve and, although it’s ultimately good for industrial real estate demand, it will continue the supply pressures.
Growth isn’t limited to the largest ports. “Seeing Past the Pandemic: Industrial Demand and U.S. Seaports,” a new report published by the NAIOP Research Foundation, says smaller markets adjacent to recently expanded ports have experienced the strongest relative growth in demand for industrial space, but the Los Angeles-Long Beach port complex has experienced the largest increase in total trade volume, supporting strong demand for local industrial real estate.
Challenges go beyond port infrastructure. There’s more to the supply chain than a ship coming into the port, said Brian Fish, senior project manager, St. Onge Company, at I.CON West 2022. After the containers are off-loaded, a drayage provider comes in with a truck and chassis – but a chassis is increasingly hard to find and is needed to get the driver into the port. For companies that are in Southern California, Fish suggests they lease a chassis pool to help their trucks get into the port.
Footprint matters. Freight distribution has evolved to meet enhanced “speed-to-delivery” customer expectations and to fulfill demands for a seamless shopping experience, according to Development magazine. This is pushing retailers, manufacturers and third-party logistics providers to boost both their first-mile and last-mile footprints.
Consumer behavior has shifted. Once consumers began getting used to a “new normal” brought on by the pandemic – which included long-term work and school from home – people began investing in the spaces where they were spending all their time, said Joe Dunlap, managing director, supply chain advisory, CBRE, in a NAIOP Insight video. This changed in initial demand for essential services into one for home goods – just one of many micro shifts impacting the supply chain during the last three years.
Kathryn Hamilton, CAE, is Vice President for Marketing and Communications at NAIOP Corporate.
