NORTH AMERICA WAREHOUSING MARKET

KEY FINDINGS

• The availability of warehouse space was on the decline in the US due to an import surge, and growth in safety stock( buying additional stock than usual). The average rental was increasing as a result of new business competition for these properties

• The average vacancy in US warehouses was around 3.1% in Q4-2022.

• The growing trend of express delivery by e-commerce companies has fueled demand for near-airport warehouses at substantial rent premiums compared to other industrial spaces in large metropolitan areas.

• An E-commerce supply chain requires up to three times more warehouse and logistics space than a traditional brick-and-mortar supply chain

• Warehouses were demanding higher negotiated rents than asking prices. Coming on the heels of already escalated prices due to the pandemic, it’s a worrying factor for several small and medium-sized companies

• On the West Coast, cities near ports are seeing are seeing continued growth in demand despite rental increases.

• The top 5 companies accounted for 50% of the warehouse capacity in North America

• Amazon was renting/leasing about 392 M sq. ft of warehouse area by the end of 2022, making it one of the largest tenants in the region, Amazon owned only 22 M sq. ft of warehouse across North America rising from 16.7M sq. ft in 2021.

• Food & Beverage Warehouse received a boost post-pandemic as most of the companies opted to expand storage after the dire consequences faced during a pandemic

INTRODUCTION TO NORTH AMERICA WAREHOUSING MARKET

Warehouses act as a strategic decoupling point in the supply chain, they enable companies to match customer demand and Supply when they are not in synchronization. With the supply disruption of consumer goods, medicines, and food products due to the coronavirus pandemic warehouses came under a lot of pressure for order fulfillment.

1. As the United States has been shifting its focus from globalization, this would bring onshoring and near-shoring in the front seat, which will increase the demand for warehousing.
2. The health care industry’s cold storage would experience a huge demand as many nations have fast-paced clinical trials of the COVID-19 vaccine.
3. E-commerce and online grocery are expected to generate more demand for large warehouses as the pandemic has changed the shopping habits of customers and this is likely to stay post-pandemic.
4. With the increase in the market share of e-commerce players, many retailers are repurposing themselves are distribution centers, with ever-growing pressure on delivery lead time and costs associated with these new distribution centers would see a spike in demand as this helps e-commerce players achieve hyperlocal fulfillment.
5. As the pressure on sustainability is going up the demand generated due to reverse logistics is expected to go up.
6. As there would be changes in the import-export imbalance in the United States, this would reduce the demand for bonded warehouses.
7. Industries like Chemicals and specialty materials are hit very hard in the US, and the likely demand for the specialized warehouses handling them would reduce in the short term.
8. As many large companies are now moving towards outsourcing warehousing activity, this would surge the demand for 3PL warehouses.
9. Improved On-cloud warehouse management systems would help reduce capital expenditure and operating expenditure, which would help speed up the setting up of warehouses.
10. Automation in the areas of put away and order picking, with the help of short-range communication devices and 5G would reduce the warehouse cycle times even further

TRENDS IN NORTH AMERICA WAREHOUSING MARKET

Cloud-based systems are more scalable and flexible than a site-based WMS, hence, reconfiguring to match a company’s changing size, complexity, and market conditions is easier and less costly. Costs can be further reduced in some cases by choosing a software-as-a-service (SaaS) subscription rather than paying for software licenses.

RaaS allows one to use mobile robots without buying them. One could think of it as robot rental, but you only pay when the robots are in action. Your subscription package can be tailored to include the mobile robots’ implementation, programming, control, maintenance, and all other services requiring specialist engineers.

Blockchain tech is a network that uses cryptography to create data transfers in blocks on a shared digital ledger. Blockchain has implications for warehouse operations & inventory management because of its advanced data authentication, validation, and transparency. Blockchain databases could enable every stakeholder in complex supply chains to connect & share automated records for every transaction within the secure network.

Smart warehouses gather huge amounts of data, via scanning of goods and through the use of sensors on their materials handling and other equipment. Analytics systems can detect patterns in your data that would otherwise be invisible. Another application is in monitoring the condition of your equipment and assessing the best approach to its maintenance. This minimizes downtime, reduces repair bills, and extends asset life.

This trend became popular due to Amazon. From unloading and racking to selecting and packaging, every part of an automated warehouse is designed for efficiency, which means you can deliver goods from your warehouse to your customer's doorstep faster than ever before.

DEVELOPMENTS IN REGIONAL DISTRIBUTION CENTERS IN US

Distribution Centers (DCs) are an increasingly integral part of the U.S. economy. As retail evolves from traditional brick-and-mortar stores to include more selling through e-commerce channels, the significance of these technologically advanced engines of commerce will continue to rise. A distribution center connects the local economy directly to an immense global stream of commerce. On average, a new DC employing 3,000 workers resulted in 5,111 total new jobs in an MSA including those 3,000 at the new DC, and sustained those new jobs over 20 years.

Retail giant Lowe’s Canada plans to operate a new 1.23 million-square-foot distribution center just outside of Calgary as part of its strategy to optimize its distribution network to better meet the needs and expectations of its in-store and online customers. The new distribution center is a partnership with the Highfield Investment Group and will cost more than $120 million. Walmart Canada has officially opened a brand new, state-of-the-art warehouse order fulfillment system at a distribution center in Cornwall, Ontario – the first of its kind at Walmart Canada. This $20-million investment will improve Walmart Canada's world-class supply chain. 

The acceleration of electronic commerce has demanded new spaces to streamline the distribution of products and supplies in cities, in Mexico. In this sense, the logistics and real estate sectors occupy a relevant position. Accounting for nearly one-fifth of the country’s GDP and population, Mexico City and its metropolitan area rather than the whole of Mexico seems to be the most promising market that possesses the appropriate purchasing power. As a business-friendly city, Guadalajara is also dubbed the “Silicon Valley” and “fashion capital” of Mexico, in addition to traditional sectors such as agroindustry, processed food, and furniture. 

US WAREHOUSING MARKET SEGMENTATION

The warehousing market can be segmented into the following categories

North America Warehousing Market By Country

• USA
• Canada
• Mexico

North America Warehousing Market By Ownership  Type

• Public/Government Warehouses
• Private Warehouses

North America Warehousing Market By Warehouse Type

• General Warehouse
• Refrigerated Warehouse

North America Warehousing Market By Industry

• Agriculture
• Food & Beverage/FMCG
• E-commerce
• Others 

NORTH AMERICA WAREHOUSING MARKET ANALYSIS

Proliferation Of 3PLs

With ongoing pressure to improve the agility of the supply chains company owned and company operated came under a lot of pressure in the United States many companies are looking to outsource the warehousing activity, this would be a beneficial move from a 3PLs perspective as this would potentially raise the demand for them.

Rift In US-China Relationship

The strained relations between the two largest economies the US and China and the likelihood of this relationship irrespective of who is elected into the office of the US would be a strain on Imports into the US this would be a strain Bonded warehouses, the underutilization of these is likely to increase post-pandemic.

The rise and rise Of E-Commerce

Many 3PL companies like DHL and UPS which are already in the B2B e-commerce segment serving various small businesses now have a huge potential to serve the B2C sector as this segment has seen a huge spike in demand during a pandemic, many of these companies are looking for rapid expansion which would positively impact the US warehousing market.

E-commerce companies would generate a larger share of demand for cold storage and Agri warehouses as the share of commerce through online mode has increased multi-fold during a pandemic, with storage in food products of all the categories fresh, chilled, and frozen categories.

With hyperlocal fulfillment strategies, e-commerce players would generate more demand for smaller distribution centers (repurposing the retail in the city) than for larger ones which generally are located in the suburbs of the city.

This trend can be observed in the commercial construction sector only warehouse construction showed an increase amid the pandemic while retail, hotel, and housing have shown a large drop.

Post-pandemic, we believe the United States might need another 800-900M square feet of space in the next five years to cater to the demand generated by the e-commerce industry.

Sectors like Apparel and footwear, Hotels & restaurants, chemicals, and automotive have taken the biggest hit due to COVID-19 this would be reflected in their respective warehousing markets, whereas Pharmaceuticals and consumer goods have been shielded and the impact has been minimal so logistics partners and warehousing contracts in this specialized sector is likely to increase in the short term.

Many 3PLs have already invested and geared themselves for the COVID-19 vaccine supply chain, as the temperature requirement might be as stringent as -70°C in the entire value chain.

TECHNOLOGY IN THE NORTH AMERICA WAREHOUSING MARKET

Advancement of digital technologies and advanced analytics across the supply chain is generating a lot of data this is one compelling reason for companies to develop a digital twin, all the warehousing data would be captured and the digital twin can help companies make faster decisions and help in optimizing the processes, Xcelgo is helping many logistics companies build their digital twin and streamline their operations.

5G coupled with edge computing would be the key driver in increasing Automated Guided Vehicles (AGV) proliferation, they can help warehouses automate repetitive tasks, reduce labor costs, and increase workplace safety.

The order picking and put away processes performed by AGVs can be coupled with artificial intelligence to automate the quality inspection process by computer vision (vision quality).

This can help reduce errors and improve the reliability of warehouses, Amazon has already introduced this in the US and many companies like Conveyco are already big-time players in providing these technologies.

The coronavirus pandemic has been a blessing in disguise for warehousing in the United States, with the rise in technology, e-commerce, and 3PLs as the key drivers to propel the demand.

NORTH AMERICA WAREHOUSING MARKET COMPANY PROFILED

• DHL Supply Chain 
• GXO Logistics
• Ryder Supply Chain Solution
• NFI
• GEODIS 
• CJ Logistics 
• Americold

NORTH AMERICA WAREHOUSING MARKET REPORT WILL ANSWER FOLLOWING QUESTIONS

1. Market share of North America Warehousing Market manufacturers and their upcoming innovations
2. 5 key predictions for next 5 years in North America Warehousing Market
3. Average B-2-B  North America Warehousing Market  price in all segments
4. Latest trends in  North America Warehousing Market, by every market segment
5. The market size (both volume and value) of the  North American warehousing Market in 2024-2030 and every year in between?
6. Production breakup of the North America Warehousing Market market, by suppliers and their OEM relationship
7. What role does technology play in the modernization of warehousing operations in North America?
8. What are the key regulations and compliance standards affecting warehousing operations in North America?
9. What are the evolving needs and expectations of customers in the warehousing industry?
10. What are the major challenges faced by the warehousing industry in North America?
11. How has the rise of e-commerce affected the demand for warehousing services?
12. What strategies are warehousing companies employing to meet the requirements of e-commerce businesses?