March 19, 2018 | Industry Insights
New Report Provides Key Info on U.S. Warehousing Market
Recent estimates from Armstrong & Associates, Inc. (A&A), an internationally recognized key information resource for third-party logistics (3PL) market research and consulting, indicate that the total U.S. warehousing market for 2017 was $148.7 billion. Commercial warehousing accounted for $68.6 billion. The Third-Party Logistics Value-Added Warehousing and Distribution (VAWD) market segment was $39.1 billion in 2016, and is estimated at $40.5 billion for 2017, according to A&A.
This information is based on data collected by A&A from more than 500 contract-warehousing operations, of which almost 400 were contract customers, and 100 public warehousing operations. You can find all the results in A&A’s report, “First Wave Pick: The Business of Warehousing in North America – 2018, Market Size, Major 3PLs, Benchmarking Costs, Prices and Practices.” The report is the latest in A&A’s series of warehousing studies, which have been instrumental resources to the industry for more than 15 years. In addition to market estimates, warehousing operators and customers of third-party logistics providers will find extensive guidelines for pricing, including e-commerce rates.
A&A estimates that there are 9,000 U.S. commercial warehousing facilities of size with 1.9 billion square feet of space. The Top 50 in A&A’s North American VAWD 3PL list—representing 3,827 facilities and 829 million square feet of warehousing space —have an average of 77 warehouses. The average size is 216,593 square feet.
As compared to previous A&A studies, operating margins, both expected and actual, are down. This is due to market competition and pricing, particularly when it comes to scope creep. A&A’s provides Transactional Pricing Guidelines in the report to help warehouse owners handle charges, storage per month by number of turns, rates for pallets high/deep, costs per square foot, racking costs, inventory turn discounts, per-hour labor rates, and transactional charges.
North American ecommerce logistics revenues were $9.5 billion in 2016, and A&A anticipates that number will double by 2020. “Ecommerce is changing the landscape of 3PL warehousing, amplifying the effects of nearly every major trend—a tight labor market, adoption of new technologies, increased rents, low vacancy rates, increasing capacity, and new development,” noted A&A in its press release.
Roanoke Trade specializes in insuring logistics service providers and warehouse operators. Part of maintaining strong operating margins is incorporating loss control and risk management strategies at a facility to minimize claims. It’s also crucial to have the right insurance program in place in the event of a loss so that your assets are properly protected.
For more information about our portfolio of property and liability coverages, including protection against the risks of fire, theft and damage of third-party owned cargo stored in your facilities, please contact your Roanoke Trade professional at 1-800-ROANOKE (800-762-6653).