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The [Complete] Guide to Sourcing a USA Warehouse

Companies, business owners, and analysts need to know the guide to sourcing a USA warehouse. Businesses must understand the best location for a new warehouse, how to choose a warehouse, and the benefits of this type of warehouse outsourcing vs. performing the function in-house.

US Warehouse Market is in High Growth & Full of Excellent Options

In the past ten years, the number of warehouses in the USA has grown consistently, coming to just over 19,000 total in 2020. Compared to just 15,000 in 2010, this shows the yearly growth of warehouses in the United States. But how did this happen?

In the past decade, the number of employees and businesses utilizing warehouses in the USA has continually grown. The USA warehousing industry reached over 8 million people in 2020, including transportation services, automation, and fulfilling needs.

Although new technology may see this number decline in the future, it has still grown. Despite the new cost-effective measures that reduce the need for manual labor, warehousing in the USA continues to expand.

Furthermore, the warehousing and public storage market in the US in terms of market size has grown to $34 billion in 2022, experiencing a 4.7% US market size growth in the past year. Compared to 5 years ago, the public storage and warehousing USA industry has grown 4%.

Lastly, warehouse vacancy has decreased year after year, with a starting point of 8.83% in 2013 already decreasing to 7.9% the following year in 2014. This indicates that the capacity continually increases, employees are hired, and the need for warehouses has grown.

Outsourced warehouses in the USA are in great demand, and for good reason!

Where is the Best Location for Your US Warehouse?

Choosing where to put your US warehouses can be the difference maker between success and failure.

The best location for a warehouse in the US will depend upon:

  • The ideal INBOUND shipping location to minimize inbound freight costs
  • The ideal centralized location to minimize overall outbound shipping times and costs to your customers
  • Whether or not you care if your US warehouse is near you (this is mostly a personal preference)
  • If you require multiple warehouse locations (hint – most small and growing companies don’t need this)

In addition, consider these factors when it comes to choosing your US warehouse location:

  • Order volume concentrations — Consider where the highest concentration of your orders will be shipped.
  • Shipping costs and times — If high shipping costs and low delivery times are your biggest concern, using one central warehouse location can provide a minimized average shipping cost per order and lower average shipping time per order.
  • Inbound freight costs — If your business is most concerned about freight costs for inbound supplies, choose a warehouse close to a nearby port.
  • Staff interaction and accountability — If you are concerned about quality checking your US warehouse and building a close relationship, choose a warehouse close to the majority of your US staff.
  • States Taxes — Choose a warehouse that works with your tax needs based on your specific state.

How to Choose the Best Location for your Warehouse in the US

Although there are various choices of US warehouses that can work for your business, it is imperative that you use the right criteria to find out how to select the most conducive location. Consider these criteria when it comes to choosing the best location for your warehouse:

Monthly US Warehouse Fees

You don’t want to choose a location too high in pallet storage or monthly warehousing costs that can cancel out your profit. Costs and fees are essential to weigh when it comes to choosing where to open a warehouse in the USA. Some areas of the country are more expensive than other, and monthly warehouse fees will make up a relatively large portion of your expenses.

Analyze the both the cost of the warehouse per square foot or per month and the cost of outsourced warehouse pallet storage (or cubic footage) to see trends in the most affordable locations. For example, the average price per square foot per year in Memphis is $16.50. In contrast, the average price per square foot per year in Savannah, Georgia, is $11.61.

Labor Availability & Costs

Labor cost and workplace availability is essential to keeping costs low. Finding a location with workers who have the necessary skills, without costing a fortune, is essential to find a qualified and trained workforce in the warehouse and logistics businesses.

Transportations Costs

Transportation costs are affected by connectivity, public transportation availability, traffic speed, traffic volume, peak hours, and road signs/signals.

Proximity to Transportation

The proximity and location of the USA warehouse to stations, ports, airports, and highways must be a priority when it comes to fulfilling orders and logistics.

Proximity to Sales Markets

A new USA warehouse should be close to your customer base and easy to access. Analyzing your desired customer base and those in your local area can help determine where to position your warehouse. For example, if you only serve customers in the Northeastern part of the United States, choosing a warehouse in New Jersey is enough. But, if you service customers throughout the country, you may need to choose two locations on the West and East coasts.

Proximity to Suppliers

You want to be close to your supplier. There is no point in having a warehouse in another state from your supplier, if it is hard to get to via roads, airplanes, or boats. For example, if you have an Asian supplier, choose a warehouse on the West Coast to make the distribution of goods quicker and easier.

Foreign Trade Zones

If you mainly deal with goods produced outside of the US, it could be helpful to utilize a foreign trade zone warehouse to eliminate taxes and tariffs.

Environmental Factors and Disaster Contingency Planning

Some states and locations are bound by the weather and geographical restrictions. For example, suppose you have a USA warehouse in Alaska or Michigan. In that case, you can be restricted by the harsh winters and heavy snowfall. Take this into consideration when choosing distribution, transportation, and access.

The Most Important [Other] Information You Should Consider When Selecting Warehousing in the US

Aside from considering the warehouse location within the USA, you will also want to look into several other integral criteria.

We screen US warehousing based on several factors, including;

  • Customer retention rate
  • Order accuracy rate
  • Inventory accuracy rate
  • Shipping accuracy rate
  • Years in business
  • Number of customers
  • Annual order volume

We have many options for you to check out when looking for warehousing in America. Your particular company needs are unique, and it’s all about determining what warehouses will suit your needs in the US market.

Fill out a form or give us a call and we can match you with the best US warehouses today!

Benefits of Working with US Warehouses for US Companies

US-based companies will achieve expected benefits of outsourcing when working with US warehouses:

  • ‘Hands-Free’ fulfillment and distribution — US companies that work with US warehouses can quickly and easily fulfill their distribution needs on time to the correct customers and retailers. Outsourced warehouses take away the headache of storage and shipping, managing employees, etc.
  • Reliable and high quality services — Working with US warehouses increases the likelihood of transportation services through the network. Because warehousing is all that they perform, they will likely do better than your company and perform at a very high level.
  • Reduced overhead — Keeping overhead costs low can help keep the profit as high as possible. US warehouses can save your company name, from reduced storage fees to lowered freight rates.
  • Better customer service — More availability, resources, and efficiency can help businesses spend more time dealing with customers and fulfilling unique requests.

Benefits of Working with US Warehouses for Global Companies

There are numerous benefits of working with US warehouses for global-based companies compared to in-country fulfillment centers:

  • Customs — Global companies can clear customs and get better access to a more extensive customer base.
  • Reduced costs and times — An international warehouse for a company in another country means lower shipping costs and shipping times, increasing the customer service levels and efficiency. The last thing you want is for consumers to leave the checkout process because your shipping fees or delivery times are too high.
  • Diversity — Having multiple fulfillment centers means less chance of failure – one fulfillment center can be a “single point” that could deteriorate during a crisis (ex: Covid-19 pandemic).
  • Fulfill US orders — If a foreign company company sees an increase in US-based orders, opening a US fulfillment center and warehouse can help lower shipping timeframes, deliver goods quickly, and reach people in different time zones.

What Services do US Warehouses Provide?

Many US warehouses provide helpful services to businesses that can help with order fulfillment and customer service:

  • Inventory control — warehousing USA services help control inventory to eliminate human error (i.e., lost packages, failing to label packages, wrong delivery location, etc.).
  • Cross docking — Clients can break down products into multiple shipments and have them accurately delivered to customers.
  • Fulfillment and Pick and Pack Services — Whether its B2C, B2B or both, warehouses can fulfill and prepare orders for shipment. From pallet in, pallet out scenarios, to carton picks, to full-scale e-commerce order fulfillment, warehouses in the US provide the full spectrum of order fulfillment services.
  • Transportation and Transloading — Transportation services allow clients to track the goods during the delivery cycle. Warehouses allow for transloading, which helps transfer goods between modes of transportation without getting lost in transit.

Warehousing in US for Small Business Versus High Order Volumes

Small businesses should start looking for a US fulfillment company once they begin to launch their sales and products in the US market. At this time, you should have an idea of your inventory plan, counts, arrival dates, and other important data to understand the expansion of your business.

It’s important to note that warehouse companies are not high-risk/high-reward ventures; in fact, they are decidedly risk-averse. Thus, if your company is still in its early stages of expansion, most fulfillment companies may not feel comfortable partnering with you or offering a long-term commitment.

Generally speaking, it is best to begin your search within a few months of your sales launch into the US. By this point, you should have many of the details of your plan already nailed down (such as precise inventory counts, arrival dates, item SKUs, etc.) You may also have a US website up and running. In summary, we are best able to assist you with matches when:

  • You are 2-3 months out from launching your products in the US
  • You have your business website that US warehouses can work see
  • You have an estimated shipment date and known quantities that you’ll be ordering initially

With these things in hand, most warehouses will be more willing to work with you, and may even provide a discounted offer on a proposed contract.

Top Locations for Warehousing in USA

There are certain locations in the USA that are more conducive to warehouse work and storage facilities. Below is a quick list of some of the most popular US warehouse locations for outsourcing:

  • Southern California — Long Beach is the highest volume port in the country, making it the perfect location for gathering inbound products, moving freight, and distributing containers.
  • New Jersey — New Jersey, although small, has a high population and is less expensive than its neighbor (New York). There are various transportation choices throughout the state, including interstate connections and thousands of miles of railway tracks.
  • Dallas, Texas — Dallas and the nearby Fort Worth area are the perfect middle point between the East and West Coast, connecting cities like New York City with Los Angeles and Mexico City.
  • Houston, Texas — Even though it is located in the same state as Dallas, Houston has its benefits. This city is one of the biggest in landmass and mileage, making it easy for those who need extra acreage for their business. With a great port option, bringing inbound products from overseas is popular in Houston.
  • Illinois — Due to the importance of Chicago, Illinois is one of the best states for warehouses and fulfillment services. The Port of Chicago on Lake Michigan is one of the most convenient for rail access and fulfillment.
  • Florida — This southeastern state is a smart choice for a warehouse in the USA due to its access to the Atlantic and Gulf of Mexico – including the extensive Latin American market.
  • Georgia — The Charleston and Savannah metropolitan areas and ports are ideal for inbound shipments, connecting with industries, and dealing with major corporations.

Where Is the Best Location for YOUR US Warehouse?

The answer to this question really depends on your current business needs and objectives. If you anticipate immediate high-volume sales, then you may want to use multiple fulfillment centers. Should you need to spread outbound shipping costs, and ensure consistent delivery timelines, then you should consider a centralized location relative to your consumer base. If inbound freight costs are your biggest concern, then you may decide to contract with a warehouse in the same region as the nearest port.

All of the below factors should be considered when choosing the ideal warehouse location:

  • Proximity to ports of entry
  • Proximity to high concentration of customers
  • Anticipated sales volume
  • Desire to capitalize on no or low sales tax states
  • Need for close proximity to US based staff

Top Places Companies are Searching for US Warehousing: Regions, States, and Cities

How fast you get your products out to targeted customers all hinges on fulfillment center location. While the best facilities usually move products quickly across the country, being closer to customers helps deliver packages hours earlier.

Fulfillment Companies in the US

Even so, it’s worth keeping in mind a good location isn’t always about delivery. Having your warehouse closer to your business makes it easier to visit them and keep communication going. Far too many businesses think warehousing can work autonomously without interaction, but it only leads to confusion.

Here at WarehousingAndFulfillment.com, we regularly study the top places companies search for warehousing. We find most of the searches became segmented by region, state, and city.

Searching For Warehousing by Region: Is a Midwest US Warehouse Ideal or a Warehouse in a Coastal Region?

We get many requests through our site for where the best warehouses are, and we strive to provide answers based on our expert research. You’ll find some interesting results on which regions many businesses prefer.

In many cases, we pinpointed the East Coast as the top place, seemingly because of the higher populations there. However, when you look at east coast based warehouses facilities, they mention the Port of New York/New Jersey as being the second largest port in the nation. This automatically gives you access to the world’s biggest consumer markets.

Beyond the east coast, though, we found the Central U.S. being the second choice. As much as you might think the central portion of the U.S. is too far away from ports, consider many major highways connecting to the west and east originate in the Midwest.

The last regional choice was the West Coast, despite the Ports of Los Angeles and Long Beach being the busiest in the entire country.

Most telling: the largest percentage of businesses indicated they had no special preference for region and would consider any place.

Searching For Warehousing By State: Which States are Most Popular?

It turns out California is the top state searched for in finding fulfillment centers. Mention of the top ports above are obviously a major factor, though also consider highways like I-5 extend the entire length of the west coast. This allows fast deliveries by truck up to Oregon and Washington State.

3PL Warehousing and Fulfillment Search by State

New Jersey is second with proximity to the #2 port mentioned above. Plus, being close to New York opens a huge market without having to reside directly in the state.

We found Florida as the third most searched state, most likely because it’s a direct conduit to Central America, South America, and the Caribbean.

Texas was fourth thanks to being centrally located within the country, and being close to Mexico for cornering more outside markets.

Searching For Warehousing By City: The Most Popular States for US Warehousing

It’s no surprise that Los Angeles turned up as #1 in our studies on city searches for fulfillment companies. As one of the most thriving fulfillment cities on the entire west coast, it’s within close distance to the most important California ports.

3PL Warehousing and Fulfillment Search by City

Chicago is second with direct routing right into the Midwest, while not being far from major east coast markets (as well as Canada)/.

Dallas/Fort Worth is third as an example of how popular Texas is for being so centrally located.

Then you have Miami at #4. It’s a major hub for the entire east coast and the other Americas without obstructions to reaching those markets quickly.

With all this information available to you, it gives you some guideposts to go on when searching for a warehouse now or in the coming year. Contact us where we connect businesses with thoroughly screened warehouses meeting specific company needs.

How Much are Warehouses in the US?

There are average costs of fulfillment services fees and rates in the United States. The below numbers are based upon our yearly survey of US warehouses:

  • Set-Up Costs — $336-$575 from $0 to thousands, or $150-$450 for web integration
  • Inbound Shipping — Depends on the contract with the specific carriers
  • Receiving Fee — $39 per hour or $330 per 20’ container.
  • Storage Fee — $16.21 per pallet or $0.50 per cubic foot
  • Fulfillment Fee —- $3.13 per single item or $4.33 for B2B order
  • Box Fee — $0.50 to $1.61 on average, $0.80 per box
  • Order Inserts — $.05 per label or $.23 per insert
  • Outbound Shipping — $.50-$.95 per order
  • Returns — $3.15 per order
  • Kitting — $.25-$.65 per unit or $3.9.60 per hour
  • Account Management — $30-$500 per month
  • Call Center — $1.43 per minute

Special Considerations for Global Companies Expanding into the Use of US Warehousing

Suppose you are a non-US-based company looking to expand into the American market. In that case, you’ll likely need to find a warehouse located in the United States. They can help you overcome logistical challenges and deliver your product to your consumer base.

Indeed, this is not a decision that should be taken lightly. However, with the right partner in place, this crucial step can result in sustainable growth and increased profitability for your company.

The following information can serve as an overview of what you need to know when looking for warehouse services in the USA. It will cover 6 major factors that you should consider:

  1. Why should you enter the US market?
  2. What regulatory hurdles must be overcome?
  3. What specific regulations may apply to your product?
  4. Why should you utilize a freight forwarding service?
  5. Where is the best location for your warehouse?
  6. When should you start looking for a US warehouse company?

Armed with such knowledge, you’ll be able to make an informed decision, and find the best fulfillment provider for your specific needs.

Why Should You Enter the US Market?

Find a Fulfillment Company in the US for Your International Business

The United States has a dominant market share across many global industrial sectors. For example, the US alone holds 45% of the international pharmaceutical market. Further, it accounted for over 70% of total market revenue in the global packaged food market as of 2016.

In addition to the United States’ current market shares, there is also a huge amount of potential for growth. For instance, the United States’ consumer electronics industry grew from a market size of $266 billion in 2018 to $301 billion in 2019 – a year over year increase of over 13%. Also, the general cross-border eCommerce industry is growing at a rate of roughly 30% every year! Odds are, the US market share in your specific industry also has enormous growth potential.

Of course, when we talk about “entering the US market” we’re referring to the establishment of a logistical infrastructure that will help you to bypass extended lead times from overseas shipping, as well as additional shipping costs and customs clearance hassles for non-bulk deliveries. It is also important to factor in lost sales, or missed opportunities. After all, most consumers aren’t willing to wait 30 to 40 days for their product to arrive on that “slow boat from China”.

Thus, cost-saving bulk shipments to the US, along with an established on-hand quantity within American borders, can help you to leverage your presence in the United States to the fullest advantage. In summary, these are the top benefits of US based fulfillment services for overseas and international companies:

  1. Product availability – US consumers will be able to order and receive your product immediately without any additional international shipping delays
  2. Reduced customs clearance headaches – By clearing customs in bulk and maintaining a steady inventory of product, clearing U.S. customs without major problems will become a reality
  3. Increased customer satisfaction and potential repeat business – U.S. consumers are more likely to experience greater satisfaction with their order delivery by using a local U.S. based fulfillment company, thereby increasing the chances of positive reviews on your products and repeat sales.

What Regulatory Hurdles Must Be Overcome?

You may have a lot of questions about regulatory concerns associated with entry into the US market. Here are some frequently asked questions, and their corresponding answers:

Do I Need to Be a US Citizen to Sell Products in the United States?

The short answer is: no. Anyone has the right to sell products in the United States, whether a foreign company or an individual, as long as the products in question are themselves legally permissible to sell.

Does a Warehouse Need to Establish a US Entity?

Strictly speaking, no, international companies do not need to set up a physical presence in the United States. That being said, the establishment of a physical warehouse within US borders can do wonders for building up consumer trust in your business.

What Are the Tax Ramifications of Entering the US Market?

If you choose to not set up a US corporation, then you generally won’t have to worry about paying federal taxes. However, you should count on having to collect and pay sales taxes. The only states that currently do not have a sales tax are Alaska, Oregon, Montana, New Hampshire, and Delaware, and it’s likely that you won’t be using any of those states for overseas importing. Additionally, you’ll need to register with the IRS as a foreign-owned company and receive a Taxpayer Identification Number (TIN) to proceed with your importing operations. It may be wise to consult with an accountant or tax attorney to determine which type of company you should register as with the IRS.

How Do I Import My Products to My US Fulfillment Center?

The biggest thing to focus on here is the payment of all of your duties for the product shipment. For overseas shipments, you’ll need to enlist the services of a US customs broker to clear the shipments for you. You’ll also need to declare an IOR (Importer of Record) and Ultimate Consignee for your shipment. The IOR is the person or entity that takes responsibility for the inbound shipment, and guarantees that the products meet all applicable legal requirements. To register as the IOR, you’ll need your name (or your company’s name), your foreign address, and your TIN. The Ultimate Consignee will typically be your fulfillment service provider.

Would I Need to Establish a US Website?

This is not a requirement for conducting international business. Nevertheless, a website customized for your US consumer base could greatly enhance the effectiveness of your sales and marketing strategy. In addition, if your website is set up for a variety of different payment methods (debit, credit, PayPal, etc.) then you’ll likely attract more customers.

Do I Need to Set up a US Bank Account?

No. However, most US consumers will put more trust in your business if you maintain a US bank account, especially since international transactions have a reputation as fertile ground for fraud. Moreover, if you want to use credit card payments as an option on your website, then you’ll need to open a merchant account with a US-based bank.

What Specific Regulations May Apply to Your Product?

Choosing a US Based Fulfillment Service

Apart from the general regulatory burdens that must be borne, you should also carefully research any product-specific guidelines that could impact your imports. For example, you can’t even import dirt into the US without a permit, so you can expect that there will be a lot of detailed (and perhaps surprising) restrictions for more complicated commodities. Failure to meet the required approvals could result in your products being held up or confiscated at the US border.

For many items, guidelines laid down by the Food and Drug Administration (FDA) must be scrupulously observed. Affected items could include:

You should also know which import items are banned from entry into the US. The US Customs and Border Protection website can prove to be an invaluable resource in this regard. Finally, familiarize yourself with other laws regulating product imports, such as the Food, Drug, and Cosmetic Act, and the Fair Packaging and Labeling Act.

Furthermore, Tariffs (taxes on imports and exports) should be explored, identified and planned for. There are numerous websites only that detail the potential tariffs.

Why Should You Utilize a Freight Forwarding Service?

Strictly speaking, it is not necessary to enlist the services of a freight forwarding company to import your products into the US. Nevertheless, there is so much documentation and red tape, and such a bewildering variety of regulations that vary from country to country, and from state to state, that many international companies use a freight forwarding firm to handle these tedious, complicated details for them.

What does a freight forwarder do? Basically, freight forwarding companies are “logistics brokers”. In other words, they handle the logistics of your logistics by temporarily storing your product, negotiating shipping rates, handling multiple bids from carriers. Further, selecting the transportation option that is most economical, secure, and expedient. Freight forwarders can handle:

  • Pickup and transporting of your goods overseas
  • Clearing US customs
  • Final delivery to from the port to your warehouse (often referred to as “drayage”)
  • Completion of all required documentation, including the identification of proper harmonized tariff codes

If you are unsure of which freight forwarding company to use, then fulfillment companies can often recommend trustworthy freight forwarders for your consideration.

WarehouseAndFulfillment.com is a reputable and trustworthy business that screens fulfillment companies. With over 15 years in the industry, this business ensures they cover all of their bases to only work with high-quality providers to meet ALL of your unique needs.

  • Interviews — We ask all our vendors to fill out an application and go through an in-depth interview process.
  • Research — We perform independent research into the firm to ensure they are trustworthy and backed by the Better Business Bureau.
  • Credit check — We perform a credit check on the vendor.
  • Reference check — We assess the business’ level of performance and client reviews.
  • Guarantees — We require each vendor to meet specific industry standards and pricing proposals.

Making the Right Decision – Picking the Best US Based Warehouses and Warehousing

Selecting a US warehousing service is a weighty decision, but there are many resources available to help you navigate the various options out there. For instance, WarehousingAndFulfillment.com has a large number of helpful articles, including a detailed guide on fulfillment pricing and costs, and a free fulfillment guide on “How to Select the Best Fulfillment Services Company for Your Business“.

Another important step to choosing the right fulfillment partner for your business is a “face-to-face” visit, if at all feasible. After all, your fulfillment provider makes up a crucial part of your business operations, but is thousands of miles away from your company headquarters. Even if you can’t physically travel to the fulfillment center you have in mind, conversations with customers and employees, and even a virtual tour of the facility, can do much to set your mind at ease.

Using US Warehousing: Concluding Thoughts

If you’d like assistance in finding the warehouse that perfectly aligns with your business needs, objectives, and overall vision, then reach out to us at WarehousingAndFulfillment.com for further information. Since 2005, we’ve been connecting businesses with the right US based warehouses that are thoroughly screened and best matched for each unique scenario.

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