Chongqing - Amid rising tariff pressures, especially from the United States, China's cross-border companies are increasingly relying on overseas warehouses to navigate risks and control soaring costs, a recent report from Savills reveals.
Containers on the China-Europe Railway Express from Chongqing. (Photo/Chongqing International Logistics Hub Park)
The report highlights the increasing demand for warehouse space as companies seek to shield themselves from tariff fluctuations. In the third quarter of 2024, Prologis, a global leader in logistics real estate, data showed that one-fifth of its net new leases in the U.S. were related to tariff policy adjustments. For instance, China Logistics Group rents 5.6 million square feet of space in New Jersey alone- three times the level observed in 2023.
"China's logistics real estate market is ushering in a new round of development opportunities. The growth of cross-border e-commerce and global industry chain restructuring has driven demand for diverse warehousing systems, including bonded warehouses and international transit hubs. The market is shifting from basic warehousing providers to full life-cycle asset managers that cover development, operation, and exit strategies," said Louisa Luo, head of Industrial and Logistics Services of Savills China.
As of early 2024, Chinese companies have established over 2,500 overseas warehouses—more than 1,800 of which support cross-border e-commerce. These facilities span over 22 million square meters, with the United States remaining the top destination for Chinese logistics investment. However, the rising cost of warehouse construction, fueled by increased inventory demands, is placing added financial pressure on companies.
Recent changes in tariff policies have significantly impacted major Chinese cross-border e-commerce platforms such as Shein, Temu, and TikTok Shop—all of which conduct high volumes of transactions in the U.S. The revision of the U.S. duty-free exemption for “small parcels” (goods valued at $800 or less) means these platforms now face increased costs. They must either pass these costs onto consumers through price hikes or absorb them internally, putting their low-price retail strategies under strain.
And it's not just the U.S.—the European Union and Brazil have also increased tax rates and eliminated duty-free thresholds. In response, many companies have begun stockpiling inventory in overseas warehouses to reduce the high transportation costs of small-parcel shipments and hedge against the volatility of international tariffs.
Companies are also turning to technology to further improve efficiency and control costs. Automation and low-altitude logistics—such as drone delivery—are gaining traction. SF Express, JD.com, and Meituan have already adopted drone logistics to speed up delivery times and reduce reliance on large-scale storage facilities.
China's logistics real estate sector is now in a phase of transition. While warehouse construction has slowed in eastern, central, and western regions, northern and southern China continue to see new developments. In western China, the supply of high-standard, non-bonded warehouses has exceeded 18 million square meters, though rental prices have come under downward pressure since early 2024. Still, declining vacancy rates suggest that demand is beginning to stabilize.
“Chengdu remains a vital logistics center, driven by strong consumer demand and the presence of supply chain enterprises,” said Susan Chen, Associate Director of Industrial and Logistics Real Estate Services at Savills Western China. “Chongqing is also seeing robust growth, especially in the automotive sector, with demand rising in areas like new energy vehicles and home appliances.”
Xi’an is another emerging logistics hub. According to Chen, the city’s strategic focus on bulk commodities and manufacturing is strengthening its position in the market, with warehouse rental prices showing a steady upward trend.