A new report estimates the size of the U.S. commercial warehousing market at $25.7 billion. The report, “An Overview of Warehousing in North America,” is the second from Armstrong & Associates Inc., a Stoughton, WI-based supply chain management consulting firm specializing in market research, mergers and acquisitions and outsourcing, and also the publisher of Who’s Who In Logistics. This detailed report — significantly expanded from that issued last January — covers major service providers, prices and value-added services.
Among the findings included in the report: — After-tax profitability was reported at 2.7%. — Lengths of contracts reviewed were from 1-7 years, with most having 3- and 5-year terms. — Only 9% of contracts were for 1 year, and 14% were for more than 5 years. — Public warehousing pallet handling charges were found to vary regionally from $4.70 to $5.86.
A major part of the report is dedicated to warehouse price and practices benchmarks. Contract and public warehousing are addressed in separate sections, with contract warehouse relationships measured by operating margins, EBITDA and EBIT. Regional differences are reported for both contract and public operations. Profitability and margins for contract warehousing are addressed in detail, with statistical analyses made of the effect of open book versus closed book, own versus lease and other variables on margins. In the report, components of standard warehouse pricing models are given. The major variables are space utilization, labor, administrative costs and margins. This standard costing methodology is used for both contract and public warehousing. Gain-sharing, single-factor carton pricing and other key pricing elements are explained, and package handling, storage and value-added service charges are detailed. Expected operating margins and profitability measures are compared to actual results for 3PLs in the study, with statistical analyses performed showing the effects on profitability of open book relationships and leasing versus ownership. Richard Armstrong, president of Armstrong & Associates, says the report is “the only public explanation of what the real prices are in warehousing in North America.”
“An Overview of Warehousing in North America” is priced at $1495. For more information, call (800) 525-3915, e-mail Dick@3PLogistics.com, or visit www.3PLogistics.com.