Supply chain disruptions driven by fuel price volatility, shifting tariffs and geopolitical risk are again weighing on global distribution networks, with cost pressures now extending from transportation into inventory management and facility operations. Companies in sectors ranging from home furnishings to automotive manufacturing are reassessing how they move goods, where they source materials and how much product they keep on hand.
In recent commentary from Cushman & Wakefield, Michael Carson, who leads Supply Chain & Logistics Advisory for APAC and EMEA, noted that higher fuel prices are only one component of a broader realignment. He warned that energy costs can cascade through logistics networks and ultimately reshape occupiers’ overall network strategies. Benjamin Harris, Cushman & Wakefield’s Head of Industrial Consulting for the Americas, told Connect CRE that the current environment represents a persistent, multi-dimensional strain rather than a one-off disruption that can simply be waited out.
Supply chain inefficiencies have roots in decades of offshoring and just-in-time logistics, but the pandemic exposed the fragility of those systems. While many operational bottlenecks such as container shortages, shipping delays and elevated ocean freight rates had largely normalized by 2023, Harris said that underlying structural challenges remain in place. Occupiers are still working with distribution footprints and inventory positions created reactively during 2021 and 2022, even as labor productivity in core logistics markets lags pre-pandemic levels and the cost of capital remains materially higher than in 2019.
That combination has left many networks overextended, with higher carrying costs and operating expenses. At the same time, energy market volatility, tariff shifts, geopolitical realignment, tight labor markets and more constrained capital are all converging on distribution and production activities. Industrial buildings delivered over the past decade were largely designed for a more stable operating backdrop, with 36-foot clear heights, cross-dock layouts and parking ratios oriented around single-shift bulk distribution.
Harris emphasized that the physical structures generally remain functional, but occupier requirements have changed. Users are now prioritizing abundant trailer parking, increased power capacity to support automation and electric vehicle fleets, and a higher number of dock doors to manage smaller, more frequent shipments. Many are also seeking facilities that can flex between traditional warehousing and light manufacturing as reshoring and nearshoring considerations evolve. As tariffs and production strategies shift, warehousing is absorbing more complexity, including greater safety stock, more SKUs, longer dwell times on imports and a tilt toward just-in-case inventory strategies.
These trends are reinforcing demand for industrial properties with strategic supply chain positioning, particularly assets near ports, inland rail hubs and power-rich logistics corridors, even as overall leasing conditions soften. Cushman & Wakefield research indicates that occupiers are focusing less on temporary workarounds and more on longer-term redesigns of their logistics networks to enhance resilience and flexibility. For owners, developers and investors, Harris argued that underwriting now needs to extend beyond traditional market comparables to account for how buildings actually support evolving operational models.
He pointed to features such as enhanced trailer storage, robust power infrastructure, automation-ready floor design and strong connectivity as potential differentiators for future performance, cautioning that speculative projects that overlook these needs could face re-tenanting challenges. Harris also highlighted the importance of prioritizing supply chain-critical locations and designing facilities that can accommodate both distribution and light manufacturing while enabling EV charging, on-site power generation and other future upgrades.
Harris characterized the drivers of current supply chain pressure as structural rather than cyclical, citing geopolitical shifts, the energy transition, demographic labor constraints, climate impacts on infrastructure and a higher cost of capital than in the 2010s. He argued that real estate strategy and supply chain strategy can no longer be separated, and suggested that developers, investors and brokers who align assets and advice with occupiers’ long-term logistics needs are likely to see outperformance over time.
