Warehousing and Storage Services

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 8,100 warehousing and storage services providers in the US act as middlemen in the transport of general merchandise, refrigerated goods, and other types of products. Major revenue categories include storage services, specialty services, handling of goods, logistics, and transportation. Specialty services include breaking bulk, returns handling, and light assembly. Contract warehouses generally require a legal agreement for services over a fixed period (typically three years). Public warehouses generally provide short-term storage, often on a month-to-month basis.

Move To Minimize Inventory Levels

Many customer industries have made significant investments in technology and infrastructure to free up working capital by minimizing inventory holdings, reducing the need for third party storage.

Value-Added Warehousing

As customers continue to demand more from the warehousing and storage industry, the popularity of value-added warehousing grows.

Industry size & Structure

The average warehousing and storage services provider employs about 165 workers and generates $5 million in annual revenue.

    • The warehousing and storage services industry consists of about 8,100 firms that employ over 1.3 million workers and generate about $42 billion annually.
    • The industry is somewhat fragmented. The top 50 companies account for about 45% of industry revenue.
    • Large companies include Excel Holdings (Deutsche Post AG), FedEx Supply Chain (formerly GENCO Distribution Systems), and Iron Mountain Incorporated. The line between warehousing and storage services and logistics is blurred, with companies in both sectors offering similar services.
    • Major customer industries include retail and consumer products, high-tech/computers, food and beverage, automotive, and industrial.
                                  Industry Forecast
                                  Warehousing and Storage Services Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Coronavirus Update

                                  Apr 17, 2022 - Lockdowns In China Will Affect Entire Supply Chain
                                  • A COVID-19 spike in China will affect global supply chains, and could dwarf previous pandemic-related disruptions, according to transportation exports. China's so-called zero-COVID policy sometimes requires that an entire metropolis — and highly interconnected global trade center — is essentially shut down. Reduced manufacturing, along with limited truck access to distribution facilities, will first cause a significant drop in export volumes, but a surge of exports will follow when restrictions are lifted. “You’re going to have a lot of pent-up orders. It’s going to be an overwhelming movement of goods” that will drown shipping lines and ports once the lockdowns are lifted, said Jon Monroe, an ocean shipping and supply chain expert who runs a consulting firm. Spanish financial services firm BBVA predicts Chinese authorities will stick to the “zero-COVID” strategy and lockdowns until at least June. Other China observers say it could take even longer to meet China’s infection standard.
                                  • Firms looking for new options to deal with a pandemic-driven scarcity of storage are signing deals for new space long before ground is broken and expanding searches for sites farther from coastal ports. “The supply-and-demand imbalance is more significant than I have seen,” said Robert Thornburgh, the chief executive of the Society of Industrial and Office Realtors. “There is limited inventory of industrial space. It is almost evaporating before your eyes, if you are even lucky enough to know about it.”
                                  • Atlanta, GA; the Dallas-Fort Worth area of Texas, and the Lehigh Valley in eastern Pennsylvania had the most industrial space under construction in the fourth quarter of 2021. The national vacancy rate fell to 3.2% in Q4, according to a study from CBRE Group. Rents rose 11% in the quarter, setting a record, the study showed.
                                  • Total wholesale sales increased 1.7% in value month over month on an adjusted basis and 25.8% in value year over year on an unadjusted basis in February. Wholesale inventories increased 2.5% in value month over month on an adjusted basis and 19.9% in value year over year on an unadjusted basis in February. The increases partly reflect inflation in the cost of many products. Prices are increasing at the fastest pace in years, a phenomenon largely attributed to the uneven reopening of the global economy.
                                  • Industry watchers suggest that the reliance on e-commerce that took hold during the lockdown will remain. This is expected to increase long-term demand for warehousing space that large e-commerce retailers rent for use as fulfillment centers. To meet the increase in demand stemming from e-commerce growth, the US may need as many as 1 billion additional square feet of US warehouse space by 2025, according to commercial real estate services firm JLL. E-commerce requires three times the warehousing and logistics space as brick-and-mortar retail, according to logistics real estate firm Prologis.
                                  • The pandemic has exposed the vulnerability of far-flung, complicated global supply chains. Supply chain diversification is expected to lead companies to move some activities out of China, possibly creating demand for additional warehousing capacity in the US. Nearly 85% of procurement professionals at North American manufacturing firms are likely or extremely likely to reshore some of their supply chains, according to a June 2021 report released by Thomas, a provider of supplier and product sourcing services. A substantial majority of survey respondents plan to reshore some operations despite some challenges in doing so, including price and speed.
                                  • The popularity of online grocery shopping has accelerated during the coronavirus pandemic, and the category is expected to boost demand for climate-controlled warehousing space, according to Commercial Property Executive. Most online grocery fulfillment occurs in retail grocery locations, which is likely a temporary solution. As the online grocery segment grows, more fulfillment is expected to move to warehouse locations that are more efficient and cost-effective. Because cold storage facilities are three times as costly to build, such projects, historically, are rarely built on spec. However, the need for last-mile cold-storage fulfillment in large urban centers is attracting speculative warehouse investment, according to The New York Times.
                                  • The self-storage industry has seen strong growth during the pandemic as Americans stored items to make room for home offices, moved home from college, or changed residences, according to The Wall Street Journal. Businesses also rented storage space to stock up on extra inventory. Industry watchers expect demographic trends to support continued demand growth for self-storage, including Millennial household formations, downsizing retirees, and migration away from large cities. Large self-storage firms are beefing up through acquisitions to leverage the booming market.
                                  • The supply and demand imbalance for warehousing space has been made worse as retailers, wholesalers, and logistics firms have built up inventories to protect against supply chain disruptions, according to The New York Times. Some companies are signing leases before ground has been broken on new warehouse construction. Others are looking for space further inland, away from increasingly crowded regions near major ports. Warehouses in densely populated areas are getting taller to get more out of limited space. Small businesses are leasing empty storefronts and other available commercial spaces that went out of business earlier in the pandemic.
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