By Lisa Baertlein (Reuters) – America’s largest warehouse market is full as major U.S. retailers warn of slowing sales of the clothing, electronics, furniture and other goods that have packed the distribution centers east of Los Angeles.
The merchandise keeps flooding in from across the Pacific, and for one of the busiest U.S. warehouse complexes, things are about to get worse.
Experts have warned the U.S. supply chain would get hit by the “bullwhip effect” if companies panic-ordered goods to keep shelves full and got caught out by a downturn in demand while shipments were still arriving from Asia.
In the largest U.S. warehouse and distribution market – stretching east from Los Angeles to the area known as the “Inland Empire” – that moment appears to have arrived.
“We’re feeling the sting of the bullwhip,” said Alan Amling, a supply-chain professor at the University of Tennessee.
Related Book: The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger by Marc Levinson
The sprawl of Inland Empire warehouses centered in Riverside and San Bernardino counties grew quickly in recent years to handle surging demand and goods imported from Asia.
That booming area, visible from space, anchors an industrial corridor encompassing 1.6 billion square feet of storage space that extends from the busiest U.S. seaport in Los Angeles to near the Arizona and Nevada borders. That much storage space is nearly 44 times larger than New York City’s Central Park and 160 times bigger than Tesla Inc’s $TSLA new Gigafactory in Texas.
But a consumer spending pullback now threatens to swamp warehouses here and around the country with more goods than they can handle – worsening supply-chain snarls that have stoked inflation. Retailers left holding unwanted goods are faced with the choice of paying more money to store them or denting profits by selling them at discount.
Related Book: Outside the Box by Marc Levinson
Inland Empire warehouse vacancies are among the lowest in the nation, running at a record 0.6% versus the national average of 3.1%, according to real estate services firm Cushman & Wakefield.
The market is poised to get even tighter as shoppers at Walmart $WMT Best Buy $BBY and other retailers retreat from early COVID-era spending binges.
While U.S. consumer spending remains above pre-pandemic levels, retailers and suppliers are raising alarms about backlogs in categories that have fallen out of fashion as consumers catch up on travel and struggle with the highest inflation in 40 years.
Last week, Walmart said surging food and fuel prices left its lower-income customers with less cash to spend on goods, and Best Buy said shoppers were curbing spending on discretionary products like computers and televisions. Those cautionary signals followed Target Corp’s TGT.N alert that it was saddled with too many TVs, kitchen appliances, furniture and clothes.
Suppliers – ranging from barbecue grill maker Weber to Helen of Troy, a consumer brands conglomerate that includes OXO kitchen tools – also have warned of slowing demand and an urgent need to clear inventories.
Also Read: Federal Maritime Commission To Hire Investigators For Foreign Carrier Crack-Down
While the U.S. economy was downshifting, goods kept pouring in at near-record levels.
Imports to U.S. container ports that process retail goods from China and other countries jumped more than 26% in the first half of 2022 from pre-pandemic levels, according to Descartes Datamyne. Christmas shipments and the reopening of major Chinese factory hubs could goose volumes further.
Meanwhile, cargo keeps flooding into the busiest U.S. seaport complex at Los Angeles/Long Beach. During the first half of this year, dockworkers there handled about 550,000 more 40-foot containers than before the pandemic started, according to port data.
Christmas toys and winter holiday decor landed on those docks in July, along with some patio furniture for Walmart and stretch pants, jeans, and shoes for Target, said Steve Ferreira, CEO of Ocean Audit, which scrutinizes marine shipping invoices.
Retailers ordered most of those goods months ago and many are destined for the Inland Empire’s already jam-packed warehouses.
“It’s a domino effect. Now the inventory is going to really build up,” said Scott Weiss, a vice president at Performance Team, a Maersk company with 22 warehouses in greater Los Angeles.
Demand for space in the Inland Empire is so intense that when 100,000 to 200,000 square feet of space frees up, it “gets gobbled up in a second,” said Weiss.
Also Read: U.S. Container Imports Rise in June as Congestion Shifts East
Investors have almost 40 million square feet under construction in the Inland Empire – including Amazon.com’s $AMZN biggest-ever warehouse – and at least 38% is spoken for, said Dain Fedora, vice president of research for Southern California at Newmark, a commercial real estate advisory firm.
While Amazon’s 4.1 million-square-foot facility rises on former dairy land in the city of Ontario, the online retailer has been shelving construction plans in other parts of the country.
Related Book: The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
by Marc Levinson
Amazon is the biggest warehouse tenant in the Inland Empire and the nation. Its decision to scale back on the building, coupled with rising interest rates and the slowing economy, is sidelining other would-be Inland Empire warehouse builders, area real estate brokers and economists told Reuters.
Meanwhile, the scramble for space continues.
Trucking company yards and spare lots around the region have already been converted to makeshift container storage, so entrepreneurs are marketing vacant stores as last-resort warehouses in waiting.
Brad Wright is CEO of Chunker, which bills itself as an AirBNB for warehouses, and works with everyone from state officials to the owners of vacated big-box stores to find new places to stash goods.
During a recent tour at the former Sears anchor store in San Bernardino’s Inland Center mall, Wright and a potential tenant strolled past collapsed ceiling tiles, sagging wall panels and idled escalators while working out how forklifts would navigate the abandoned space. Wright sees the empty stores as one answer to easing the log jams.
“There’s a lot of them sitting around, and they’re in good locations,” he said.
Related Book: Outside the Box by Marc Levinson
(Reporting by Lisa Baertlein in Los AngelesAdditional reporting by Siddharth Cavale in New YorkEditing by Kevin Krolicki, Ben Klayman and Matthew Lewis)
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The Port of Los Angeles handled a record 1,042,652 twenty-foot equivalent units (TEUs) in September, marking the busiest month in its 118-year history as strong consumer demand and shifting global...
The Port of Los Angeles reported its best single month in its history. In a media briefing, port executive director Gene Seroka announced the port processed 1,042,652 TEUs, 23k TEUs more than the July 2025 record.
U.S. container imports are finally beginning to slow after an unusually long peak shipping season that stretched through the summer and into early fall, according to the latest Global Port Tracker report from the National Retail Federation (NRF) and Hackett Associates. The slowdown comes after months of stronger-than-expected cargo volumes at major U.S. ports, as retailers continued bringing in merchandise despite tariffs, inflation and higher transportation costs. Ports covered by Global Port Tracker handled 2.3 million twenty-foot equivalent units (TEUs) in August, up 0.4% from July but down 0.7% from a year earlier. August now appears to have been the busiest month of 2026, marking a shift from last month’s forecast that September would take the top spot. “Even with any fluctuations in final data, we’re likely past the busiest part of the year,” said Jonathan Gold, NRF vice president for supply chain and customs policy. “The truth is that the peak season started early and was stretched out through the summer and early fall, with the difference from month to month often amounting to little more than a rounding error,” Gold said. The latest forecast puts September imports at 2.28 million TEUs, down from the 2.31 million TEUs projected a month ago. October is expected to ease further to 2.25 million TEUs before volumes fall to 2 million TEUs in November. Despite the expected slowdown, imports are still running well ahead of last year in some months. September volumes are forecast to rise 8.2% year over year, followed by an 8.5% increase in October. The revised outlook follows a peak season that has repeatedly defied expectations. Retailers moved merchandise into the country earlier this year to get ahead of tariff changes and supply chain uncertainty, initially raising expectations that imports would peak early and decline through the summer. Instead, volumes remained elevated, with shipping delays and resilient consumer demand helping extend the traditional peak season. The strength has been evident at individual ports. The Port of Los Angeles recorded its busiest three-month stretch on record during June, July and August, while the Port of Savannah reported a record September earlier this week, handling 504,015 TEUs, up 3.7% from a year earlier. Hackett Associates founder Ben Hackett said the economic outlook remains mixed, with consumers continuing to spend despite signs of weakening confidence. “Despite this, consumers appear to remain confident and cautious at the same time, with consumer confidence indexes sliding to multi-year lows while consumer spending continues to be robust in the face of increasing inflation,” Hackett said. For the full year, Global Port Tracker now expects imports at major U.S. container ports to reach 25.8 million TEUs, up 1.4% from 25.4 million TEUs in 2025. That is slightly above last month’s forecast of 25.7 million TEUs. Looking ahead, January 2027 imports are forecast at 2.07 million TEUs, down 1.9% year over year, followed by 1.92 million TEUs in February, up 1%. For retailers, the extended shipping season means much of the merchandise needed for the holidays is already in the country, reducing the need for another major import surge before year-end. “Most holiday merchandise has arrived, and the remainder of the year is just a matter of last-minute replenishment and preparation for early 2027,” Gold said.
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