Inbound Logistics | January 2022

TAKEAWAYS [ IN FOCUS ] Shaping the Future of the Global Supply Chain

Finding a Home for Holiday Returns Record retail sales, including a growing share of online purchases ( see chart ), mean that more returns than ever are ooding warehouses. U.S. holiday retail sales were up 8.5% compared to 2020, says data from Mastercard, and 66% of consumers will likely return at least one gift. At 18%, the e-commerce return rate is almost twice as high as retail returns overall. Worker shortages and low industrial vacancy only add to the difculties with reverse logistics, which is both labor and space intensive. Most returns end up in warehouses, where they’re sorted manually. Here’s what to consider when shopping for a reverse logistics warehouse: • Sites in close proximity to consumer households and retail stores are preferable to keep transportation costs low for reverse logistics. • Proximity and easy access to infrastructure, such as recycling centers, is key. • Aim for larger, exible footprints. Reverse logistics requires 20% more warehouse space than forward logistics. • A state-of-the-art distribution center is not typically needed for returns processing; a second-generation facility can adequately meet demand. The rent discount compared to new construction can be steep, offering signicant value. • With more manual labor and less racking and automation required, lower clear heights and less efcient layouts are often adequate and can be leased at lower rents. • Demand is often seasonal, with retailers needing extra space only during peak periods. Manufacturing buildings as well as converted retail stores present exible opportunities.

PORT EVERGLADES SAILS AH E AD Port Everglades has broken several records in its cargo operations as the cargo trade rebounds. It recently welcomed Mediterranean Shipping Company’s Kotor Bay ( pictured ), the largest container ship ever to call on the South Florida port. Kotor Bay has a container handling capacity of 8,566 twenty-foot equivalent units (TEUs), carrying a variety of cargo from India and the Mediterranean. At 1,114 feet, it’s even longer than the U.S. Navy’s largest class of aircraft carriers. The MSC Rachele recently arrived at Port Everglades along its route on the East Coast. During her stay, 4,894 containers were off-loaded and loaded, making it the single largest container movement for a ship at the port. Port Everglades also set a record for container volume in October 2021. At 94,588 TEUs, container volume was up 5.5% from the previous record set in October 2018.

Holiday Retail Sales and E-commerce Penetration

Holiday retail sales

E-commerce share of sales

$ 1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0

20% 18% 16% 14% 12% 10%



8% 6% 4% 2% 0%

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: U.S. Census

42 Inbound Logistics • January 2022

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