AIhas elevated the cpg market by making it faster, making consumers expect more - they want finished goods, same-day delivery and 24/7 customer service with prompt response that must be personalized. Room for making mistakes is minimal now - thats pretty harsh for ecommerce stories and product sellers. On the other hand, tariffs and platforms are making stores to stretch themselves a lil more, leading them to pay more logistics cost than before which cut their profit margin by 30%.

Import duties, transportation fees and other expenses are always tied with a product your customer buys, and current scenarios are causing even well-performing products struggle to maintain profitability.

How are rising storage costs impacting CPG Brands?

Warehouse space across the United States has become significantly more expensive over the past few years. In 2023, the warehouse rent rose to 40% and in 2025, the cost had a 0.9% increase in Q2. The rise did not stop in 2026. It is expected to maintain the pace which may affect your brand. After all, storage expenses include multiple other sub expenses, such as 

• Monthly pallet storage fees

• Receiving and inbound handling charges

• Pick and pack labor

• Outbound shipping coordination

• Inventory management systems

• Returns processing

These combined costs directly impact the cost of goods sold (COGS). When storage rates increase by 10–20%, they would consequently reduce the gross margin unless offset elsewhere.

Consider a growing CPG brand storing 1,500 pallets monthly. Each month, on average they pay $15 for every pallet, which translates into $22500 pallet fees on total. If we include other expenses, it won’t be less than $50000 to $70000, which means the companies have to earn more than $700000 so the warehouse cost would be no more than 10% of it. 

Why are tariffs adding more pressure to the supply chain?

In addition to domestic storage costs, tariffs on imported goods have increased landed expenses for many CPG brands by 11.4% on average. Categories such as packaging materials, raw ingredients, and finished goods imported across the globe have experienced new or renewed tariff adjustments.

For brands importing products into the United States, tariffs create several challenges:

• Higher upfront capital requirements at customs

• Increased per-unit landed cost

• Reduced margin per SKU

• Cash flow strain due to duty payments

Most economic research shows that the U.S. importers absorb the majority of tariff costs rather than foreign manufacturers. This means brands cannot simply rely on overseas suppliers to lower prices to compensate.

When tariffs raise product costs and storage rates increase simultaneously, gross margin squeezes and if your brand cannot increase the product price, then forget about profitability. 

How do storage costs and tariffs affect cash flow?

Cash flow is often the hidden casualty of rising logistics expenses. It can minimize the pace of the sales cycle which eventually increases the warehouse cost because your company would use the space for a longer duration than required. Consequently, it create three significant financial pressures:

1. Capital is tied up in inventory for longer periods.

2. Liquidity decreases, limiting marketing and expansion efforts.

3. Overstock risk becomes more expensive and dangerous.

Successful and large brands could manage but emerging and mid-size CPG brands may have stunted growth because their funds would be locked into inventory and overhead.

Why is scalable 3PL fulfillment becoming a strategic advantage?

Earlier, brands would stay with one warehouse for years which can amplify financial risk during uncertain demand cycles. The current 3pl fulfillment style offers operational flexibility that in-house logistics often cannot match because they let brands to:

• Increase or decrease storage capacity based on demand

• Avoid long-term real estate commitments

• Convert fixed overhead into variable cost

• Improve shipping speed through optimized facility locations

• Handle seasonal or promotional spikes without hiring internally

For CPG brands selling through ecommerce channels, retail distribution, or TikTok Shop, demand can fluctuate rapidly. A product may trend overnight. Without scalable warehousing and fulfillment, brands may struggle to keep up, leading to delayed shipments, customer dissatisfaction, and lost revenue.

Scalability reduces operational risk while supporting growth.

What should CPG brands look for in a 3PL partner?

Before deciding which 3PL fulfillment you would go with, it is crucial to evaluate a warehouse because it would be your partner that would offer you benefit, creating a win-win situation mutually. These are the key factors you must determine:

1. Transparent pricing structures

Clear breakdowns of storage, handling, and fulfillment fees help brands forecast costs accurately.

2. Flexible storage commitments

Volume-based or month-to-month storage agreements reduce exposure during demand shifts.

3. Strategic U.S. location

A centrally located warehouse, such as in Texas, can reduce shipping zones and lower transportation costs nationwide.

4. Strong inventory management systems

Real-time tracking and integration with ecommerce platforms improve accuracy and reduce costly errors.

5. Experience with CPG brands

CPG products often require temperature control, lot tracking, expiration management, and compliance handling.

A well-structured warehousing and fulfillment strategy must align with both operational needs and financial objectives.

How to save your money after selecting a 3PL fulfillment provider to maximize profit?

To maintain their clientele base, multiple US-based 3PL fulfillment providers offer storage credit programs to support CPG brands. You need to pick such warehousing and fulfillment services that guarantee service and scalability. 

Such 3PL include cart.com, e53 fulfillment and Shiphype.

E53 Fulfillment offers tiered storage credits based on monthly order volume:

• Brands shipping 500+ orders per month may qualify for $2,500 in storage credits

• 1,000+ monthly orders may receive $5,000 in credits

• 2,500+ monthly orders may receive up to $10,000 in credits

These credits apply specifically to storage fees and can reduce early-stage overhead during scaling periods.

These storage credits will cut your storage cost, providing you with meaningful financial relief when tariffs and warehousing rates are elevated. If your brand is at an initial stage, it may help you improve your cashflow for a month by using a long-term strategy to maintain the rhythm by accelerating reinvestment into marketing and expansion.

Click here to scale your CPG brand in this scenario with storage credits

How can CPG brands build a resilient strategy with their 3PL fulfillment partner in 2026 by using their storage credits? 

Storage credits would allow your CPG brand to focus on: 

• Improving inventory forecasting to reduce excess storage

• Diversifying sourcing to mitigate tariff exposure

• Negotiating flexible storage agreements

• Prioritizing centralized U.S.-based shipping hubs

A resilient warehousing and fulfillment model converts logistics from a cost burden into a growth enabler, leading you to handle economic fluctuations, seasonal demand, and competitive pressure seamlessly.

Final Thoughts

The combination of rising logistics costs and renewed tariffs has reshaped the financial landscape for CPG brands in the current fiscal year, leading to a 30% cut in profit margins due to which many are looking for scalable warehousing and fulfillment services to enhance their operational efficiency.

In this environment, such companies need to look for a 3PL fulfillment partner that would offer them storage credits to protect profitability and enable growth. e53 Fulfillment offers storage credit with inventory management and WMS to help you scale and improve your gross margin. 

To navigate rising costs and sustain long-term success in an increasingly complex market, this offer will help you improve your cashflow and compete like a pro. To know more about the offer, click here to book a call with our team.