Chinese logistics operators are getting into US warehousing
Summary
The growing leasing activity comes as e-commerce operators are trying to reach more American consumers.Logistics operators with roots in China are taking on more warehouse space across the U.S. amid broad changes in sourcing, manufacturing and global trade flows.
Prologis, the world’s largest industrial real-estate operator, said it estimates China-based third-party logistics providers and e-commerce companies accounted for 20% of net new warehouse leasing across the U.S. this year through the third quarter, which company officials say is up sharply over recent years.
Chris Caton, the company’s managing director for global strategy and analytics, said Prologis has long leased space to Chinese retailers and logistics operators and the demand “has clearly accelerated this year."
Industrial real-estate experts said some of the companies are based in China, while others have their headquarters in the U.S. or elsewhere and primarily handle logistics from China to the U.S. Many of the logistics operators have focused on leasing space in major U.S. logistics markets near ports in Southern California, New Jersey and Savannah, Ga.
In New Jersey, logistics companies based in China leased 5.6 million square feet of warehouse space through the third quarter, nearly three times the amount of space those companies leased in that region in all of 2023, according to real-estate services firm JLL.
Chinese e-commerce giants Alibaba Group and JD.com have been expanding their warehousing presence in the U.S., and third-party logistics firms including Western Post, Lecangs and Elogistek have also stepped up leasing.
Western Post’s website lists an address in Shenzhen, China. The website says it provides services such as warehousing, ocean freight and customs handling. The company didn’t respond to requests for comment.
Lecangs, with an address in Perris, Calif., is a third-party logistics subsidiary of China-based furniture manufacturer Loctek, according to the company’s website. The company didn’t respond to requests for comment.
Elogistek’s website lists an address in Fontana, Calif., and says it is a supply-chain management company with a presence in Ningbo, China. The website includes links to YQN Logistics, a Shanghai-based freight forwarder. Elogistek didn’t provide comment.
Prologis’s Caton said some logistics providers are setting up warehouses in response to the rapid growth of China-founded discount retailers such as Shein and Temu, which have won over American shoppers with rock-bottom prices on products ranging from apparel to home goods.
“Some of these concepts are growing 25%, 50% year on year," Caton said. “When you go from having a $5 [billion] to $10 [billion], or $10 [billion] to $20 billion online concept, you need a supply chain to execute on that."
Fast-fashion site Shein and shopping app Temu have been building out U.S. supply chains to speed up fulfillment. The companies have typically shipped most orders via air directly to U.S. consumers from suppliers in Asia, with delivery times that could extend beyond a week, far beyond the average shipping time of retail rivals such as Amazon.com, Walmart and Target.
Shein, based in Singapore, has opened warehouses in Indiana and California. A company spokesperson said Shein is also using third-party logistics providers across the U.S.
The U.S. arm of Temu, owned by Chinese e-commerce company PDD Holdings, has been adding American brands and sellers with inventory stored in the U.S. to its low-price marketplace. A Temu spokesperson said the third-party sellers on its marketplace use a variety of logistics operators.
The companies have been investing in U.S. sales at a time when regulatory changes are in the pipeline that would make it more complicated and expensive to ship directly to Americans from China.
The Biden administration said in September that it would restrict use of a tariff policy called the de minimis rule that allows packages valued at under $800 to enter the country without duty or customs screening, a provision that the Chinese e-commerce sellers have used to ship their goods to U.S. customers.
Jason Tolliver, head of logistics and industrial real estate at real-estate services firm Cushman & Wakefield, said some companies are storing more goods in the U.S. to prepare for the prospect of additional tariffs on products made in China. “Regardless of who wins the U.S. presidential election, both parties have a platform where tariffs are a part of their policy, and particularly tariffs against China," Tolliver said.
Experts say the leasing activity has been a bright spot for warehouse owners as the broader U.S. warehousing market has contracted following frenzied demand during the pandemic.
The vacancy rate for industrial real estate climbed to 6.4% in the third quarter, up from 4.6% in the same period a year earlier and the highest quarterly reading since the end of 2014, according to Cushman.
Write to Liz Young at liz.young@wsj.com