Warehousing in Toronto: Expectations vs Reality 2023

Warehousing in Toronto

Since after the pandemic, several costs of conducting a business have increased due to limited availability, supply chain bottle necks and resulting factors like increase in gas prices and shortage of working labour. The warehouse and logistics industry too has been several affected in many ways. One of the primary reasons has been the spike in demand for Last Mile Delivery, Shipping and Warehousing in Toronto – customers which and pro-longed several kind of purchases online from ordering Takeout Food to Shoes, customers across the globe have realized the potential savings from ordering online vs visiting stores in person, thanks to the global pandemic. With an unprecedented demand for Warehouses, Logistics, Last Mile Shipping, Storage and Labour, the warehousing industry was not ready and has since been strained in resource allocation.

Here are some observations we have made from businesses with small to large operations and the perception they have when they evaluate working with a Warehouse in Toronto:

1. Warehousing in Toronto is Cheap

Due to a sudden spike in demand for logistics including warehouse storage, product movement, delivery, IT infrastructure, general labour, technically qualified labour and capital investment in warehousing infrastructure, businesses need to realise that Warehousing in Toronto is priced close to any other metropolitan city in North America and is not distant in terms of input costs. Several cost components have not just increased but multiplied from 1.5x to 3x since the beginning of the pandemic including Business Insurance, Rentals, Labour and Gas Prices. Although a vast majority of this is caused because of supply chain disruptions but it seems the overwhelming demand for warehouses may dominate this trend and prices are unlikely to reduce anytime in the near future.

2. We Can Get A Place In Any Warehouse We Want

Warehousing in Toronto is spread across the GTA (Greater Toronto Area) and encompasses all kinds of warehouses classified from Tier 1 to Tier 5 – such rating is provided based on various factors including their infrastructure, size and category of warehousing. Based on our observations, the ‘premium’ Tier 1 and Tier 2 class of warehouses do not even entertain customers below a certain business requirement because their style and cost of warehousing, right from their internal processes to Warehouse Management Software systems, is so high that considering small to medium volume clients would be a loss-making proposition for them instead of a revenue opportunity.

3. Same Day Shipping is Normal

Each order received by a warehousing company follows the same process whether the order is for a single item pick up or a large trailer load – clients must realise that expecting to ship out products the same day is unrealistic and that the warehousing company will either schedule an order for the next business day or charge the client a ‘Rush Fees’ for same day shipping. Many clients expect that shipping out a small order should be not be a time taking affair however, clients must also realise that their may be other client tickets ahead in the day’s schedule already. From the time a new order is received, any company which provides Warehousing in Toronto, Brampton, Mississauga or the GTA – would have very similar processes involving physically picking, labelling and shipping a single or multiple product.

4. Ocean Freight Lead Time has Normalized

Like many countries, Canada too depends largely on import of goods from countries like China, India, France, South Africa, etc – most of which are goods imported by sea. Due to a prolonged and an increasing backlog of customs clearance, warehouse space and limited staff at the ports, timelines are extended by up to 60 days from their normal course of time. Importers must pay attention to the movement of their freight and add suitable buffer periods to ensure a steady supply chain.

5. Amazon FBA Prep Inventoyr Lead Time is Instant

Amazon Warehouses are known for their size of operations and efficiency amongst even the prominent companies which provide Warehousing in Toronto however the unprecedented spike in e-commerce orders, labour shortage and movement of trucks may also have impacted the world’s biggest marketplace. FBA Sellers seldom presume that once the products are delivered to the FBA warehouse, the inventoyr status would get updated and would be ‘ready for sale’ instantly however the reality is that FBA Warehouses may also be swamped with incoming shipments and the FBA Seller’s merchandise may only become available from 1 to 30 days from the time of checking in the inventoyr in the receiving area.

6. Self-Operated Warehouses are Cheaper than Outsourced Warehousing in Toronto

It is common for growing businesses to consider commencing their own warehouse operations based on the assumption that a warehouse they operate themselves, owned or leased, may turn out to be cheaper however the reality is that there are several direct, indirect and unforeseen expenses that warehouse operators have to consider. With growing demand for warehousing in Toronto by virtue of the location and feasibility of freight movement, if a business was to acquire or lease a warehouse, just the initial investment is capital and time intensive which seldom works out to be difficult for businesses that have use only for their own warehousing requirements.

7. One Warehouse Can Handle All Our Requirements

Every kind of warehousing demands a specific type of warehouse infrastructure, personnel training, insurance coverage, software as well as pricing structure. Presuming that a single warehouse space can handle any and all kind of product movements and business use cases would be incorrect. The reality is that each of the following Product Types and Warehousing Requirements would have those many permutations which would require a unique warehouse plan and price structure:

8. Prime Location Warehouses are Rare to Find

Companies that require warehousing services, generally start searching for warehouses outside city or densely populated areas assuming that Warehouses in Prime Locations would either too expensive, unavailable or simply do not exist. However, the reality is that are several prominent companies which provide Warehousing in Toronto, Warehousing Mississauga and Warehousing Brampton and have seen a recent rise in services especially because of the highway connectivity and feasibility they provide to long term freight movement costs including Trucking or even Parcel Pickup Services.

Conclusively, I feel that Warehousing in Toronto is undergoing a transition for the better and companies should be prepared the digital transformation accelerated due to the pandemic but definitely has a positive economic impact for all stakeholders to grow and learn together.