Warehouse Wisdom. Weekly. 03/28/2025

Happy Friday!

This week in “Logistics Meets Law & Order,” a Boston man pled guilty to helping drivers fake their way through commercial license exams — a scheme that involved coaching applicants on what to say and allegedly swapping in stand-ins to take the tests. The good news? He’s facing up to 15 years. The bad news? We’re still not totally sure who’s driving some of these rigs.

And there’s lots more warehouse and logistics news where that came from, including customers getting stressed out, small businesses holding back on expansion, more LTL changes, nationwide commercial vacancy rates doubling, and more.

Global Logistics

Stockpiles and a slightly less painful customs checkout

Small businesses are known for their grit, adaptability, and—when necessary—creative cost-cutting. Unfortunately, thanks to a fresh wave of tariffs, many are now showcasing their best trick yet: not expanding. From shelving growth plans to trimming already-trimmed budgets, business owners are running out of levers to pull.

Retailers, on the other hand, are putting their warehouse space to good use by quietly stockpiling inventory like it’s 2020 all over again. Facing tariff uncertainty, many have bulked up to avoid future cost hikes—essentially playing high-stakes supply chain Jenga. It’s a bold move that may protect margins for now, assuming, of course, consumers still want what’s on the shelves six months from now.

But hey, at least international customers can rest a little easier—UPS just rolled out “Global Checkout,” promising an end to surprise customs fees at delivery. No more guessing games, hidden charges, or courier-fueled existential dread. Now shoppers can know the full damage before they click “Buy Now.” A win for transparency—and a small mercy in a week that hasn’t had many.

Marketplaces

Stressed shoppers, and Amazon’s AI continues to upsell

Walmart CEO Doug McMillon has observed that customers are exhibiting "stressed behaviors," such as opting for smaller pack sizes toward the end of the month. This shift reflects the financial pressures many consumers are facing, leading to a significant decline in Walmart's market valuation by nearly $22 billion.

U.S. retailers like Walmart and Target are currently in challenging negotiations with suppliers over proposed price increases. These discussions stem from the increased production costs suppliers are facing due to recent tariffs on aluminum and other imports. The outcome will influence when and by how much merchandise prices might rise, affecting both retailers and consumers.

Meanwhile, Amazon is rolling out "Interests," an AI-driven feature designed to personalize the online shopping experience. By allowing customers to create detailed prompts about their preferences, the tool proactively notifies users about new and relevant products, aiming to enhance product discovery and keep consumers engaged. Retailers and suppliers are having tough negotiations behind closed doors.

Logistics Vitals

Most Amazon sellers say “hard pass” to international expansion

Despite Amazon's continuous global expansion, a significant majority of its sellers remain firmly rooted in their home turf, seemingly unphased by the siren call of international markets.

• Single-Market Sellers: A notable 69% of Amazon sellers operate exclusively within one marketplace.

• Minimal Global Reach: Fewer than 1% have ventured into 11 or more countries, embodying the true spirit of global enterprise.

• U.S. Seller Statistics: Among American merchants, less than 1% sell outside North America; 12% have expanded to Canada, and a mere 5% to Mexico.

• European Expansion Hurdles: Regulatory complexities, such as Brexit and varying VAT structures, have made Europe a less enticing frontier for expansion.

• Market Size Disparity: The combined traffic of Amazon's 22 non-U.S. marketplaces only slightly surpasses that of Amazon.com, making the effort to expand internationally appear less rewarding.

Freight and Shipping

Weekend deliveries, return rivalries, and Walmart’s truckload ambitions

FedEx is expanding its Sunday home delivery coverage, proving that weekends are no longer sacred—even for logistics. With Amazon already promising seven-day delivery and consumer expectations following suit, FedEx has decided rest is for the inefficient. The company now reaches nearly 65% of the U.S. population on Sundays.

Not stopping there, FedEx also introduced “Easy Returns,” its answer to UPS’s “Happy Returns”. The program lets customers drop off unwanted items at convenient locations like Office Depot and Kohl’s. It’s a classic case of “If UPS can do it, so can we,” with fewer smiles and more logistics.

Meanwhile, LTL shippers got a bit of news that’s not entirely painful: changes in freight classifications now mean denser shipments will be classified at a lower cost. The National Motor Freight Traffic Association is reworking how it prices freight classes, which may actually make shipping that box of lead ingots (or books, or brake pads) a bit cheaper. But for bulky lightweight shipments, it might not be such a good conclusion.

Finally, Walmart has entered the freight brokerage arena in earnest, recruiting outside carriers to haul its freight like it’s running its own mini-Uber for trucks. The retail giant is positioning itself as both a megashipper and a middleman, which is great news if you’ve always dreamed of hauling goods for a retailer and being paid by them. It's a strategic move that puts pressure on Amazon—and also ensures that Walmart has even more control over when, how, and how cheaply its products move.

Commercial Warehouse Space

E-commerce keeps demanding more space, even as vacancy rates climb

E-commerce may not be the new kid on the block anymore, but it’s still demanding the biggest room in the warehouse. As online retailers continue chasing faster delivery windows and regional fulfillment, developers are responding with more distribution centers—and more leasing activity to go with it. What was most fascinating to us - e-commerce logistics requires as much as 3 times the space as retail!

Of course, in a twist of real estate irony, CommercialEdge’s March report shows the national industrial vacancy rate has doubled to 8.2%. That’s what happens when you build for record-breaking demand and then demand decides to take a nap. While rents are still edging up in many markets, the sudden availability gives tenants something they haven’t had in a while: options—and maybe even a negotiating chip or two.

And speaking of operating warehouses, a new study by Radial reveals that modern brands strongly favor in-house operations. Caution: you have to somewhat discount the slanted vantage point of a 3PL fulfillment company running the poll, but it does offer some insights into some of the challenges faced by growing brands and their preference to try to run fulfillment themselves.

Warehouse Quick Deliveries

Family Dollar gets flipped, Amazon fights fakes, and more…

• Family Dollar sold to VCs.

• Amazon seized more than 15 million counterfeit products in 2024.

• The debate over U.S. fees on Chinese ships continues.