Top 20 warehouses: Top 20 refrigerated and 3PL warehouses 2020

Buoyed by a surge in e-commerce orders, the push to close final-mile distribution gaps, and the need to outsource non-core tasks to trusted partners, the valued-added warehousing and distribution segment fared well in 2020 in spite of the larger issues that unfolded domestically and internationally during the year.

According to Armstrong & Associates, a third-party logistics (3PL) consultancy and research firm, total commercial warehousing revenue will total about $79.4 billion this year, including both contract and public services. Value-added warehousing (third-party logistics) will end at about $46.9 billion for 2020 (down slightly from $47.2 billion in 2019).

The shining star on the block right now is e-commerce, which posted double-digit percentage increases month-over-month throughout most of the year. In 2020, the 3PLs serving that market posted $53.3 billion in gross revenues—a number that’s been increasing at a compound annual growth rate (CAGR) of 28% since 2017. “That’s much higher than overall 3PL sector growth, and it’s where a lot of the activity is taking place right now,” says Evan Armstrong, president of Armstrong & Associates.

Armstrong compiles an annual list of the top North American warehousing companies. Each company has either provided square footage information or enough public information for Armstrong & Associates to make a reasonable estimate of size.

“Overall, the warehouse providers that are handling e-commerce shipments for customers have been faring pretty well,” he continues, noting that companies from Armstrong’s Top 20 list that fall into that category include Radial, UPS Supply Chain, GEODIS, and DHL. Also on this list (but not officially “ranked” because it doesn’t operate like a traditional logistics provider) is Amazon, a key player in the e-commerce arena whose U.S. logistics revenues are about $25.5 billion, or roughly 60% of the nation’s total value-added warehousing market share, Armstrong says.

“Amazon’s always kind of the oddball on the chart because you can’t really do apples-to-apples comparisons between Amazon and the rest of the 3PLs,” he explains. For example, while the company’s Fulfillment by Amazon (FBA) service qualifies as third-party logistics, the actual service that Amazon provides differs significantly from that of a traditional provider. “3PLs tend to focus more on storage and handling for revenue generation,” Armstrong explains. “Whereas Amazon does more on the demand-planning and sales operations side.”

By the numbers

With 139 million square feet of warehouse space and 439 facilities, DHL Supply Chain North America held onto the top spot on this year’s list. It’s a position the the provider is used to filling, holding a wide lead over most other 3PLs on the list.

“DHL is always No. 1 because it’s the largest,” says Armstrong, who adds that global organizations like Ford, Chrysler, HP and Agilent Technologies all rely on DHL for warehousing and transportation management services.

Taking the second spot on this year’s list is XPO Logistics, which has about 90 million square feet of space across 400 facilities. “XPO has a fairly significant global footprint, both in the warehousing and transportation management,” Armstrong points out. He sees the company’s last-mile delivery services as an especially valuable asset right now and estimates that this portion of XPO’s business will have approximately $1 billion in revenues for 2020. “They have one of the largest last-mile delivery networks domestically,” he adds.

Rounding out the top five on this year’s list are Ryder Supply Chain Solutions (with 328 warehouses and 56.4 million square feet), NFI (145 and 49.6 million), and GEODIS North America (142 and 44 million). Armstrong says that while GEODIS has been cashing in on the e-commerce boom and providing services to large customers like Apple, NFI has solidified its place in the consumer, food and grocery sectors. “NFI also offers integrated, dedicated contract carriage,” he adds.

A new list entrant this year is Radial, which has 21 warehouses and about 11.7 million square feet of space. Armstrong pegs the company’s overall 3PL revenues at $1.2 billion, with $900 of that comprising pure e-commerce business. The 3PL’s top customers include Dick’s Sporting Goods and Bath & Body Works, both of which are presumably doing a brisk e-commerce business during the pandemic.

Top 20 North American warehousing 3PLs

(Ranked by warehousing square footage within North America)

*Square footage is company reported or Armstrong & Associates, Inc. estimates.
**Armstrong & Associates, Inc. estimated space for 3PL based off of Amazon Global Supply Chain and Fulfillment Center Network, MWPVL International, Inc., April 2020

Source: Armstrong & Associates

Companies to watch

Reflecting on this year’s 3PL rankings, Armstrong points to CJ Logistics North America as one of several companies to watch during the coming year.

With nearly 25 million square feet in warehouse space and 66 facilities, the company’s prowess increased when it acquired DSC Logistics in 2018. This year, the two combined into a single operating company. Armstrong says there could be more mergers and acquisitions in the cards for the warehousing industry, mainly due to the sector’s fragmented nature.

“We’ve seen a number of European companies come here to acquire other firms,” says Armstrong, who points to Kuehne + Nagel North America and GEODIS and DHL Supply Chain North America as proof that the trend is underway. “We may see more Asian companies coming over and making acquisitions where it makes sense to do so.”

Within the e-commerce sector, Armstrong says other companies to watch right now include FedEx Logistics and UPS Supply Chain Solutions. And while these two huge parcel carriers dominate the e-commerce sector, he says a number of smaller providers that didn’t make the Top 20 list are doing very well right now, including Port Logistics Group and Quiet Logistics. “There are a many companies that you don’t hear of often that are growing very fast in the current environment,” Armstrong explains.

The dynamics of warehousing

Reflecting on 2020 and looking ahead to 2021, Armstrong expects the 3PL sector to continue exploring new ways to increase throughput and meet customers’ changing demands. For many, the key to achieving these goals lies in automation investments, with companies like Fetch and Locus Robotics developing co-bots that can be put to use in third-party fulfillment centers.

As the cost of these autonomous robots continues to come down—and as their business use case becomes stronger—Armstrong expects more 3PLs to make those investments. “The price points are getting low enough that you can have a return on investment (ROI) of under three years, in most cases,” he says, “depending on what type of automation you’re looking at.”

Along with that increased automation, warehouses are also getting larger in size. Where the traditional 3PL warehouse averaged about 250,000 square feet, that number has since grown to more than 500,000 square feet in the modern fulfillment environment. “A lot of that increase is being driven by e-commerce,” says Armstrong.

Finally, the contracts that exist between companies and their 3PL providers are also changing, with many of them now spanning just two years, versus the more standard three-year contract. “These shifts are also being driven by e-commerce,” says Armstrong, “and are contributing to some pretty significant, overall changes in the dynamics of warehousing.”

Tracking trends in refrigerated warehousing

Matt Ott, president and CEO at the Global Cold Chain Alliance (GCCA), says few surprises surfaced on its annual Top 25 North American refrigerated warehousing companies list. “The [top] three companies from our last study remained the same (Lineage Logistics, Americold Logistics and United States Cold Storage),” says Ott. “In fact, this report shows the consistency in the industry’s efforts to ensure billions of consumers have safe, affordable, and fresh products to rely on daily around the globe.”

Top 20 North American refrigerated warehousing companies

(Canada, Mexico and U.S.)

With a total public refrigerated warehouse capacity of 719 million cubic meters, the cold chain industry continues to grow domestically and globally. Other top entrants on this year’s list include VersaCold Logistics Services, AGRO Merchants Group, Interstate Warehousing and Frialsa Frigorificos, all of which maintained their 2019 rankings.

And where Covid-19 obviously had a major impact on all industry sectors in 2020, Ott says providers of refrigerated warehousing remain focused on initiatives like workforce innovation, cutting-edge automation, managing regulatory changes, and delivering safe food to consumers.

“Customer mix and channel implications remain top of mind,” Ott explains, “including a recovering-yet-volatile foodservice sector, robust grocery channel performance, and understanding which accelerated behaviors around e-commerce and direct-to-consumer will remain as longer-term opportunities.”

Looking ahead, Ott says increased investment in collaborative innovation around automation, robotics, and advanced data analytics with strategic customer segments will “continue to serve as accelerators to the cold chain’s industry success and a compelling differentiator to insourcing.”