WAREHOUSING
3PLs are the reason warehouse space is getting expensive
Who is leasing all the warehouse space? The answer is you.
Cushman & Wakefield says 3PLs have accounted for 30% of all industrial leasing so far this year, more than any other tenant type. Manufacturers were next at 26%. Third quarter was the best for net absorption (space actually taken and used) since early 2023, and national vacancy dropped to 6.8%, the lowest since the end of 2024. About 80% of that demand went to inland markets: Houston, New Jersey, the Inland Empire, Savannah and Miami.
The next day, Prologis, which owns warehouses worldwide, reported its quarter. Its CEO, Dan Letter, said customers are running lean on inventory and that "excess capacity within their networks has largely cleared." Look at what happened when Prologis tenants renewed or signed new leases on space they'd had before. Rents were 38% higher on a net effective basis, which includes free rent and other concessions, and 23% higher in cash. In other words, old leases are being repriced to today's market.
Prologis also said market rents are still moving up. They rose 0.5% in the quarter, the third quarter in a row. Dallas, Houston, Atlanta, Phoenix, Indianapolis and Northern California are on pace for 5% to 6% growth this year, according to the call. On supply, Letter said rents would have to rise about 27% before a new building pays for itself, so there's little reason to build more.
What this means for you: Find your lease expiration dates this week. If a renewal is within 18 months, start talking to your landlord now. Prologis's 38% is an average across its own buildings, not your number, but it shows which direction renewals are heading. Then look at your client contracts. Look first at anyone on a multi-year deal with fixed storage rates, since a rent jump lands on you.
ECOMMERCE
Google now has a shopping cart that checks out from several stores, and some of your clients are already in it
Google's Universal Cart rolled out in the U.S. on October 15. It lives in Google Search and the Gemini app. A shopper can add items from different stores to one cart, get price-drop alerts, and pay once with Google Pay.
Google doesn't ship anything. The store still ships the order, handles the support, and is the seller of record. So an order that comes through Universal Cart lands in your client's system like any other, and nobody at Google is on the hook for the delivery.
The part to look at is the Shopify piece. According to PPC Land, Shopify stores were matched to Google Merchant Center accounts and switched on by default in September. Merchants who didn't want their checkout to go through Google had to turn it off manually. Digital Commerce 360 doesn't say anything about shipping or returns for these orders, and Google didn't say what it charges merchants.
What this means for you: Ask your Shopify clients if they know they're in this. Many may not. If they are, orders can start arriving from a new place before the holidays, so check that their delivery promise and cutoff dates are right everywhere their products show up. Also ask how they'll tell Universal Cart orders apart from the rest, so you can see how much volume it adds.
RETURNS
TikTok Shop sellers can now take returns with no box and no label
If you've ever returned something to Ulta or Staples without printing a label, you've seen Happy Returns. UPS owns it, and as of October 14, it's built into TikTok Shop.
Here's how it works. A shopper starts the return in TikTok Shop and picks Happy Returns. She walks the item into one of about 10,000 drop-off spots (The UPS Store, Ulta, and Staples are on the list) and hands it over. No box, no label, no printer. UPS bundles the returns together and ships them back to the seller.
It's the first time Happy Returns lives inside a marketplace instead of one retailer's website, and UPS says it's the only box-free, label-free option TikTok Shop has. FedEx has a competing service called Easy Returns, which launched last year.
Setup depends on who ships the orders. If TikTok fulfills them, there's nothing to do. If the seller ships their own orders, Happy Returns walks them through it. UPS's Birdie Smith says that second group should look at it once they're handling around 10,000 returns a year, mostly in apparel, shoes, and accessories. UPS didn't say what it costs.
Carriers want in on returns because there are so many. Returns totaled $849.9 billion last year, about 16% of all retail sales.
What this means for you: If you handle returns for apparel brands on TikTok Shop, ask them whether they're turning this on. Returns that come back through UPS arrive bundled, so you may get a pallet of mixed returns instead of a stack of single parcels. Ask how they'll label and sort them before the first one shows up at your dock. A client doing 10,000 returns a year wants that product back on the shelf in days, so you can charge for a fast returns turnaround.
Quick hits
AUTOMATION
Symbotic bought a German sortation company called Cellumation.
No price disclosed. Cellumation makes a sorting surface built from hundreds of small cells, each of which can move a package in any direction, replacing conveyor belts. Symbotic says it takes up far less space than a conveyor and is already used by postal, e-commerce, and logistics operators. Walmart owns a stake in Symbotic. If you're planning a sortation build, keep an eye on the price.
LEGAL
A judge upheld a $604 million verdict against C.H. Robinson.
With interest, it's above $700 million. A jury found that a driver Robinson hired through a trucking company was working under Robinson's control, so the broker owes for a 2021 crash that killed three people. Robinson says it didn't cause the crash and hasn't said whether it will appeal. If your 3PL books even one truck for a client, ask your insurer in writing whether you're covered for something like this.
TRUCKING
Carriers are turning down nearly 14% of the loads they're offered, and diesel futures jumped about 5% on Tuesday. A year ago, rejections were under 6%. FreightWaves says to expect a tight market into 2027. Diesel futures rose after Trump announced a deal for Russia to release more diesel, which analysts told NBC is less than two weeks of U.S. demand. If you book truckload for clients, get your regular lanes onto contract rates before year-end.
SHIPPING
At least 10 ships were hit in and near the Strait of Hormuz in a week, and one container ship sank. The GFS Pride, a Singapore-flagged container ship, caught fire and sank off Oman on Tuesday with containers aboard. All 21 crew got off safely. Six ships were hit in a single day, the most since the war started in February. Iran's Revolutionary Guard says the ship hit a mine on an "unauthorized" route, while Singapore's authorities say projectiles hit it. Strait crossings dropped to 131 last week from 176. Maersk, ONE, PIL and OOCL reportedly have schedules tied to some of the damaged feeder ships, and analysts warn that war-risk insurance can be canceled on short notice if your cargo sails on a ship owned by someone other than the carrier on your bill of lading. If a client imports on a feeder route near the Gulf, find out who owns the ship.
PORTS
Savannah got its permit for a $2.3 billion container terminal.
The Army Corps of Engineers approved it October 14 after three years of review, and the Georgia Ports Authority announced it at its annual event. The terminal adds room for 3.5 million containers a year on 350 acres of Hutchison Island. Construction starts in January 2028 and finishes in the mid-2030s. Savannah handles about 7.75 million containers a year today. If you're weighing Southeast buildings, it's a long bet on Georgia, and nothing at your dock will change anytime soon.
3PLs: we’re sourcing for a furniture brand
We’re running an RFQ for a DTC furniture brand that needs one warehouse in the LA metro and one in the NY metro. Stools, chairs, benches, and tables that ship in their own cartons; about 375 pallets at go-live; a mix of parcel and freight-size cartons.
Download the RFQ, and if it’s a fit, make sure you’re registered with us. If you’re not, go to Apply as a 3PL and fill out the information.
Email [email protected] with any questions.
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