Companies dealing with a continuing gap between supply and demand are increasingly turning to ad hoc arrangements, such as keeping items in parking lots and on truck trailers, as they struggle with having excess inventory and a shortage of warehouse space. According to experts, the strategy is intended to keep supply chains flexible and enable businesses to delay potentially expensive commitments to new storage capacity in the face of economic uncertainty in the U.S. and significant shifts in consumer purchasing habits. The overflow method is the most recent example of how manufacturers and retailers are continuing to adjust their distribution strategies as needed to maintain supply chains in the face of disruptions in transportation networks and challenges in demand forecasts. In a warehouse market that is severely constrained, where vacancy rates have fallen into the low single digits in several key distribution areas and lease costs have increased, businesses are searching for space. According to a study this month from the real estate services company JLL, industrial property rents nationwide averaged more than $8 per square foot in the second quarter, a 21% increase over the same period last year. However, according to shipping specialists, the practice of keeping goods on transport equipment increases wider strains in already-stressed supply chains because it ties up the shipping containers, truck trailers, and truck frames needed to keep goods moving, making it more difficult for trucking companies and ocean carriers to get the equipment they need at the right place and time. “A trailer cannot be utilized to move other items when it is being used for storage,” said Lisa Ellram, a supply chain management professor at Miami University Farmer School of Business in Oxford, Ohio. To get rid of their extra inventory as soon as possible, several stores, like Target Corp. and Macy’s Inc., are lowering their prices. Others are keeping products that arrived late. According to Karl Siebrecht, CEO of Seattle-based Flexe Inc., which connects companies to warehouses with excess storage space, shippers leasing short-term warehouse space are also asking about keeping trailers in those facilities’ parking lots. It’s sort of one of your temporary short-term ‘tricks in the bag,’ if you will. Hey, can I just put a few of my trailers in storage somewhere until I can start moving some of this stock down the supply chain? stated Mr. Siebrecht. “We get that question a lot,”
