3PL-warehousing: New Armstrong report says U.S. commercial warehousing market will hit $50 billion

A new report from supply chain consultancy Armstrong & Associates Inc. states that United States-based commercial warehousing revenue will hit $50 billion in 2010. The report notes that combined contract and public warehousing revenues are expected to top 2008 levels by 2 percent after a 2009 decline. And it added that the contract and public warehousing market now represents 45 percent of the entire U.S. warehousing market.

By ·

A new report from supply chain consultancy Armstrong & Associates Inc. states that United States-based commercial warehousing revenue will hit $50 billion in 2010.

The report notes that combined contract and public warehousing revenues are expected to top 2008 levels by 2 percent after a 2009 decline. And it added that the contract and public warehousing market now represents 45 percent of the entire U.S. warehousing market.

Richard Armstrong, chairman of Armstrong & Associates, told LM that a slowly recovering economy is the main reason for a 2010 rebound in the commercial warehousing market.

“Increasing activity is a direct reflection of the economic recovery,” said Armstrong. “The economic recovery is gradual and will take a while, but the rebound is due to the recovery.”

Warehousing activity that is increasing for various companies represents a snapshot of what is happening in different vertical markets, said Armstrong.

He cited automobile sales, which have lagged, as an example of warehousing and third-party logistics (3PL) activity in that sector that remain previous levels. The same goes for anything related to housing and new home construction, which work directly with big box retailers like Lowes and Home Depot and other building materials suppliers for the housing industry, he said.

But the news is not as bad for other sectors, like food and beverage, which are not likely to have any lag and may actually see a slight increase in 2010, due to U.S. population growth, said Armstrong.

“Healthcare should grow this year, and I don’t expect there will be any [drop-off] for defense or aerospace,” said Armstrong. “And when it comes to telecommunications-related merchandise like cell phones and the IT sector as it relates to all the applications available now like smart phones and portable computers are all likely to hold their own throughout this year.”

Included in the report is a list of the top 25 commercial warehousing services providers, which includes 3PLs. It is also comprised of updates on facility sizes, capacity, revenues, pricing, regional variations and vertical industries, according to Armstrong & Associates.  And data on operating margins, EBITDA and EBIT margin distributions are provided for contract warehousing operations. 

The firm said in a statement that the results show that profitability is not inherent to either of the models, but is determined by company cultures and pricing practices.  And it said that expected operating margins and profitability measures are compared to actual results.  Statistical analyses, said Armstrong, detail the effects of open book relationships and leasing, versus ownership on overall warehouse profitability, with practitioners providing insight on the role and benefits of gainsharing relationships. 

Another feature of the report highlighted by Armstrong are components of standard warehouse pricing models whose 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, according to Armstrong. 

For more information on the report, go to http://www.3PLogistics.com.


About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Latest Whitepaper
How Lean is your Lean Quality Program?
Avoid quality program bureaucracy that can sap logistics productivity and increase costs
Download Today!
From the September 2016 Issue
Indecision revolving around three complex supply chain elements—transportation, technology and organizational structure—finds many companies waiting to commit to a strategic path. However, waiting too long will only result in a competitive disadvantage that will be difficult to overcome in today’s fast-paced, global economy.
Time for Asia’s ports to rebuild
Is the freight recession upon us…again?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Supply Chain Best Practices: Visibility to In-Transit Inventory
During this webcast you'll learn on how various organizations have gained instant access to in-transit parcels and given access to this information to stakeholders.
Register Today!
EDITORS' PICKS
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...
2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...

Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...
Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....