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Largest U.S. warehouse hits record low vacancy amid supply chain congestion

Yahoo Finance's Dani Romero reports on how supply chain issues are creating record-low vacancies among the biggest warehouse in the U.S.

Video Transcript

DAVE BRIGGS: Did you know America's biggest warehouse is visible from space? It's near Los Angeles and includes more than 1.6 billion square feet of storage. It's more than 40 times bigger than New York's Central Park. Oh, and it's nearly full, if you can believe that. Dani Romero is here with this incredible story, how we got here and how we're all impacted by it.

DANI ROMERO: Yeah, Dave, you know that retailers have been stocking up for the past year to really avoid those supply chain bottlenecks that they experienced during the pandemic, and now, we're seeing warehouses really stocked up. They have low vacancy, but merchandise keeps flooding in these ports across the country as consumers have really taken a step back on the demand for goods. But this situation is really different from last year, and just one supply chain expert really has to explain what we're seeing this time around. Take a listen.

NATHAN STRANG: And I think it's-- but it's similar results due to different conditions. Like I said, last year was, you know, the warehouses didn't have enough labor. This year, the warehouses have plenty of labor, but they're full because there's nowhere to take the cargo to because sales are down, or because just too much cargo came in. So how long is it going to last? I think, you know, through the end of the year, if you look at how the carriers are managing their schedules, they think that it's going to get very soft after October.

DANI ROMERO: So you can hear right there that experts are really estimating that this will really ease by October, but more shippers have actually been routing to other ports across the country to really avoid the bottlenecks that they experienced on-- on the west coast. Now, let's just take a look at the port of Savannah really quick.

The port of Savannah-- OK, so you can see right here that it is upticking, like right here, and on average, it is over 200 hours that ships are waiting just to dock. So that's about nine days. Now, let's take a look at the port of Long Beach. OK, so look, it's down here now.

DAVE BRIGGS: They've plummeted.

DANI ROMERO: They've definitely gone down, and now, it's like, about five hours on average that these ships are waiting. So you really see the drastic changes, so people actually listened. They did. They listened, and they went to other ports, and that-- now, we're seeing this uptick on the east coast instead of the west coast.

DAVE BRIGGS: So the snap back then are those factories in, as you mentioned down in Savannah, are they going to get full and have too much supply?

DANI ROMERO: I mean, that could happen, right, this bullwhip effect that seems to be happening right now.

DAVE BRIGGS: But the biggest problem is the clogged ports, the time at sea. You can't help but wonder if this is, at some point, a deflationary story where we have so many goods that prices begin to come down. But we shall see. Dani Romero, good stuff. Thank you.