From spare-parts depots to fulfilment centres, operators are trading floor space for vertical, software-driven storage

Walk into a spare-parts warehouse in the Gulf built five years ago and you would see rows of racking stretching into the distance, forklifts weaving between aisles, and a picker walking the length of the building to find one part. Walk into one built this year and increasingly you will not see any of that. You will see a wall of enclosed machines, each one delivering trays of stock straight to a picker who never has to move.

That machine is a vertical lift module, or VLM, and it is becoming one of the quiet workhorses of Gulf logistics. A VLM stores goods on trays stacked vertically inside an enclosed unit, some as tall as 30 metres, and uses an automated extractor to bring the right tray down to an operator on command rather than sending a person to search for it. The pitch is straightforward, according to SSI Schaefer, one of the larger suppliers in this space, a single unit can cut the physical footprint needed for small parts storage by as much as 90% compared with conventional shelving.

The market numbers back up what is happening on the ground. The GCC vertical lift module market was valued at $94.7 billion in 2025 and is forecast to reach $196.7 billion by 2036, a compound annual growth rate of 7.6%. Saudi Arabia already accounts for the largest slice of that market, holding 42.3% of GCC share in 2025, driven by its Vision 2030 industrial buildout.

Saudi Arabia leads MENA’s active warehouse pipeline, with Riyadh, SPARK, Qatar, Morocco, Egypt and Dubai adding major Grade A capacityMENA’s warehouse pipeline remains concentrated in a handful of major logistics corridors in 2026, led by Saudi Arabia and supported by active projects in Qatar, Morocco, Egypt and the UAE. Together, these developments are adding substantial Grade A capacity for distribution, e-commerce, cold chain and industrial occupiers.

Rikaz and Arcapita’s The Node is the largest confirmed active logistics park on the list, with a gross floor area of 2,958,344 sqm in Riyadh. Rikaz lists the project status as “infrastructure works in progress”, while Arcapita says the 3 million sqm development will include Grade A warehousing for regional and international tenants. The first phase covers about 400,000 sqm, with access to King Khalid International Airport and Riyadh’s main ring roads.

SAL Logistics Zone, Riyadh

SAL Logistics Zone at Falcon City covers more than 1.5 million sqm north of Riyadh. SAL’s Tadawul disclosure states that the company leased 1,561,965 sqm from Sela for 30 years, extendable by 15 years, to construct, develop and operate a logistics zone. SAL’s 2025 reporting says the final land agreement was completed in October 2025, with design, enabling works and tenant engagement progressing.

The Justice Department’s Trade Fraud Task Force has crossed $1 billion in recoveries, penalties, forfeitures, and charged losses. The announcement came in July 2026, less than a year after its August 2025 inception. For manufacturers and importers, as well as their logistics partners, these cases can provide context around which parts of the supply chain are under the microscope.

A Costly Transshipment Playbook

The largest recovery clocked in at $549.5 million. It came from a False Claims Act settlement with Perfectus Aluminum and four affiliated warehousing companies in California. Between 2011 and 2014, the companies imported more than 2.2 million aluminum extrusions from China and declared them on CBP Form 7501 as finished pallets, a classification not subject to antidumping and countervailing duties. DOJ says the extrusions were spot-welded together to resemble pallets. A jury convicted the companies criminally in 2021, and the civil settlement followed this past May.

Perfectus is the largest case, but it is not the only one built around the same idea. Multiple companies have attempted to relabel origins and reroute paperwork to dodge duties.

Ceratizit USA, a tungsten carbide distributor, paid $54.4 million after DOJ alleged it routed Chinese-made products through Taiwan and re-declared them as Taiwanese to avoid Section 301 tariffs. The company also allegedly misclassified the products under the wrong Harmonized Tariff Schedule code and skipped country-of-origin marking duties.

Boise Cascade paid a $6.4 million fine, twice the profit DOJ says it made on the goods, after its supplier, Horizon Plywood, shipped Chinese birch plywood through Malaysia. While there, it was repacked into new containers and sent on to the U.S. as if it had originated there. DOJ says Boise Cascade kept placing orders for the plywood even after federal agents executed a search warrant at Horizon’s warehouse.

Two Chicago cases folded into the $1 billion total run the same play with gold jewelry. Surya International allegedly mis-declared 563 shipments worth $693 million as Singaporean when the goods actually came from India and the UAE, avoiding roughly $38 million in duties. Importer Barkha Wholesale is accused of running a similar scheme through Oman and Singapore over six years, avoiding about $13.6 million.

Liability Doesn’t Stop at the Port

DOJ has been explicit that its mandate covers “the entire supply chain, including importers, customs brokers, downstream distributors, industrial and commercial end-users, and other supply-chain actors who knowingly profit from merchandise imported contrary to law.”

Under federal law, a case can be prosecuted not just at the port of entry but in any district the goods later move through. This means a distributor or end-user several steps removed from the original customs declaration can still land in hot water if it knew, or should have known, the goods entered illegally. That pushes the compliance burden past the importer of record. Freight forwarders, customs brokers, and buyers relying on a supplier’s country-of-origin paperwork must verify it independently, not just file it.

Whistleblowers Have a Serious Financial Incentive

The Perfectus case started with whistleblowers. Two individuals and the Aluminum Extruders Council, a trade group, sued under the False Claims Act’s qui tam provisions and split 17.5% of the settlement, roughly $96 million. Ceratizit’s whistleblower, a single individual, collected $9.75 million. That’s a direct financial incentive for competitors, trade associations, and former employees to report suspected duty evasion. DOJ actively promotes this type of activity through its Corporate Whistleblower Program.

The MGI International case shows the other side. MGI, a plastic resin distributor, misrepresented Chinese-origin goods to dodge Section 301 duties, but the company caught the scheme itself. It disclosed the evasion to DOJ and overhauled its compliance program. DOJ, in response, credited MGI’s prior $6.8 million FCA payment and declined to prosecute the company at all. Only its former COO, who orchestrated the scheme, was criminally charged.

Non-Duty Risk is in Scope Too

Not every case is about tariffs. Boise Cascade’s exposure ran through the Lacey Act, which criminalizes trafficking in illegally sourced timber, not just customs valuation.

Royal Sovereign paid an $8 million criminal fine and $395,786 in restitution after failing to report to the Consumer Product Safety Commission that its imported air conditioners were linked to more than 40 fires and one death. Sourcing integrity and product-safety reporting sit squarely inside what DOJ calls trade fraud.

What Happens Next?

DOJ and the Department of Homeland Security released a joint Resource Guide to Trade Fraud Enforcement laying out what regulators consider covered conduct and how civil versus criminal resolutions get decided. DOJ backed the effort with a new Global Trade & Commerce Enforcement Section and named the U.S. Attorney’s Office for the Northern District of Illinois as lead prosecutorial partner across 35 participating districts.

U.S. Customs and Border Patrol, working in parallel, says it has assessed more than $2.1 billion in trade-related penalties and barred 35 companies from federal contracts this fiscal year.

Distributors face liability for conduct several steps removed from their own filings, and whistleblowers have a bigger financial reason to come forward. In the current environment, it is important for logistics partners to verify all paperwork, not simply accept it in good faith

Supply chain activity is growing at its fastest rate in over four years. With shippers front-loading inventory ahead of this year’s tariff deadlines, excess stock is now moving through the warehouse network. The industry is already feeling the squeeze, from carriers scrambling for dock space to shippers absorbing rent hikes.

The Logistics Managers’ Index, a monthly survey of logistics executives on inventory, warehousing, and transportation conditions, recently rose above 70 for the first time since March 2022. The index scores conditions on a scale of 0 to 100, with readings above 50 signaling expansion and readings above 70 representing significant expansion.

The last time logistics managers reported growth this fast, the industry was digging its way out of pandemic-era backlogs.This time, tariff-fueled stockpiles are driving the jump. The LMI report ties the increase directly to retailers “rushing inventories forward to avoid tariffs,” bringing in Q4 holiday goods ahead of schedule in order to outpace new duties the U.S. may impose in late July.

Which Metrics Are Moving?

According to the LMI report, inventory levels rose 5.7 points to 60.5, which the report identifies as the driver behind June’s spike. The biggest move, however, was warehousing utilization. The metric climbed 6.5 points to 69.4, its highest reading since September 2022. Transportation utilization climbed 5.2 points to 74.7, a new eight-year high.

Notably, warehousing capacity moved the opposite direction. It slipped down 3.0 points to 47.5, sliding back into contraction after a brief stretch of mild expansion in May. That reading is roughly flat versus a year ago and down 5.1 points from two years ago.

Warehouse capacity is tightening at the exact moment inventory and utilization are surging, creating a squeeze that’s already showing up in pricing. Warehousing prices are up 5.5 points year-over-year and 9.3 points from two years ago.

LMI respondents don’t expect the pressure to ease in the near-term future. They’re forecasting warehousing utilization to climb further, reaching 72.5 in the months ahead.

What Does the Real Estate Data Say?

The LMI measures how tight capacity feels to the companies renting space, while commercial real estate data reveals the levers behind the tightening. Current data points to a supply problem rather than a demand blip.

CBRE’s Q1 2026 industrial figures show leasing activity up 14% year-over-year to 249.8 million square feet, putting it on pace for a record year. Net absorption rebounded to 43.1 million square feet, but construction completions slowed to 55.4 million square feet, still barely keeping ahead of demand. National vacancy sits at 6.7%.

Prologis’s research, published in May, shows that new warehouse deliveries are on pace to hit roughly 190 million square feet in 2026, the lowest level in a decade and about 20% below the pre-pandemic average. Prologis expects full-year net absorption near 200 million square feet, up from 2025.

Demand is on track to outrun new supply for the first time since the pandemic-era buildout ended, and Prologis is telling its investors to expect vacancy to contract by year-end. Rents already turned positive in Q1, the first increase since 2023.

Industry-wide utilization is still running around 84%, which is below the long-term average. Still, the Prologis research made it clear that scarcity is “emerging in select locations and building types.”

Real estate data is consistent with what the LMI is highlighting. Shippers in the markets and categories where scarcity is already showing up are the ones driving the warehousing capacity reading below 50, even while the national number still looks quite a bit looser.

The Whole Picture

Together, the two data sets suggest that the industry has spent several years underbuilding. Construction is still sitting near decade lows, and demand is accelerating faster than that pipeline can respond. A normal cycle absorbs a demand spike with new supply coming online, but this cycle doesn’t have much supply queued up to absorb it.

For shippers, the data suggest that this may be more than just a one-month index reading. Contracts signed even a year ago were priced before this run-up, and rent growth turning positive in Q1 is an early signal. Shippers renewing space this year are negotiating at the bottom of the rent cycle. That negotiating window narrows as demand keeps outpacing supply. The smartest move right now is likely to lock in space and rates.

The next LMI report and Prologis’s next quarterly update will provide more context around this trend. Those numbers will show whether June’s inventory build was a one-time front-load ahead of this year’s tariff deadlines or the start of a longer run, as well as whether vacancy is actually contracting as expected.

Building a nuclear reactor in America has historically been a high-stakes, logistical nightmare with multi-year delays and busted budgets as par for the course. Hyper-specialized components that take years just to order, let alone forge, add to the challenge.

Now, the federal government is trying a radically different approach: fixing the supply chain before the first shovel hits the dirt.

The U.S. Department of Energy (DOE) is executing a structural shift in infrastructure financing, earmarking $17.5 billion in low-interest loans specifically to shore up the front end of the nuclear power pipeline. Announced Tuesday by the DOE’s Office of Energy Dominance Financing (EDF)—formerly the Loan Programs Office—the capital injection is designed to tackle the biggest roadblock in the entire building process: the years-long wait times for the massive, specialized core parts of a reactor. By securing funding early, utilities can immediately order Tier-1 components, including the heavy steel pressure vessels that house the nuclear fuel, massive steam generators, and specialized high-power coolant pumps, long before construction begins.

The capital will be distributed across five selected projects structured as special purpose vehicles (SPVs) between utilities and technology provider Westinghouse. To qualify, each SPV must collectively contribute $1 billion in private capital into the procurement pipeline. All five projects plan to deploy the Westinghouse AP1000, the flagship U.S. pressurized water reactor.

Tackling the Long-Lead Procurement Nightmare

For logistics and procurement executives in the heavy industrial sector, the nuclear supply chain has long been a masterclass in risk. Structural components for large-scale reactors cannot be bought off the shelf; they require forging capacities that only a handful of facilities globally possess. Fragmented domestic manufacturing, coupled with strict regulations and a specialized labor deficit, frequently pushes component lead times out by multiple years.

According to EDF Director Gregory Beard, by financing the procurement of these heavy components well before breaking ground, the agency expects to compress commercial operation timelines by up to three years. The strategy aims to achieve volume-based purchasing economies, driving down the unit cost of components that usually face severe inflationary pressures during extended development cycles.

The strategy directly targets the structural failures of past projects. Southern Company’s expansion of Plant Vogtle in Georgia—which brought two AP1000 units online in 2023 and 2024—became a cautionary tale after slipping seven years behind schedule and running $17 billion over budget.

Energy Secretary Chris Wright noted that the EDF engineered this new funding framework specifically to isolate those legacy risks. A key structural difference this time around is the unbundling of technology supply from field execution. While Westinghouse remains the foundational technology supplier, the actual engineering, procurement, and construction (EPC) contracts will be awarded via a separate, competitive bidding process. Additionally, the AP1000 design is fully finalized, eliminating the rolling engineering changes that plagued Vogtle’s early supply chain logistics.

Underwritten by Hyperscale Demand

The Westinghouse AP1000 pressurized water reactor (PWR) is the most advanced commercially available nuclear power plant. Photo courtesy of Westinghouse

The administrative push to get 10 new large-scale reactors under construction by 2030 is driven by a massive, non-negotiable demand signal: the power requirements of artificial intelligence data centers.

Hyperscalers like Microsoft, Google, and Meta are scrambling to secure gigawatt-scale, carbon-free baseload power. Tech conglomerates are expected to act as the primary off-takers for these new builds through long-term power purchase agreements (PPAs), providing the revenue certainty required to underwrite the massive capital expenditures of the projects.

While the newly announced component loans are expected to stabilize the mid-tier manufacturing pipeline, the commercial operation dates for these five unselected projects are still projected for the mid-2030s.

To prevent downstream bottlenecks from choking the rollout, the administration is concurrently addressing raw material constraints. The component financing sits alongside a broader federal effort to re-establish a domestic nuclear fuel supply chain, including a recent $2.7 billion allocation for domestic uranium enrichment and ongoing negotiations to convert surplus defense plutonium stockpiles into commercial-grade fuel.

A New Playbook for Heavy Industrial Logistics?

The implications of this $17.5 billion program may extend beyond the nuclear sector. If the DOE’s pre-construction financing strategy successfully compresses project timelines and keeps budgets intact, it could establish a new federal blueprint for de-risking other massive, capital-intensive industrial supply chains.

Currently, sectors like grid-scale energy storage, deep-water offshore wind, and domestic critical mineral refining face the exact same “chicken-and-egg” procurement dilemma: developers hesitate to buy multi-million dollar components without finalized project approval, but waiting for approval pushes delivery dates out by years.

By utilizing federal capital to absorb front-end procurement risk, the government is essentially testing whether it can artificially stabilize volatile industrial supply chains. If this framework proves it can shield utilities from hyper-inflation and long-lead bottlenecks, expect to see the “procurement-first” loan model adapted for projects such as cross-country transmission lines, advanced chip manufacturing facilities, and large-scale domestic mining operations.