See, remember folks, we're going into this time where we think it's potentially true that, because of all these shortages that companies are over buying, okay, when companies over buy they're doing so, because they're frustrated of shortages, so they're double and triple ordering what they actually need to Make sure they have enough of a stockpile, but that means they have to stockpile it somewhere and store it somewhere and inventory it somewhere, which actually creates inefficiencies. Because, anytime, you inventory stuff, you lose stuff, you damage stuff stuff gets stolen. It's a disaster like get stuff off the shelf having stuff on the shelf is is very, very, very bad in business. This is why we like just in time inventory, but that whole concept got screwed during during these pandemic shortages, but anyway, look at this financial times.

U.S warehouses are running out of space as containers pile high. Let's take a look at this containers. This, by the way, could lead to deflationary pressures. Right containers piled high, the port of new york and jersey form attention-grabbing views.

Okay, the facility is one of eight okay. Whatever, let's uh, let's get here to the point, he has a team of employees and real estate agents urgently searching for more space rebounding consumer demand has led to record imports through us ports on both coasts and strained. Every link in the supply chain after 41 years. In the business, this particular person has a unique vantage point over one of the worst of the bottlenecks that executives and economists fear could derail the u.s recovery demand for space and demand for people have been the greatest.

I have ever seen, wow in 41 years. All right adding that he has been inundated with calls for new customers, but has had to turn many of them down to prioritize existing customers, and this uh. This particular person again is uh a warehouse warehousing facility for containers imports at the port of new york and jersey. The third largest in the country were 26.4 percent higher for the year to august than in the same period in 2020.

The warehouses where those container loads would normally head first before being distributed, are struggling to cope nationwide. Industrial vacancy hit a historic low of 3.6 percent in third quarter. You know, i have to say i would not have expected uh industrial vacancy to plummet if the pandemic. Okay, ism manufacturing by the way uh just came in it, looks like it came in at 58.4 versus 59.2, oh yeah! Here we go it's on cnbc now as well.

The final read will end up 58.4 58.4, which happens to be the lightest read of all of 2021 as a matter of fact to find a line. Now this is interesting. The manufacturing index uh that potentially implies a little i mean any number over 50 - is still growing like expansion, but as cnbc just mentioned, one of the lightest reads, which kind of potentially makes sense that you would see some slowdown in the insane ordering that we've been Seeing for factories and manufacturers, because of of so much double and triple pre-ordering, that has been done and that's why we're seeing these insane amounts of storage and storage issues these these uh shipping constraints. All of this take a look at this somebody here, christopher writes, warehouse problem is driven by the rise of new 3pl like shipmonk, ship, fusion and others they're grabbing all of the urban near urban warehouses.

Uh. Well. Thank you for that. Thank you for that that insight.

So anyway, uh back into this here, according to uh cbre uh, let's see here, okay, that's the 3.6 industrial vacancy in the three markets closest to the new jersey port combined vacancy rates. Just are just 1.5 percent. The leap in demand has collided with a sector that has not invested enough to build capacity for months moments like this warehouse operators say they face shortages of everything. They need to run their facilities efficiently now from racks uh to balers to forklift trucks.

This by the way sounds bullish for plug plug power. Does uh hydrogen powered forklifts by the way, because this equipment is caught in the same shipping delays as other imports, as in many industries? Labor shortages are also making the situation worse. According to bls, the number of warehouse workers increased by only three percent in january and september, a number insufficient to match the surge of goods flowing in the past. Referrals from the employee networks were enough to find new people, but not currently, the effects are being felt.

The shortage of space is pushing up the prices. Tenants pay to store their goods. It used to be common for new new warehouses to sit empty for months or years before they found tenants. But now demand is so intense that customers are booking space before buildings are even completed.

Warehouse operators said on the latest. Earnings call that a record 70 of the space it is developing in the u.s has been pre-leased, that is prologus pro logis logistics logis pro logis. Whatever, anyway, i imagine, there are stocks and standard earnings called people are in a kind of panic mode when it comes to buying or committing to real estate. It's incredible uh yeah, here's the stock, it's ticker symbol, p, l d, it's up! 24! In the past six months, fifty percent year to date on the five year chart it's up 192 percent, my goodness uh.

Some companies with the resources to do so are buying their own warehouses to ensure they're, not fighting, rivals to secure the capacity they need. According to co-star a real estate group, the top 25 retailers required almost 39 38 million of rentable square feet in industrial space. More than double the 2019 figure warehouse owners, meanwhile, are accelerating construction plans to catch up with demand with so few options near ports. Some retailers and logistics companies are pushing further inland redirecting some customers, from los angeles and long beach to utah and nevada, where there are millions of square feet of capacity.

Well, that makes sense, but problem is you just have to get it there? How are you going to get it there right? These facilities can be cheaper by a margin of 20 to 35 percent, but yeah again you got to get it there, uh, instead of spending 800 as a container to get it from the port to a nearby warehouse. You might be spending like 3 500 to get it unloaded at a more distant location, no kidding jeez what a mess. This is a problem that is going to be with us for a while. They don't expect this to end until the middle or end of 2023.

I actually think it's going to get worse yikes, so it's interesting, i mean again so many warehousing issues in my opinion are just the result of massive uh pre-ordering double triple ordering by walmart target by other companies to make sure they have enough product. Then they got to sort all the stuff that they bought, which that's going to take a while. They need labor to get out through all this product that they just bought, and then they got to sell it, and once this all gets sorted, i think we're just going to be flooded with product store. Shelves are going to be going from bare to overflowing and it's going to force price cuts, so i do expect to see consumer based price cuts.

Substantial consumer-based price cuts next year, we'll see we'll see individual deflationary pressures, not everything. I still think wages and rents are going to have substantial inflationary pressures, but this right here this article from the financial times that is hands down a deflationary concern. You don't have warehouse, storage issues, uh and think inflation for very long. In my opinion, uh take a look at this dk just spent ten dollars to say this.

I work in sales for a large switch and router manufacturer starts with a c couldn't be cisco, but anyway you're absolutely right. My clients are putting all their orders in place for 2021 now only exacerbating the issue. Oh yeah yeah. Well.

Thank you so much for that insight.