Trends, Challenges, and Strategic Considerations
The landscape of warehousing and distribution has undergone a significant transformation in recent years. With the rapid rise of e-commerce, shifting consumer demands, and increasing real estate costs, high-density storage solutions have become critical for optimizing space and improving operational efficiency.
Kevin Minkhorst, CEO of 3D Storage Systems has a keen viewpoint on the evolving needs of distribution centers, the impact of automation, and the strategic role of high-density storage systems. With over three decades in the industry, Minkhorst has a wealth of experience to share about the key trends shaping warehouse storage today.
The Shift to E-Commerce and Its Impact on Storage
E-commerce has dramatically reshaped storage and fulfillment requirements. Unlike traditional retailers that move full pallets of goods to stores, e-commerce operations require picking and packing of individual items.
“Take Walmart, for example,” says Minkhorst. “Historically, their distribution model involved shipping truckloads of products to large distribution centers, where items were sorted and sent in bulk to stores. But with e-commerce, everything is different. They had to build an entirely new system that could handle smaller quantities, often breaking down pallets immediately into individual SKUs stored on shelving.”
This shift means traditional high-density storage solutions like pushback racking or pallet flow are less suited for e-commerce fulfillment, as they rely on full pallet loads. Instead, multi-level shelving and automated picking systems have taken precedence in this space.
Where High-Density Storage Fits In
Despite the growing focus on e-commerce, high-density storage remains essential for businesses managing large inventories of bulk goods. Industries such as grocery, consumer goods, and manufacturing continue to rely on pushback and pallet flow racking to maximize storage efficiency.
“In frozen food storage, for example, we’re seeing a huge increase in demand for high-density solutions,” Minkhorst shares. “Many of the jobs we look at these days have a frozen component because consumers are shifting to ready-made meals. Grocery store freezers used to be one aisle—now they’re multiple aisles.”
“In frozen food storage, for example, we’re seeing a huge increase in demand for high-density solutions. Many of the jobs we look at these days have a frozen component because consumers are shifting to ready-made meals.”
The trend toward frozen food storage highlights the need for compact, high-density systems that can store multiple pallets of the same product efficiently.
The Role of Automation in Storage
Automation is often cited as the future of warehousing, but adoption has been slow outside of the largest companies. While automated guided vehicles (AGVs) and robotic picking systems are making inroads in manufacturing and large-scale e-commerce fulfillment centers, the cost remains prohibitive for most mid-sized warehouses.
“In my 35 years in the industry, I’ve only seen automation interact with our racking systems a handful of times,” says Minkhorst. “Automated forklifts will probably be the first major wave of adoption since they don’t require the same level of infrastructure investment as fully automated storage systems.”
Trends in Warehouse Development
The construction of new distribution centers is largely driven by two factors:
- Population Growth – As regional populations expand, new storage and distribution facilities must be built to support demand.
- Corporate Expansion – As businesses scale, their distribution networks must grow alongside them.
“Warehousing follows population trends,” Minkhorst explains. “If a region’s population is growing, the demand for storage grows with it. At the same time, real estate costs have skyrocketed, making it more expensive to expand.”
To counteract rising costs, companies are turning to high-density storage to maximize space utilization within existing warehouses.
“The cost of warehouse real estate has shot up dramatically,” Minkhorst adds. “It used to be that you could build a warehouse for around $40 – $50 per square foot. Now, in some areas, it’s upwards of $120 per square foot. When real estate costs increase that much, optimizing your storage density becomes even more critical. It’s no longer just about efficiency—it’s about financial necessity.”
“It used to be that you could build a warehouse for around $40 – $50 per square foot. Now, in some areas, it’s upwards of $120 per square foot.”
This steep rise in property costs has reinforced the value of high-density storage, helping companies avoid the expense of expanding their footprint unnecessarily while still increasing pallet capacity.
Regulatory Changes and Their Impact on Storage Design
As warehouse operations evolve, building codes, safety regulations, and industry standards continue to change, directly impacting the design and cost of storage systems. Two major regulatory shifts in recent years have shaped the storage industry:
1. Stricter Engineering Standards for Racking Systems
Changes in structural engineering standards—driven largely by the Rack Manufacturers Institute (RMI) and new building codes—have significantly increased the amount of steel required in racking systems. This shift, while enhancing safety, has made storage solutions substantially more expensive.
“The RMI sets the engineering standards for racking, and every time they meet, the requirements get stricter,” explains Minkhorst. “Frames that used to be built with a certain amount of steel now require twice as much steel to meet today’s standards. A racking system that was perfectly functional 20 years ago wouldn’t pass the new requirements.”
While these regulations have improved warehouse safety, they have also driven up costs.
“Pushback racking that used to cost $200 per pallet now costs $400 per pallet—and it’s the same product, just with more steel in it,” says Minkhorst. “These new requirements aren’t necessarily bad, as they enhance safety, but you can see why costs keep rising.”
2. Fire Safety Regulations and Their Effect on High-Density Storage
Another major regulatory shift involves fire protection requirements, particularly those set by FM Global, one of the world’s largest industrial insurance companies.
“If you exceed five pallets in a row, you now have to leave a gap or install in-rack sprinklers,” Minkhorst notes. “This is pushing companies to rethink their storage layouts, often opting for shallower pushback racking configurations to stay compliant.”
Previously, warehouses could use deep pushback systems—five or six pallets deep, back-to-back—without additional fire suppression measures. Under new fire codes, facilities using deep racking must either:
- Install in-rack sprinkler systems (which increases cost and risk of accidental damage)
- Leave a minimum four-foot gap between deep racking sections to act as a firebreak
As a result, some companies are reducing the depth of their high-density storage to avoid the extra cost of in-rack sprinklers while maintaining compliance.
While these regulations enhance safety, they come at a cost to warehouse operators.
“Rack prices have doubled due to the new standards, and fire safety codes now require additional spacing or costly sprinkler systems. At the same time, real estate prices are soaring,” Minkhorst explains. “All of this makes high-density storage more essential than ever—because every square foot saved in a warehouse translates into serious cost savings.”
The Decline of Drive-In Racking
One notable shift in the industry is the decline of drive-in racking systems, which were once popular for high-density storage.
“Drive-in racking is becoming obsolete because most companies now deal with more SKUs and fewer pallets per SKU,” Minkhorst explains. “Pushback racking has largely replaced drive-in because it allows for better SKU management while maintaining high density.”
“Pushback racking has largely replaced drive-in because it allows for better SKU management while maintaining high density.”
Drive-in racking works best when storing large quantities of the same product—for example, in industries like beverages or frozen food where entire lanes can be dedicated to a single SKU. However, as inventory strategies shift to smaller, more diverse stock-keeping units (SKUs), drive-in storage no longer provides the flexibility that many warehouses need.
Converting Drive-In Racking to Pushback
For companies with existing drive-in racking, conversion to pushback racking is an option—but it requires proper clearance and structural integrity.
“We do drive-in conversions where possible, but the challenge is that drive-in racks take a lot of damage over time from forklifts constantly driving into them,” Minkhorst says. “Before we can retrofit a system, we have to assess the condition of the existing structure—and in many cases, it’s been beaten up too much to reuse.”
Another key factor in drive-in to pushback conversions is clearance height.
“You need a minimum of 12 inches of clearance above each pallet to properly install a pushback system,” Minkhorst explains. “If you only have 6 inches of clearance, you’re out of luck—you won’t be able to drop in a pushback system without modifying the entire racking structure.”
“Before we can retrofit a system, we have to assess the condition of the existing structure—and in many cases, it’s been beaten up too much to reuse.”
In some cases, adjustments to beam levels can create the necessary clearance. However, if damage to the existing drive-in rack is too severe, a full replacement may be required.
“Drive-in racks are often 20 or 30 years old,” Minkhorst says. “By the time companies realize they need more SKU flexibility, their old drive-in system is too damaged to retrofit, and they end up having to start from scratch.”
Why Pushback Racking is the Preferred Alternative
The decline of drive-in racking has coincided with the rise of pushback racking, which provides greater flexibility while maintaining high-density storage.
“In pushback racking, every level is independent, so you can store different products on different levels,” Minkhorst notes. “With drive-in, every pallet position in a lane has to be the same product—both horizontally and vertically. That just doesn’t work for most companies anymore.”
For businesses looking to optimize storage, the move away from drive-in racking is part of a larger industry shift toward more adaptable, SKU-friendly high-density solutions like pushback.
Strategic Considerations for Storage System Selection
When designing a storage system, companies must balance several factors:
Forklift Compatibility – The type of forklift equipment dictates aisle width and accessibility.
Building Constraints – Column spacing and warehouse layout impact racking configurations.
Inventory Characteristics – The number of SKUs and pallets per SKU determines whether high-density storage is appropriate.
Operational Efficiency – Storage layout should optimize access to frequently picked items while maximizing space usage.
“Warehouse design has to be a mix,” Minkhorst emphasizes. “You’ll always have some standard pallet rack, some high-density storage, and sometimes shelving. It’s about strategically placing these elements for maximum efficiency.”
Future-Proofing Storage Strategies for a Changing Industry
High-density storage remains a cornerstone of efficient warehouse management, especially as companies face rising real estate costs and shifting distribution models. While automation continues to evolve, traditional storage solutions like pushback and pallet flow racking still play a vital role in optimizing space and streamlining operations.
As the industry adapts to changing consumer behaviours and regulatory pressures, businesses must take a strategic approach to storage, ensuring their systems align with both current and future needs. By leveraging high-density storage solutions where appropriate, distribution centers can maintain efficiency, reduce costs, and stay competitive in an ever-evolving marketplace.