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 Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation 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

                                  Recent Developments

                                  Mar 5, 2023 - Amazon Reduces Warehouse Space Again
                                  • E-commerce giant Amazon has canceled, closed, or delayed another 33 warehouses, according to Supply Chain Dive. Amazon canceled, closed, or delayed 66 facilities in September 2022, bringing the total number of affected facilities to 99 by early March 2023. The cuts comprise 32.3 million square feet of active or ground-level space in 30 states. Fulfillment centers and delivery stations are most affected, according to Supply Chain Dive. Amazon invested billions of dollars into building and leasing millions of square feet of warehouse space early in the coronavirus pandemic. The company began slimming down its portfolio in a bid to strengthen profitability now that businesses have reopened and outsized demand for e-commerce has subsided.
                                  • Recent layoffs at big-name logistics companies could signal more staffing cuts amid economic uncertainty, according to industry news source Supply Chain Dive. Many companies had aggressively increased staff to keep up with heightened demand sparked by the COVID-19 pandemic, but with consumer spending cooling in an uncertain economic environment, accelerated growth has turned into bloated operating expenditures. Freight forwarder Flexport laid off 20% of its workforce in December 2023, citing a macroeconomic downturn that is hurting its customers. “Lower volumes, combined with improved efficiencies as a result of new organizational and operational structures, means we are overstaffed in a variety of roles across the company,” co-CEOs Dave Clark and Ryan Petersen told employees in a January 11 memo. Other major industry names including C.H. Robinson and DSV are also relying on layoffs or hiring freezes to reduce their labor costs.
                                  • Demand for sustainable warehouse development is increasing, according to real estate investment trust Prologis. Installed warehouse rooftop solar capacity will double in 2023, and EV truck charging capacity will exceed 10 megawatts, the firm said. Building future-proof facilities can shield logistics companies from future operational risks including changing regulations, community resistance, and volatile fossil fuel-based energy pricing. Costs for sustainable building and operations are dropping. Expenses associated with sustainability have been a huge roadblock for businesses wanting to gear toward green, but government incentive programs and the European energy crisis have the power to turbocharge these longer-term trends, according to Prologis.
                                  • High purchase cost is often a major barrier to entry for companies working in logistics, manufacturing, fulfillment, and other industries where automation is required to remain competitive and counteract labor shortages. Some robotics companies offer a robotics-as-a-service (RAAS) model allowing customers to lease or rent robots to avoid high up-front purchase costs. “The flavor more associated with RaaS today is charging per unit of work,” said Peter Sieff, CEO of Aethon, which specializes in autonomous mobile robots that work in healthcare and hospitality settings. “Instead of charging for the hardware and software as a product itself you pay for the service it is delivering. There are two major RAAS models — leasing and payment per transaction or task performed. Companies often rent and buy robots based on needs or market trends. Companies may rent first and then buy, or they may rent robots during peak demand season.
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