Commercial warehousing revenue in the United States will reach $50bn this year, according to a report by Armstrong & Associates Inc. Contract and public warehousing combined are expected to exceed 2008 revenues by 2 percent after declining in 2009. The contract and public commercial warehousing market now constitutes 45 percent of the total U.S. market. Details of these segments by vertical industry are provided, as well as lists of the top dry and refrigerated warehousing providers. This year's report has expanded coverage on the Canadian and Mexican warehousing markets and the refrigerated warehousing segment.
The report provides updates on facility sizes, capacity, revenues, pricing, regional variations and vertical industries. Operating margins, EBITDA and EBIT margin distributions are provided for contract warehousing operations. The results show that profitability is not inherent to either of the models, but is determined by company cultures and pricing practices. Expected operating margins and profitability measures are compared to actual results. Statistical analyses detail the effects of open book relationships and leasing, versus ownership on overall warehouse profitability. Practitioners provide insight on the role and benefits of gainsharing relationships.
The analysis also explores the trend in the growth of contract warehousing at the expense of public warehousing. Three-year contracts are standard covering 48 percent of the contract warehousing relationships. Comparisons for open book versus closed book and building ownership/leasing arrangements have been calculated. Specifics for KPIs, value-added services and gainsharing are presented.
The report also includes components of standard warehouse pricing models. The major variables are space utilization, labor, administrative costs and target profitability margins. This standard costing methodology is used for both contract and public warehousing pricing. Gainsharing, single-factor carton pricing and other key pricing elements are examined. Charges for package handling, storage and value-added services are detailed in the report.
Armstrong & Associates Inc. is a supply chain management market research and consulting firm specializing in competitive benchmarking, mergers and acquisitions, strategic planning, logistics outsourcing, centralized transportation management programs, and supply chain systems evaluation and selection. Among other things, it publishes international and Americas editions of Who's Who in Logistics and Supply Chain Management.
