Increased e-commerce sales demand for food and other perishables has led to a shortage of cold storage space at one of America’s busiest ports.
The East Coast’s Port of New York and New Jersey has seen a shortage of cold storage as increased demand from online e-commerce stores for food and other refrigerated cargo have hit the port prior to the U.S.’s holiday season, according to JOC.com. Those looking to ship refrigerated goods will need to invest in developing new space and pay more money to store their cold goods.
Rates for buildings to store refrigerated goods in, such as refrigerated warehouses, are expected to rise even higher with this increased demand and space shortage, according to Steven Beyda, senior vice president at CBRE, a major real estate company. There will also be additional costs incurred by shippers for longer transportation times, as cargo will have to be transported more often than usual due to the shortage.
CBRE further added that while specific increases in both the shortage and real estate rates are currently uncertain, due to vague monitoring procedures, it is clear that fast-growing demand without more available space will inevitably lead to cost increases that may worsen further over time. This will make it more expensive for shippers to transport their refrigerated cold goods into one of the U.S.’s busiest consumer markets.
The good news is that more investment in cold storage space could help reduce future cost increases for shipping refrigerated goods.
According to officials at the Port of New York and New Jersey, steep increases facing shippers this holiday season may lead to future investment in more cold storage warehouse space, as investors look to cash in on what appears to be a large opportunity with increased demand for e-commerce. It is typically more expensive to construct a cold storage warehouse than a dry storage warehouse, leaving many investors historically reluctant to invest more in this key area. However, these market changes may force them to change their mind.