Warehouses are about more than just the square footage — to work, they need storage racking. Lots of it, along with material handling equipment, a capable workforce and so much more. That racking in particular requires a lot of steel. But as warehouse demand skyrockets, the steel supply is falling short.
Long lead times, rising prices
It’s been a song stuck on repeat across many global industries this year: necessary materials are hard to come by. And even when you can find them, the prices are jaw-dropping.
For steel racking, lead times are stretching up to nine months, while prices have increased as much as 2.5 times vs. one year ago. Much of this comes down to the raw steel itself spiking in value — it’s currently hovering close to $2,000 per ton.
No sign of relief in the short term
When you combine the steel shortage with labor and equipment shortages, it’s looking like a tough slog for the foreseeable future. In the meantime, the demand for new warehouses isn’t likely to ease up. So long as online retailers continue to push overnight and 2-day shipping as a major incentive for shoppers, the need for localized logistic centers will persist.