Warehouse Demand Surges as Retailers Reset Supply Chains
Demand for U.S. warehouse space is rebounding as upheaval from the coronavirus pandemic pushes businesses to retool their supply chains. Industrial real-estate activity, such as lease renewals and new leases, jumped 43% from April 15 to May 14 from the previous 30-day period, with the recovery from the economic shocks of the pandemic being quicker than expected, according to real-estate firm CBRE Group Inc.
Retailers and food and consumer goods suppliers ramped up their e-commerce operations during that period after a surge of orders from housebound shoppers during lockdown measures that were put in place to stop the spread of the virus. Companies are also securing new space to modernize their distribution operations, including locations near big population centres, for what they expect to be continued strong demand for services such as online grocery delivery.
As the pandemic accelerates the growth of e-commerce, which typically requires higher amount of inventory and about three times as much space as traditional distribution operations that serve stores, demand for warehouse space is set to increase.
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Europe could face oil shortage in a decade, study warns
Europe could face an oil shortage within the next decade, making the move to increase the use of low carbon energy even more urgent, according to a new report. The study conducted by the Shift Project, a climate thinktank, has warned that oil production may fall faster than the EU’s reliance on fossil fuels, raising the risk of a looming oil supply crisis and severe shock to the market price.
The analysis found that oil production from Russia and the former USSR, which provide more than 40% of the EU’s oil supply, has already entered “a systematic decline”. This decline would outstrip the rate at which the EU has curbed its use of oil over the last 10 years. Africa’s oil production, which makes up more than 10% of the EU’s oil supplies, is also expected to decline sharply over the next decade.
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Sales plummeted 14% in April leaving companies with bulging inventories
The inventory-to-sales ratio paints a clear picture of the pandemic and the economic turmoil it has created across retail and manufacturing. Stay-at-home orders put in place to help flatten the curve of coronavirus infections resulted in the closure of retail storefronts, and the increase in e-commerce wasn’t enough to make up the difference, according to Jon Gold, vice president for supply chain and customs policy at the National Retail Federation.
The total business inventories-to-sales ratio shot up to 1.67 in April. This is [KK1] the highest the measure has been since 1992, according to the Census Bureau’s monthly inventory and sales report released last week and a review of the agency’s historical numbers. Manufacturers saw the biggest spike with their inventory-to-sales ratio rising to 1.7. Retailers were at 1.69 and wholesalers reported a ratio just above 1.6.
Total business sales were down 14% from March 2020 and were down 18% year over year in April. Inventories also declined, but not to the same level, falling 1% from March 2020 and 2.2% year over year, according to the Census Bureau.
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