Americans are ordering more, but the U.S. can only handle so much

• Published Month : Tuesday, 24 Dec 2019 12:00 pm

The delivery crunch is a year-round phenomenon that’s causing people to rethink the design of American cities.

 

There's only so many boxes that can be delivered in a day.

Warehouse space is nearly full, with vacancy near an all-time low. Streets are crammed with delivery vans blocking traffic. City curbs are increasingly a turf war between delivery drivers and everyone else. Even grocery store aisles can feel crowded — at least, when staff for delivery services are scouring the shelves.

Americans are demanding more deliveries, and as a result, many of the things needed for delivery are becoming scarce. And with many companies pushing to meet that demand, industry experts say the U.S. faces a problem — its infrastructure can only handle so many deliveries.

The crunch has been extreme in the weeks leading up to Christmas, but it’s a year-round phenomenon, and it’s one that’s causing people up and down the delivery chain to rethink the design of American cities, streets and buildings.

“E-commerce has completely transformed the industrial market, and we’re still kind of wrapping our heads around it,” said Matthew Walaszek, an associate director of research at CBRE, a commercial real estate firm.

It’s a transformation years in the making and inspired by convenience. Amazon Prime launched in 2005, tantalizing consumers with two-day delivery and whetting their appetites for the parade of delivered goods that would follow: prepared food, groceries, gifts, paper towels, mattresses, wardrobe recommendations and nearly anything else that could fit in a box.

Established retailers have chased Amazon’s lead in home delivery, while startup companies are forgoing malls or other physical locations and selling directly to customers, through the mail or other delivery service.

“Seven years ago, thinking that you’d be getting cheeseburgers delivered by the millions was kind of crazy, right?” said Chris Baggott, CEO of ClusterTruck, a food and delivery company founded in 2015.

But the reckoning has arrived: The physical infrastructure of the country doesn’t yet match its delivery ambitions. There’s just too much stuff getting delivered.

Packed house

Start with the warehouse space, from the massive 1 million-square-foot fulfillment centers to the “last mile” depots closer to city centers. Though the U.S. has added around 1 billion square feet of warehouse space in the past six years, the vacancy rate is near a historic low and rent is still rising, according to CBRE data.

“Our warehouses are stacked to the brim,” Walaszek said.

Developers have begun to think vertically. Last year, Prologis built the country’s first three-story warehouse in Seattle, with ramps so that delivery trucks can access the upper floors. Industry analysts say multifloor warehouses are beginning to make sense in areas where land is pricey, and for the first experiment Amazon and Home Depot signed on as tenants.

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