The Role of Third-Party Warehousing Companies in L.A. During Supply Chain Disruptions

In the early days of the Covid-19 pandemic, companies scaled back production in response to a rapid decline in consumer demand. But, by the end of 2021, businesses began to reopen and demand consequently skyrocketed. 

The global supply chain was ill-prepared for this type of interruption, and it underscored the importance of having a backup plan in place in the event of a breakdown in the supply chain. Unfortunately, Southern California is no stranger to these types of breakdowns. Partnerships with third-party warehousing companies can, however, help your business overcome the challenges posed by disruptions.

But before explaining how, let’s first cover some of the biggest threats to the supply chain for Los Angeles-based businesses. 

An Unpredictable Environment

Southern California is home to two of the nation’s largest ports—the Ports of Los Angeles and Long Beach—along with thousands of miles of highways and railroads. Supply chain breakdowns can stem from any one of them. 

Southern California’s unique geographic and economic position creates special vulnerability to supply chain disruptions around these ports. Each risk brings distinct challenges to logistics operations that third-party warehousing companies must plan for:

Wildfires:

• The devastating 2020 wildfire season across California inflicted a staggering financial toll exceeding $4.2 billion dollars in destroyed homes, businesses, and infrastructure.

• Jump ahead to this year, and we’ve witnessed trucking fleets scrambling to establish alternative pathways when flames engulfed critical transportation corridors. These unexpected detours haven’t just stretched delivery timelines – they’ve hammered companies with unplanned fuel expenses and labor costs while leaving customers frustrated by shipping uncertainties.

• U.S. BLS data show that employment drops by an average of half a percentage during fire events in California, including a decrease in industries related to trade, transportation, and utilities. 

Third-party warehousing companies with distributed inventory across multiple facilities were able to better maintain fulfillment rates despite road closures. Also, businesses with comprehensive emergency planning are better equipped to resume operations days faster than unprepared facilities

Earthquakes:

• USGS scientists paint a sobering picture: within three decades, South California faces better-than-even odds (60%) of enduring a seismic event registering at least 6.7 on the Richter scale.

• When Loma Prieta violently shook Northern California in ‘89, road networks fractured, including the vital San Francisco-Oakland Bay Bridge artery, forcing logistics managers to hastily improvise while vehicles crawled through unprecedented gridlock and third-party warehousing companies were stocked-out.

• Five years afterwards, Northridge’s violent upheaval twisted steel and concrete freeways into useless ruins across Los Angeles, causing massive supply chain disruptions and unleashing a financial catastrophe approaching $49 billion as homes crumbled and businesses shuttered throughout the region. 

Smart warehouse partners now incorporate earthquake resistance in facility design. They maintain backup power systems and satellite communication capabilities that function when traditional infrastructure fails.

Landslides:

• According to the California Department of Transportation, the state suffers an average of 10 landslide-based road closures a year on state highways, making life difficult for unprepared logistics and third-party warehousing companies

• The notoriously unstable Big Sur corridor exemplifies this vulnerability – between 1961 and 2001, crews tackled 55 significant landslide blockages along this stunning yet treacherous stretch.

• When saturated ground collapsed at Rat Creek in 2021, the resulting 70+ day closure of Highway 1 forced countless eighteen wheelers and delivery vehicles into exhausting inland detours, burning extra fuel and killing delivery schedules. 

• USGS notes that as of 2025, increases in precipitation extremes are projected to dramatically increase the intensity and regularity of landslides in the near future.

Strategic warehouse positioning away from hillside zones and planned alternative routes by third-party warehousing companies can mitigate the effects of road closures caused by landslides. 

Unions:

• During the 2023 port worker negotiations – which took place at West Coast ports that, as of early 2025, handled roughly 42.7% of US containerized imports by value – greatly slowed down delivery and transport

• In early June 2023, at the worst point of the union-based supply chain disruption, average container dwell time at LA and Long Beach went above 7 days! 

Businesses and Warehouse partners can plan accordingly by making sure to have excess safety stock on hand to avoid disruption during work stoppages. Just-in-Time warehouses may face stockouts under such circumstances! 

Third-party warehousing companies can offer your business consultative support as you navigate these challenges. Here’s how:

Goods are Stored Near Your Customers

Shipments from suppliers overseas can be disrupted by any number of events, from storms to labor strikes at ports. A warehouse partner ensures you have the items you need in the proximity of your customers. 

When your company outsources inventory storage to third-party warehouses, all imported goods are immediately shipped from ports of arrival to a nearby warehouse facility. During supply chain disruptions, you can feel confident you will still be able to meet customer demand with a reliable third-party warehousing company, until operations are restored. 

You Get Visibility Into Your Inventory

Interruptions in the supply chain can make it difficult for companies to keep track of their inventory levels since shipments typically arrive less frequently. A trustworthy warehousing partner can offer peace of mind during moments like this and help your business circumvent such issues.

Many third-party warehouses use advanced inventory management software that offers their clients real-time visibility into inventory levels. As inventory levels drop, companies can respond by alerting their customers and contacting suppliers to determine when future shipments will arrive. 

At the same time, third-party warehousing companies can use inventory monitoring technology to determine the optimal amount of safety stock to reduce the likelihood of stockouts while minimizing storage costs. 

You Get Access to Supply Chain and Logistics Experts

Interruptions in the supply chain can be stressful for business owners. During such trying times, it’s important to have access to professionals with experience in the field. 

Third-party warehouses have the experience and expertise needed to help their clients navigate the challenges of a disruptive event. They can offer updates in a rapidly evolving environment and provide suggestions on how your company can prepare itself for future supply chain disruptions. 

Third-Party Warehousing Company Trends and Future Outlook

Recent supply chain management shifts emphasize resilience over pure efficiency.

Key trends reshaping Southern California warehousing include:

• Safety stock increases: According to a McKinsey survey of supply chain leaders, 97% of respondents said they were pursuing a combination of tactics to fight supply chain breakdowns, including increasing inventory.

• Increased space demand: As of 2021, annual net absorption, the total change in occupied space, is now 56.3% higher than it was in the previous ten-year period and the demand for space is projected to increase for businesses and third-party warehousing companies. 

• Vacancy rates: vacancy rates sit roughly around 7.4% in Southern California, but have fluctuated greatly over the years. The recent and likely short-lived increase in vacancy offers an opportunity for importers and warehousers alike.

Of course, part of staying ahead of these trends is introducing new approaches to warehousing strategies. Technological integration is one area where warehousing is likely to drastically change in the coming future:

• Surveys show that 92% of supply chain leaders are planning on spending more on upgrading inventory and network-optimization tools to increase logistical resilience to supply chain disruptions. Third-party warehousing companies will be at the cutting edge of implementation.

• A recent study on North American distributors found that embedding AI in forecasting can help reduce on-hand inventory by 20-30% and lower stockout rates by 5-15%.

• Some supply chain analysts predict that by 2027, up to 75% of companies will adopt some form of cyber-physical automation in their warehouses. 

Forwarded-thinking third-party warehousing partners stay abreast of such changes and are always working to integrate new developments. They identify specific vulnerabilities in your supply chain and create contingency plans tailored to your product lines and customer distribution patterns.

At Cummins Logistics, A Third-Party Warehousing Company That Has Your Back

If you’re in search of a 3PL provider with experience in tackling the challenges of the global supply chain, Cummins Logistics can help. We have more than 40 years of experience in building customized warehousing solutions for each of our clients. Get started today