Warehouse Wisdom. Weekly. 03/21/2025

Happy Friday!

If you've recently noticed fewer impulse snack hauls making their way from the warehouse to your pantry, you're not alone. General Mills is feeling the crunch—America’s appetite for snack foods is slowing down, which is truly devastating news for both Wall Street and lovers of mid-afternoon Chex Mix. To add to the gourmet gloom, food manufacturers are now politely knocking on the White House’s door, asking for a tailored tariff exemption before things get even more expensive (and possibly flavorless).

But fear not, because this week’s logistics landscape offers far more than just a calorie count. We’re diving into a fresh batch of updates, including Amazon and Walmart going head-to-head in a new LTL showdown, USPS making moves toward greater efficiency, a cargo and port rush ahead of looming tariffs, AI shopping finally becoming more than just a buzzword, and the results from our annual warehousing costs and pricing survey. Let’s dive in.

U.S. Freight and Shipping

LTL showdown, UPS adds a price tag, and USPS continues efficiency habit

The LTL market is about to get a lot more interesting (or chaotic, depending on your perspective), thanks to Amazon's latest move. The retail giant is officially stepping into the LTL game, setting the stage for yet another disruption in freight. With its vast network, deep pockets, and infamous ability to upend entire industries overnight, Amazon's entrance into the space means existing carriers might want to start rethinking their strategies.

But wait—Walmart isn’t about to let Amazon have all the fun. The retail giant is doubling down on its own freight ambitions, expanding its brokerage operations to give shippers an alternative to Amazon’s growing logistics empire. Walmart is promising access to its vast transportation network, a move that’s sure to make things interesting for freight providers caught in the crossfire of this escalating LTL arms race.

UPS is ringing in the spring season with a little extra weight—on your shipping invoice. The carrier has introduced a $0.29 per pound surcharge on China-to-U.S. shipments, citing cost pressures and demand fluctuations. The fee will remain in place until at least March 29. If you were hoping for relief in Q2, you might want to start budgeting for a few more pennies per pound—or, you know, start looking into alternative routes that don’t involve surprise fees.

And the USPS is getting efficient—yes, you read that correctly. The Postal Service is exploring the possibility of serving as a logistics partner for federal agencies, leveraging its network to move government shipments more effectively. If this initiative moves forward, it could provide the USPS with a new revenue stream while making government logistics less of a bureaucratic nightmare. That said, only time will tell if this efficiency push sticks, or if it will end up as another well-intentioned reform lost in the mail.

Global Freight and Logistics

Chokepoints, power plays, and growing freight volumes

Global shipping never sleeps, and neither does the Federal Maritime Commission, which has decided to probe seven key ocean chokepoints to improve shipping efficiency. After all, port congestion, long container dwell times, and mysterious supply chain bottlenecks don’t just resolve themselves. This deep dive aims to identify where the real pain points are—and ways to alleviate the impact of these transit constraints.

Meanwhile, trans-Atlantic air cargo is surging as shippers scramble to beat the April 2nd U.S. tariff deadline. With businesses looking to get their goods across before new duties kick in, airfreight capacity is tightening fast. Expect a few more weeks of elevated rates, stressed-out logistics managers, and last-minute shipping "emergencies" before the dust settles.

Adding to the geopolitical shipping drama, the U.S. is keeping up targeted strikes on the Houthis in Yemen, aiming to curb their attacks on Red Sea shipping. While this is meant to improve security for commercial vessels, the ongoing instability has left carriers and insurance firms less than thrilled. For now, shipping companies are still facing reroutes, delays, and rising costs—all of which, of course, get passed straight down the supply chain.

In other news, China isn’t happy about the Panama-BlackRock infrastructure deal, calling it a threat to global trade stability. The deal, which involves U.S. financial giant BlackRock, has raised concerns in Beijing about American influence in a region where China has been heavily investing.

In other parts of the world, the U.S. and Russia are sitting down to discuss Black Sea shipping safety, as both sides recognize that disrupted trade isn’t good for anyone. The talks aim to reduce risks for commercial vessels operating in the region.

And over at the Port of Los Angeles, cargo volumes continue climbing, with February numbers showing another strong month. Imports are surging, exports are moving, and the supply chain chaos of 2021-22 feels like a distant memory (or at least a less frequent nightmare). Of course, the only challenge seems to be the massive amount of containers stockpiling at the port.

Logistics Vitals

More fees, higher minimums, and fewer free lunches in our 9th annual warehouse cost survey

Our ninth annual Warehousing and Fulfillment Costs & Pricing Survey has been released, offering a comprehensive analysis of current industry costs and pricing. Key findings from the 2025 survey include:

• Increased Minimum Monthly Spend: The average minimum monthly spend requirement has risen from $337.50 in 2024 to $517 in 2025, impacting businesses with lower order volumes.

• Long-Term Storage Fees More Common: The percentage of warehouses charging long-term storage fees has grown from 23.33% in 2024 to 48.6% in 2025, with fees ranging between $5 and $10 per pallet per month.

• Mixed Trends in Storage Costs: While the cost per cubic foot of storage decreased from $0.55 to $0.46, bin storage costs increased from $2.67 to $3.08, and square-foot storage costs rose from $1.22 to $1.73.

• Fluctuations in Fulfillment Costs: Receiving costs per pallet decreased from $12.91 to $10.52; however, per-container receiving costs saw a significant increase from $350 to $500 and pick and pack costs for B2C and B2B also increased.

• Higher Return Fees: The average return fee has risen from $3.95 to $4.06, with 92% of warehouses now charging for returns, up from 79.33% in 2024.

These insights provide valuable benchmarks for businesses to assess their warehousing expenses and strategize accordingly.

Marketplaces

Consumer AI shopping adoption grows, and retailer leaders implement tariff strategies

In the ever-evolving landscape of retail, tariffs have become the latest challenge, prompting a variety of responses from industry leaders. Some off-price retailers, leveraging their unique sourcing models, remain unfazed by these trade tensions. Conversely, companies like Best Buy have openly acknowledged that consumers should brace for price increases as a direct consequence of the tariffs. A significant number of retail executives are emphasizing their strong vendor relationships and proactive diversification of supply chains to navigate these challenges.

In never ending retail AI news, Adobe is forecasting a significant shift in consumer behavior, predicting that over half of shoppers will utilize generative AI tools for their purchasing decisions this year. This anticipated change underscores a move towards more personalized and efficient shopping experiences, with AI-driven platforms assisting consumers in product discovery and decision-making processes. As technology continues to integrate into daily life, retailers are encouraged to adapt to these advancements, ensuring they meet the evolving expectations of their customer base.

Not to be outdone in the realm of retail innovation, Amazon has announced the return of its Prime Big Spring Sale, scheduled from March 25 to March 31, 2025. This seven-day event promises substantial discounts across various categories, including apparel, beauty, and home goods, offering consumers an opportunity to refresh their spring essentials at reduced prices. Both Prime members and non-members can take advantage of these deals, though Prime subscribers may receive additional perks.

Warehouse Operations

Warehouse financing gets tougher, and labor dominates warehouse costs

Navigating the commercial real estate landscape has become increasingly complex following the Federal Reserve's recent decision to pause interest rate cuts. Maintaining the current target range of 4.25-4.5%, the Fed cited projections of higher inflation, partly due to recent tariff policies. This move introduces uncertainty for investors, with industry professionals anticipating a "bumpy and unpredictable" year ahead. Challenges such as securing financing for high-value deals and potential increases in unemployment are expected to influence both short- and long-term decision-making in the sector.

Within warehouse operations, labor continues to be the predominant operating expense, accounting for 50% to 70% of a company's warehousing budget. To mitigate these costs, many warehouses are adopting automation and artificial intelligence technologies. Implementing modern warehouse management systems (WMS) has led to a 25% increase in productivity, while automated storage and retrieval systems (AS/RS) have improved order accuracy levels to above 99%. These technological advancements not only enhance efficiency but also allow skilled employees to focus on more complex tasks, thereby optimizing overall operations.  

Warehouse Quick Deliveries

Forever 21 falls, tariff tensions rise, and FedEx isn’t feeling optimistic

• Forever 21 falls.

• SMBs anticipate a moderate to major impact from tariffs.

• EU pushes back tariff response.

• FedEx sounds the alarm on very challenging market.