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Why major companies are building smaller, more regional warehouses

Why major companies are building smaller, more regional warehouses

Our economy and the logistics industry are seeing an interesting phenomenon when it comes to warehouse construction and use. We want to take a few minutes to discuss what the changes are and why we think they are happening.

Over the past few years, there have been major changes in the logistics industry, especially where large corporations like and Walmart are concerned. In our recent blog about trends we expect for 2018, we discussed five trend predictions entering 2018.

One of these trends involves large companies choosing to build smaller, more regional warehouses. It appears that prediction is already coming true. Because many major companies are in need of warehouse space, many logistics experts have even claimed that it is now a wise business investment and an even better real estate investment.

Why companies are building more warehouses

Research has shown that the cost of building warehouses in large, urbanized areas is gradually increasing. For many online retailers, this is not good news, because their online orders are also continuing to increase. While the increased sales are good, rising costs plus added demand creates quite the conundrum.

In many urban states, like New Jersey or Pennsylvania, there is a large number of warehouses, yet there is still not enough warehouse space to meet the demand. We are even seeing a lack of adequate warehousing space in the areas where we do business including Tulsa, Little Rock and Northwest Arkansas. Since the need to produce warehouses is rising along with the costs, larger corporations are trying to keep pace by building smaller warehouses.

Benefits of smaller, regional warehouses

In general, consumers are beginning to demand quicker delivery. With this demand for speed, the large companies are left needing more regional warehouse space and distribution centers to transfer and store these deliveries. These smaller warehouses make it possible for the larger companies to be more efficient in fulfilling their customers’ online orders.

Smaller, regional warehouse are effective and more efficient for the larger corporations. On one hand, by learning to work with smaller spaces, the large companies are avoiding having to build large new buildings. Many of the smaller warehouses are converted buildings, which is much more cost effective to build.

Similarly, the footprint left by the smaller warehouses is less expensive and more readily available for purchase. The turnaround time for converting these smaller spaces is much quicker than building a large warehouse space.

Finally, smaller regional warehouses make it easier to contract with smaller, local last mile delivery services, like On Time Logistics. This allows the online retailers an even greater ability to get products to their customers quickly.

As a warehouse provider and a last-minute delivery service, On Time Logistics is here to help you! Are you looking for a way to cut costs? Do you want to work with a local, professional logistics company? Contact us today to help with warehousing or logistics in Little Rock, Tulsa, Northwest Arkansas, and the surrounding areas.

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