Warehousing and Storage Services Market

Market Overview

The global warehousing and storage services market size was valued at USD 648.35 billion in 2021. It is projected to reach USD 1,264.01 billion by 2030, growing at a CAGR of 7.70% during the forecast period (2022-2030).

Warehousing and storage services offer storage for the commodities owned by another business or organization, including their products, vehicles, equipment, parts, and perishable goods. This frequently includes distribution and inventory management. Both short-term and long-term contractual storage arrangements are possible. The ability to adjust the environment, such as temperature and humidity, may be included in warehouse and storage facilities to extend product lifespan or prevent item degradation. On short notice, warehouse and storage services can make a client's property available for pick up or delivery of goods on the client's behalf. Due to an increase in e-commerce, the global warehousing and storage business has seen significant expansion in recent years. The market is predicted to grow due to increased demand for refrigerated storage.

Market Dynamics

Global Warehousing and Storage Services Market Drivers

Rising Interest in Omnichannel

Major online brands entering physical storefronts have considerably increased the omnichannel supply chain. Some people find the speed and force of changing business dynamics overwhelming. Intelligent retail solutions are now implicitly required by the intelligent consumer. Different consumer groups use a variety of retail channels to shop and select products that suit their needs and way of life. Businesses have thus realized that expanding customer options and the buying experience drives profitability. The key phrase for medium and large brands will be "Omni-channel retail" as they push to expand B2C and B2B e-commerce.

The interoperability of various channels and the accessibility of more recent technologies for visibility have made it possible for merchants to fulfill orders from the closest fulfillment center, which has reduced the impact of inventory holding costs over time. As a result, shipping costs have decreased, and consumer satisfaction has increased, encouraging repeat business. An omnichannel network takes pride in emphasizing the consumer experience. Customers feel in charge and independent of the manufacturer because they may contact them anytime and request assistance if necessary.

Global Warehousing and Storage Services Market Restraint

High Maintenance Cost

Maintenance and site upkeep is essential to keeping operations running smoothly, even more so in a quick-moving supply chain system where a single error or problem could significantly impact operations. The cost of cold storage and temperature control in general facilities is high and can result in significant losses if done incorrectly. Lighting and temperature control are a warehouse's two major energy consumers (in the form of heating, cooling, or refrigeration). Therefore, the quickest approach to saving energy is to lower the costs of these two significant contributors. Other significant costs include labor and rent.

Due to damage, the monthly amount of freight passing through the warehouse is a crucial cost factor for maintenance. At the same time, the location and age of a facility are particularly relevant elements of breakdown maintenance. Therefore, it becomes evident that frequently moving warehouses to meet the changing needs of freight volume and to use young building facilities is a valuable management practice based on both the difficulty of estimating future market demand and the relevance of the building's age in determining building management costs.

Global Warehousing and Storage Services Market Opportunities

Electronic Commerce Growth

According to UNCTAD, 1.45 billion people, or 25% of the world's population, engaged in online transactions in 2018. The top 20 markets by B2C e-commerce sales were split roughly in half by developing and transitional nations. In these economies, B2C e-commerce was most significant in China, Hong Kong (China), and the United Kingdom and smallest in India, Brazil, and Russia compared to GDP. Through the quick and extensive transmission of technology, globalization has increased the volume and variety of cross-border transactions in services and products. This has driven the trends in the global cross-border B2C e-commerce market.

Advanced e-commerce technologies also cut marketing expenses and administrative costs. This helps businesses to reach markets that are spread out. The COVID-19 epidemic in 2020 contributed to an increase in e-commerce consumers worldwide of 9.5% yearly, to more than 3.4 billion. The largest market segment for e-commerce is fashion, followed by toys, hobbies, electronics, and media. These factors are anticipated to create opportunities for market growth.

Regional Analysis

The global warehousing and storage services market is divided into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.

Asia-Pacific Dominates the Global Market

Asia-Pacific is the most significant shareholder in the global warehousing and storage services market and is anticipated to grow at a CAGR of 9.45% during the forecast period. Asia-Pacific is a primary perishable food item consumption driver, raising the demand for refrigerated warehousing techniques. A significant expansion in food and beverage companies producing a broad range of perishable food goods and frozen foodstuffs is also projected during the shelf lives of these food products. For Instance, Rhenus Logistics said in 2019 that it now provides end-to-end logistics solutions to India, Greater China, Hong Kong, the Philippines, Thailand, Singapore, Malaysia, and Vietnam as part of the extension of its warehouse solutions to the Asia-Pacific region.

North America is anticipated to grow at a CAGR of 6.50% during the forecast period. Manufacturing businesses have been driving up demand for outsourcing warehouse services through their growth in operations and output. As a result, merchants and distributors now have more significant logistical needs for storing raw materials and finished goods. Additionally, shippers are increasingly outsourcing the logistics component of their operations to warehouse service providers due to the benefits of outsourcing in terms of improved operational efficiency and cost savings. In the upcoming years, it is anticipated that the expanding demand from important application sectors, including automotive, manufacturing, retail, technology, healthcare, and construction, will experience rapid growth.

Europe is anticipated to grow significantly during the forecast period. Due to a decline in demand and the development of new facilities in the EU region, goods that may avoid delivery through the United Kingdom and have warehousing and distribution facilities are likely to close. For Instance, since 2001, Maersk has satisfied the demands of this selective customer to worldwide pharmaceutical players in Central Europe by offering professionally developed professional warehousing and distribution services. The warehouse, which will expand Maersk's current in-house storage and distribution facility in Mszczonow (Poland), will have specific sections for human and animal health items and be run by a team of logistics professionals.

In the United Arab Emirates, warehouse demand is rising rapidly as e-commerce and online shopping are becoming increasingly popular. The storage market in the UAE grew gradually from 2013 to 2019 due to the increase in investments in the industrial sector. In order to guarantee quick delivery and effective flow of goods across borders, warehouses are generally situated close to the free zone. Due to the country's rising need for perishable goods and the requirement for prompt delivery, the cold chain markets in the UAE would be affected. Additionally, growing industrial sector investments that support economic diversification will open up growth opportunities for the UAE's logistics and warehousing business.

Segmental Analysis

The global warehousing and storage services market is segmented by type, ownership, and end-user industry.

Based on the type, the global warehousing and storage services market is general, refrigerated, and farm product warehousing and services.

The general segment owns the highest market share and is expected to grow at a CAGR of 7.00% during the forecast period. The global need for e-commerce is likely to increase demand for general warehousing. Clothing and accessories, fashion, consumer electronics, home and garden, and sporting items are some important product categories. As a result of COVID-19, the demand for general storage increased sharply in the second half of 2020. The household demand from metropolitan areas worldwide has been a primary driver of this need. The supply chain disruption and logistical difficulties experienced in H1 were lessened by the restart of industrial output that gradually relaxed lockdown limitations.

Based on the Global Cold Chain Alliance's measure of market penetration, chilled warehouse space was unevenly distributed among nations. In 2018, the capacity of all refrigerated warehouses globally increased by 2.67% to 616 million cubic meters from the capacity reported in 2016. With 150 million cubic meters, India has the largest country market by far, followed by the United States with 131 million cubic meters and China with 105 million cubic meters. In 2020, the capacity of all refrigerated warehouses globally increased by 16.7% to 719 million cubic meters. North America and China accounted for the majority of the increase in capacity since 2018.

Cold storages are essential for post-harvest storage and distribution of perishable goods and food items. It facilitates the transportation of perishable agricultural items, such as fruits, vegetables, meat, fish, poultry, milk, and milk-based goods, from production sites to consumption centers. Utilizing the government's three major agricultural reforms, integrated warehousing businesses in India intend to buy directly from farmers by providing them spaces for purchasing and selling products. In the post-reform age, warehouses can function as efficient substitute market yards for men with a little more assistance from the government.

Based on ownership, the global warehousing and storage services market comprises private, public, and bonded warehouses.

The private warehouse segment is the highest contributor to the market and is expected to grow at a CAGR of 7.10% during the forecast period. Private businesses frequently establish private warehouses for their unique purposes. These warehouses are placed in a strategic way to meet the needs of industrial and commercial entities. Private warehouses are very adaptable and can be configured for product placement and storage based on the type of products. A single business typically occupies private warehouses. These would generally be significant businesses with significant warehousing needs.

Governments generally create public warehouses, which are authorized to be used by private parties (including cooperative societies). One can rent out public warehouses for both professional and private purposes. These are frequently utilized by manufacturers, wholesalers, exporters, importers, and government organizations to receive and deliver their goods. They are typically situated near transportation lines, such as railways, highways, rivers, etc. Public warehouses offer monthly short or long-term storage. Pallets stored and square footage used can be used to determine the cost of storage.

Based on the end-user industry, the global warehousing and storage services market is manufacturing, food and beverage healthcare, consumer goods retail, and others.

The manufacturing segment owns the highest market share and is expected to grow at a CAGR of 6.10% during the forecast period. Manufacturing organizations have been driving up demand for outsourced warehousing services through operations and product development. As a result, merchants and distributors now have more significant logistical needs for storing raw materials and finished goods. The market share for automotive logistics is growing due to rising car registrations in developing and developed nations and structured shipping and storage of automotive parts.

The demand for a "smarter" warehouse to service today's connected consumer has been driven by a fundamental shift in how consumers increasingly make purchases across numerous touchpoints, including online from desktop computers, mobile devices, and in-store. Warehouse management systems must adapt as retailers look to combine their offline and online operations to reduce costs and increase productivity. Unprecedented real-time visibility into organizations' assets, people, and transactions across a wide range of industries, from discrete producers in the consumer goods sector, is being made possible by the surge of next-generation, technology-enhanced warehouses.

Recent Developments

• September 2022- According to the most recent statistics from the Ports of Sweden, APM Terminals Gothenburg continues to expand and gain market share in the struggling Swedish container industry. It is becoming increasingly apparent that Swedish businesses are prioritizing effective, long-term logistics solutions. APM Terminals Gothenburg handled 49% of the Swedish container market in the year's second quarter, the largest share since 2015. The Swedish container market shrank by over 4,000 TEU during the year's first half, continuing a recent pattern, while volumes through APM Terminals Gothenburg rose by 20,000 TEU.
• October 2022- One of the largest third-party logistics providers, AllCargo Logistics, leased 1.7 million square feet of space at its Malur, Karnataka, logistic park to major online retailers. Companies like Amazon, Flipkart, and Decathlon have taken up residence in the park's first phase.