$1.9 trillion warehouse market growing strongly driven by emerging markets

Expected growth of 6-8% comes off of strong global growth, with India and China taking the lead

The global market for warehousing is currently growing at a Compound Annual Growth Rate (CAGR) of 6 – 8%, according to Beroe Inc, a procurement intelligence firm. The increasing service levels such as e-commerce and same-day delivery are influencing retailers to invest further in the warehouse industry.

India and China are expected to be the projected growth driving markets for the warehousing industry mainly due to the anticipated increase in manufacturing facilities and the growth in the e-commerce sector.

The growth of retail and FMCG goods has been the main driver for the industrial warehouse industry. The maturity of the e-commerce industry has led to an increase in demand for warehouse space from 3PLs across the globe.

Another growth driver for the warehousing industry is the increase in disposable income, which is increasing at 2.3% among global consumers. This has created a demand for consumer goods along with increased imports and exports.

Key Findings:

  • Europe and North America show higher development in the service provider department due to high technology adoption levels and a wider range of services offered. Emerging countries such as Brazil, India, China, and Japan show low to medium maturity due to lower 3PL rates and lower adoption of warehouse technology.
  • Use of technology in warehouse management functions such as AGV (automated guided vehicle), i.e., pick to light and voice directed picking is emerging in the industry. Most warehouse occupiers are reconfiguring their distribution centres (DC) towards faster response times and space-saving, efficient systems with minimal labour requirements.
  • Contract warehousing is a low-margin business with an average gross margin of 8 – 10% and an average net margin of approximately 2 – 4%.
  • Low availability of skilled labour in regions such as North America and Europe along with less expertise in the warehousing field keeps wages relatively high. This impacts the overall operating costs and becomes a major constraint in the warehousing industry.
  • Just-in-time techniques and vendor-managed inventory systems also require warehouse usage; thus, there are no substitutes for warehousing.
  • The union of warehouse management systems with TMS (transportation management system) and LMS (learning management system) will increase communication and planning for companies with the use of real-time data transmission across various platforms.
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