Warehouse Wisdom. Weekly. 02/07/2025

Happy Friday!

Just when we thought it would be another mundane week in logistics and warehousing…wait, we don’t really think that anymore, do we? In almost unthinkable freight new, authorities try to crack the case of 100,000 stolen eggs. If you’ve ever thought cargo theft was limited to high-value electronics and designer goods, think again. Now, breakfast commodities are fair game as egg prices shoot through the roof. And there’s just no telling what twists and turns take place in a delivery truck, as an Amazon delivery driver in California found out mid-route that he’d been nominated for a Grammy. We’re not sure we’ll look at our delivery driver the same again.

In more traditional logistics news, we’ve got updates on USPS resuming deliveries to China, a new Supply Chain Resiliency Bill, rising warehouse vacancies (except for those mega-warehouses that are still thriving), malls getting a second life as fulfillment centers, fresh tariff and de minimis policy chatter, and more. Let’s dive in…

Freight and Shipping

USPS is back to delivering, but still under scrutiny

USPS has resumed delivering packages from China after a brief pause. While package delivery has resumed, don’t expect overnight miracles. Officials are warning that international shipping delays could still cause disruptions.

Meanwhile, USPS is fielding some pointed questions about its ongoing network shakeups. Postmaster General Louis DeJoy has been on a mission to overhaul operations, but not everyone is convinced the changes are helping. Regulators are now asking whether these network adjustments are actually improving service or just creating a more complicated headache.

In Washington, the Senate is pushing forward with a Supply Chain Resiliency Bill aimed at making disruptions (slightly) less painful. The bill focuses on strengthening U.S. supply chains by reducing reliance on foreign suppliers and boosting domestic manufacturing.

And LTL (less-than-truckload) carriers are showing signs of a long-awaited rebound. Analysts are predicting an uptick in demand, which should come as a welcome shift after months of sluggish freight volumes. The turnaround could mean better conditions for carriers and shippers alike, assuming the industry can avoid its usual cycle of overcorrecting.

Industrial Warehouse Space

Mega-sized wins, vacancy increases, and the mall’s second act

It’s a tale of two warehouse markets—on one hand, mega leases for massive distribution centers surged in 2024, as retailers and logistics giants doubled down on securing space for their ever-expanding supply chains. But while the mega-warehouses are thriving, the rest of the market isn’t looking quite as great.

Across the country, warehouse vacancies are on the rise, especially in areas that saw a building boom over the past few years (like New Jersey). After developers scrambled to keep up with pandemic-fueled demand, we’re now seeing a reality check as some of that space sits empty. Turns out, not every 200,000-square-foot facility next to a highway was destined for greatness.

As a result, industrial rents in the U.S. and Canada have fallen by about 7%, marking a shift from the sky-high rates of the past few years. Prologis, is adjusting its expectations as landlords find themselves actually having to compete for tenants. But don’t think you’re going to be commanding the negotiating table - 3PLs are still gobbling up warehouse space at a good clip.

Meanwhile, shopping malls—once the epicenter of retail foot traffic—are continuing their transformation into fulfillment hubs. Amazon, Walmart, and others are snapping up former mall spaces and repurposing them for logistics operations, proving that what was once a temple of teenage loitering can now be the backbone of last-mile delivery.

Logistics Vitals

Freight market still hitting the brakes

The U.S. Bank Freight Payment Index confirms what many in the industry have already felt—2024 was not a banner year for freight. Both shipment volumes and spending declined in Q4, signaling ongoing softness in the market as demand remains sluggish.

• The overall freight index fell 4.7% to 80.1.

• Fourth quarter freight spend was down 2.2%.

• Shipments fell 2.2% in Q4, marking sequential declines over each quarter.

• The Northeast region saw the steepest shipment decline at 18.6%.

• While the market remains weak, some analysts expect a potential recovery in the second half of 2025.

Marketplaces

Retail shifts, Amazon’s revenue crown, and legal trouble in Quebec

Retail trends are shifting, and for once, it’s not all about e-commerce. Consumers are increasingly turning to local retailers, with surveys showing that 79% of shoppers now prefer to support neighborhood businesses over big-box chains. Whether it’s a push for community support, a reaction to online shopping fatigue, or just the fact that waiting five to seven business days feels like an eternity, local stores are seeing a resurgence.

Meanwhile, Amazon is set to overtake Walmart in total revenue, marking a major shift in retail dominance. But before the logistics world takes a victory lap, it turns out this milestone has a lot to do with its Amazon Web Services (AWS) segment. The company’s cloud computing empire is the real moneymaker, proving that while shipping millions of packages is impressive, hosting the internet is far more profitable.

That said, it’s not all smooth sailing for Amazon—especially in Canada. The company is facing legal action over the abrupt closure of warehouses in Quebec, with the provincial government stepping in to investigate potential labor violations. Amazon claims it’s simply adjusting operations, but officials are less than convinced.

Global Logistics

Panama Canal confusion and air cargo’s potential freefall

The Panama Canal is at center stage again this week, with conflicting reports on whether U.S. government vessels will get to skip the hefty transit fees. The U.S. State Department says the answer is yes, while the Panama Canal Authority says otherwise.

Meanwhile, air cargo rates could be in for a serious correction, with some analysts predicting a 50% drop in pricing. A major concern for the airfreight industry is that a sharp decline in demand from U.S. consumers will lead to a significant decrease in rates, which could lead to some serious freight savings for shippers.  

Warehouse Quick Deliveries

Let’s keep de minimis and tariff talk to a minimum this week, shall we?

• With de minimis changes, the playing field is leveling, so small and medium-sized U.S. business can compete more effectively on price.

• Chinese retailers selling on platform like Temu are being asked by logistics agents for deposits.

• And steals and deals on international discount retail platforms may become harder to pull off.

• Here are some of the retailers with the most international shipping exposure.

• A quick explanation of tariffs and who pays for them.

• One correction from last week: A couple of our wonderful readers pointed out that we made a big mistake last week, misspelling Colombia. Our sincerest apologies and thank you, readers, for being so on top of things and helpful.