Inflation’s inventory gluts are here to stay and will hit the bottom line in weaker economy: CNBC Supply Chain Survey

Bloated warehouse inventories are an expensive pressure eating away at the bottom line of many companies, and for many, the excess supply and associated costs of storage won’t abate this year, according to a new CNBC Supply Chain Survey.

Just over one-third (36%) said they expect inventories to return to normal in the second half of this year, with an equal percentage expecting the gluts to last into 2024 — 21% saying a return to normal can occur in the first half of the year, and another 15% expecting normal activity by the first half of 2024. But uncertainty about inventory management is significant, with almost one-quarter (23%) of supply chain managers saying they are not sure when gluts will be worked off.

“We don’t expect significant decreases in inventory levels within our network in 2023,” said Paul Harris, vice president of operations for WarehouseQuote. “Several of our manufacturing clients are experiencing dead/bloated inventory challenges due to over-ordering in the container grid-lock from prior quarters. A majority have elected to keep the inventory on hand and are opposed to liquidating.”

A total of 90 logistics managers representing the American Apparel and Footwear Association, ITS Logistics, WarehouseQuote, and Council of Supply Chain Management Professionals (CSCMP) participated in the survey between March 3-21 to provide information on their current inventories and the biggest inflationary pressures they are facing, and often passing onto the consumer.

What’s sitting in warehouses, and what companies are doing about it

Logistics experts tell CNBC 20% of their excess inventory sitting in warehouses is not seasonable in product nature. Slightly more than half of survey participants said they would keep the items in warehouses. But a little over one-quarter (27%) said they are selling on the secondary market because inventories impact a company’s bottom line through…