What You Can Learn From The Warehouse Market

The global warehouse market had a value of $1.9 trillion in 2018 according to the 2020 market intelligence report by Beroe. Out of this the market size of Asia Pacific was $1,249 billion and it was followed by Europe which had a market size of $346 billion. The market size of North America was $170 billion and the market size of Latin America was $47 billion. The high market maturity countries are Singapore, the US, Belgium, France, Germany, Australia, and the UK. These countries have high market maturity because they offer a range of services and can easily adopt technological solutions. The medium market maturity countries are Poland, India, Dubai, Brazil, South Africa, and China.

The low market maturity regions according to Beroe are Argentina, New Zealand, and Chile. These countries have low third-party logistics penetration levels and are unable to adopt technology for warehouses easily. Beroe estimates that the warehouse market growth will be at a CAGR of 8%. The top global warehouse service providers are XPO Logistics, C.H. Robinson, UPS Supply Chain, CEVA Logistics, Kuehne + Nagel, DHL Supply Chain, and Schenker Logistics. There are two main cost components that are of the utmost importance to the warehousing market. These are labor and warehouse rental. The labor costs contribute up to 35% of the total cost while warehouse rental contributes up to 30% of the total cost.

The warehouse market trends state that some of the Asia Pacific countries such as India will be at the forefront of driving the market forward. This is because there is likely to be an increase in the manufacturing units in these countries. Moreover, research shows that there is going to be a hike in container ports in these countries as the e-commerce sector is going to witness continuous growth in these countries. Beroe estimates that the e-commerce industry will grow from $1.7 trillion in 2017 to more than $1.9 trillion in the coming years. One of the important trends is the adoption of same-day delivery by many e-commerce giants which will fuel the market growth further.

Retailers are willing to make higher investments in warehouses because of the increase in demand that is likely to grow. Service levels by the e-commerce industry are increasing which means the warehousing market will see future growth. Another trend in the warehouse market is the use of technology such as AGV which stands for automatic guided vehicles. These are helping the warehousing market become increasingly efficient while increasing the response time at the same time. In addition, technological advancements are proving to be more efficient and help save space which is vital as demand is increasing.

One warehouse marketing strategy that is being adopted by many providers globally is a shift to a centralized distribution model. This is where shipments are sent to a central location after which they are sent to distribution centers. This adoption will simplify the supply chain and will increase efficiency in the warehousing market. Another emerging trend in the market is value-added services that are being offered by warehouse service providers. These include packaging and labeling among other functions. They help to compliment the service that is being offered by the warehouse service providers.

The warehouse market is likely to be driven by the growing retail industry too. As the retail industry expands, there will be an increase in the warehousing market as more warehouses will be required for storage. Beroe’s research states that in 2016 there was an increase of 2.6% in manufacturing production globally. This number is likely to increase even further in the coming years and so the warehousing market will see an increase in demand. Moreover, the global economic situation is positive which will propel the growth of the warehouse market. This is because people’s disposable income is increasing at a rate of more than 2% globally and so people are ready to purchase more than ever before thereby supporting the warehousing market.

Although the market for warehouse service providers looks promising, some constraints can hinder or slow down warehousing market growth. There has been a rising demand for Class A warehouses. Although this is possible for developed regions, it is not the case for developing and emerging regions such as China and India. Another constraint is the lack of proper workers who have sufficient expertise in the industry in developed regions such as Europe and North America. This has pushed the wages higher which increases the operating costs in these regions. If these constraints are resolved, then the warehouse market will grow at a faster rate.

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