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 8,300 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 234 workers and generates $6 million in annual revenue.

    • The warehousing and storage services industry consists of about 8,300 firms that employ over 1.9 million workers and generate about $49 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

                                  Jan 6, 2024 - Prices Rebound
                                  • Warehousing and storage service prices have rebounded moderately from a 2023 low recorded in June. Prices have been significantly above the long-term historical trend since 2021. Industry employment began rebounding in September 2023 after a steady decline during the prior eight months but remained below January 2023 levels. Average wages for nonsupervisory employees increased moderately during the first 11 months of 2023.
                                  • The average warehouse vacancy rate increased to 5.2% in the fourth quarter of 2023 from 4.6% the previous quarter and 3.1% a year earlier, according to commercial real-estate services firm Cushman & Wakefield. More US warehouse space is unused than at any time since the coronavirus pandemic. Companies signed new leases for about 588 million square feet of warehouse space for the full year in 2023, down 27% year over year, according to Cushman & Wakefield.
                                  • Warehousing and storage firms benefiting from reshoring may also benefit from nearshoring, according to the Reshoring Initiative (RI). Harry Moser, founder of RI, says that if a product is so labor intensive that you can’t bring it to the US, then companies are sometimes surprised to find that wages in Mexico are far lower than in China. The average Mexican manufacturing worker earns $4 an hour, while the rate in China — where wages have been gaining 10% to 15% a year — is currently around $7, and in the US, it’s roughly $23. Products coming from Mexico end up with an average 40% US content, while in China they have 5% US content. Warehousing and storage is likely to be needed along supply chains that extend into Mexico.
                                  • 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.
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