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

                                  Nov 2, 2022 - Robotics-as-a-Service Wins Converts
                                  • 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.
                                  • The strengthening US dollar threatens to undermine a rebound in American manufacturing, according to many economists. The warehousing and storage industry may be negatively impacted if the flow of manufacturing input and output products decreases. The US dollar’s high value relative to the euro, the Japanese yen, the British pound, and other currencies makes foreign-made goods cheaper to import, while exports of US-made goods grow more expensive for foreign buyers. Experts say that the dollar’s strength is due to a resurgent US economy following Covid-19-related shutdowns in 2020 and the Federal Reserve’s efforts to reduce inflation.
                                  • E-commerce giant Amazon has scrapped plans for 42 new US facilities, according to MWPVL International, a consulting firm that tracks Amazon's real-estate purchases. Amazon's real estate empire exploded during the pandemic due to a surge in demand, but the company now has a surplus of space, Amazon’s Chief Financial Officer Brian Olsavsky said. Some industry experts say that that the moves are an indicator of a broad-based reduction in demand for warehousing due to changes in consumer buying habits caused by the withdrawal of social distancing measures. Amazon doubled the size of its operations and workforce from mid-2021 to April 2022. Amazon also scaled back hiring in its retail division this year.
                                  • Demand growth for warehousing and storage may slow as retailers including Walmart, Bed Bath & Beyond, and Best Buy report that they are coping with an unexpected glut of casual clothes, kitchen appliances, and electronics. Consumers have pivoted away from spending on goods while the highest inflation in decades has crimped household budgets. Retailers are cutting prices and canceling orders to cope with excess stocks, according to Chris Caplice, executive director of Massachusetts Institute of Technology’s Center for Transportation and Logistics. Forecasts for more storage capacity may be overblown since retailers are also cutting prices and canceling orders to cope with excess stocks, Caplice added. “I don’t think it’s going to be like, we need to double the amount of warehouse space.”
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