Chinese Logistics Operators Ramp Up U.S. Warehouse Presence

Demand for U.S. industrial leases from Chinese retailers and logistics operators is on a clear upswing this year, with Americans hooked on rock-bottom products from Chinese discount retailers and the prospect of tariffs looming over the industry no matter who wins Tuesday’s presidential election.

China-based third-party logistics and e-commerce companies account for 20% of new warehouse leasing in the U.S. through the third quarter of this year, The Wall Street Journal reported, citing Prologis. 

That percentage has risen sharply in recent years, Prologis data indicates, and shows up starkly in certain markets.

China-based logistics companies leased 5.6M SF of industrial space in New Jersey through the third quarter of this year, nearly three times more than they leased in the state in all of 2023, the WSJ reported, citing JLL data. The same activity is also occurring in Savannah, Georgia, and Southern California due to their proximity to ports, the WSJ article states.

“2024 has definitely been the year of the Chinese 3PL,” Colliers principal Hilary Shipley said while discussing the trend at a Bisnow event in Savannah last month. “They have been everywhere.”

Chinese third-party logistics companies account for 63% of year-to-date leasing activity in Savannah’s 138M SF industrial market, Prologis Vice President Cassie Hanavich said at the event.

Chinese retailers began picking up industrial activity slack when domestic retailers like Amazon, Home Depot and Lowe’s began to sit on the leasing sidelines after a pandemic-fueled surge.

Some of the companies taking leases are based in China. Others have headquarters elsewhere, including in the U.S., but primarily handle logistics between China to the U.S., the WSJ reported. Companies increasing their leasing include e-commerce giants Alibaba Group and JD.com as well as 3PL firms Western Post, Lecangs and Elogistek, the article states.

At least some of the activity is supporting the feverish growth of China-founded retailers, including Shein and Temu, Prologis Managing Director for Global Strategy and Analytics Chris Caton told the WSJ.

“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 and shopping apps have typically shipped orders from Asia to the U.S. taking a week or more, benefitting from the de minimis rule that allows packages valued at under $800 to enter the country without customs screenings.

The Biden administration said in September that it would crack down on the abuse of that exemption by China-founded e-commerce platforms. Former President Donald Trump, meanwhile, has proposed a 60% tariff on all goods from 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,” Jason Tolliver, the head of logistics and industrial real estate at Cushman & Wakefield, told the WSJ.

Some companies are storing more goods in the U.S. to prepare for the prospect of additional tariffs, Tolliver said. Discount retailers like Shein and Temu are also building out their U.S. supply chains to speed up fulfillment since their delivery timeframes are typically far longer than competitors like Amazon, Walmart and Target.