07 Sep
As the ecommerce industry continues to grow, the warehouse and fulfillment sector has to deal with the growing demands and needs businesses have. Ever since the pandemic hit, online businesses have increased and the warehouse space available has decreased. It is important to note that most businesses want warehouses and fulfillment centers close to where their business is located, giving a rise to warehouses everywhere.
Warehousing and storage is a massive industry, employing approximately 600,000 people and making 22 billion USD in the United States alone. Around 10,000 U.S. based businesses are part of the warehousing sector and together, they move around merchandise that costs hundreds of million dollars each year.
There is no denying that order fulfillment and warehousing has grown all over the world. More and more ecommerce businesses want to outsource their fulfillment and storage operations to warehouses and fulfillment centers. However, is the industry ready to grow at such a rapid pace and well-equipped to handle the increased demand?
It is important to note that the warehousing sector is faced with labour and space shortages, especially since the pandemic and ecommerce industry’s increased growth. Understanding how these shortages are affecting the industry and what the latest trends suggest can help you make better decisions, especially if you are looking to outsource your storage and fulfillment to another company.
Let’s get into the statistics and trends that have come to light in the past few years and understand the warehousing and storage industry a little better.
General Warehouse And Storage Industry Statistics
The average size of a warehouse was around 65,000 square feet in 2000 and it increased to 181,370 square feet by 2017 (Westernacher, 2017)
Every year, there has been a steady increase in the average space of a warehouse or fulfillment center. Businesses continue to grow and they require more storage space. This forces warehouses to increase the storage space they can offer, leading them to grow the size of their warehouse and storage facility. The ecommerce industry is a retail industry that has seen unmatched growth over the years. More people are becoming comfortable shopping online, giving a boost to ecommerce businesses everywhere in the world. These online businesses are now relying more on warehouses and fulfillment centers to outsource their order fulfillment and storage operations, leading the warehousing sector to increase the space they use.
The number of fulfillment centers with multiple buildings continues to grow (Logistics Management, 2018)
Another example of how the growth in ecommerce businesses outsourcing their storage and order fulfillment processes has led to warehouses and fulfillment centers increasing the space they utilize for their operations. With each passing year, there are more warehouses and fulfillment centers that make use of multiple buildings. This number keeps growing because the need for storage space everywhere in the world is increasing continuously.
Warehouse renting rates in the U.S. were up by a whopping 28.7% between 2011 and 2015 (Westernacher, 2017)
The rates for renting storage space in warehouses keep increasing. In the U.S., there was an increase of almost 30% in just four years. It is important to note that the rent rates increase with an increasing demand for storage space. When there are more businesses in need of warehouse space and less warehouses that can provide that space, the rent rates increase. Businesses in the U.S. have also paid the increased rent to acquire the storage space they need for their business.
53% of manufacturers in 2018 said they only expect their utilization of warehouse space to increase in the coming years (Logistics Management, 2018)
Retail is an industry that will never slow down or stop. People are always going to be ready to make purchases at any time. Ecommerce businesses have also grown in number over the years, increasing the demand for warehouse space. Warehouses and businesses still feel that their need for storage space will only continue to grow in the coming years, showing us once again that it is important for businesses to get the space they require for their inventory.
The overall availability rate for warehouse space decreased and was as low as 7.1% (JOC, 2019)
It is crucial that warehouses and fulfillment centers can keep up with the growing demand for storage space. More businesses are looking to rent storage space and outsource their storage and fulfillment to other warehouses. However, if the warehouses don’t have enough space to accommodate all the businesses, there can be trouble with the supply chain and it can also halt business operations for many companies. The decreasing availability rates in warehouses are a source of massive problems for businesses all over the world.
PRG’s survey showed that 42% of respondents were going to invest in automation and robotics for their warehouse processes (Logistics Management, 2018)
Businesses all over the world have realized the benefits of using technology and robotics to automate and streamline their business operations. Automation of warehouse processes can help companies save time and labour costs, without them having to worry about increasing their workforce and finding more employees. Technology is a great advantage for warehouses, helping businesses keep their inventory and supplies more organized and ready to be picked and packed for any incoming orders.
Since 2012, the rent for storage space has grown by 5.6% every year (JOC, 2019)
The storage space rents have grown steadily over the years. There is an increase in the rents each year due to the growing need for storage space. More and more businesses need a place to store their inventory, and there is a decline in the available space all over the world. When the storage space businesses require is so difficult to obtain, there is an increase in the rents that are charged for this space.
As the ecommerce sales continue to grow by over 15% each year, suppliers are feeling under pressure to meet the growing need for delivering more orders at a faster pace (Westernacher, 2017)
Companies all over the world feel it is becoming more challenging to keep up with the growing demand in the warehousing and fulfillment industry. A lot of suppliers and fulfillment centers feel like they don’t have the resources to provide fast order shipping for a high volume of orders. This is why if outsourcing your storage and fulfillment to a company or warehouse, you need to make sure they have the right resources to carry out all the processes for your business. If they are understaffed or do not have access to the latest technology, they can also hinder the growth of your business.
Warehouse Shortage Statistics Regarding Space
The vacancy rate is currently around 3% for warehouses (Insider Intellegence, 2022)
The vacancy rates for warehouses are as low as they have ever been. There is less space available for businesses to store their supplies and fulfill orders. A lot of businesses have faced problems with their order fulfillment due to the lack of storage space available. It is important for businesses to get the storage space they require in order to prevent any troubles with their supply chain in the future.
The vacancy rate in port areas is even lower, almost under 1% (Insider Intellegence, 2022)
The warehouses and storage facilities around port areas are more in-demand, and businesses want to get space in these warehouses to cut down on freight charges and costs. However, the availability rates for warehouses around ports is lower than 1% currently. Businesses cannot get the storage space they require in these areas, which can cause delays in the supply chain and order fulfillment.
One of the biggest warehouse operators in the world said there was an increase of 8.5% in rents just between Q1 and Q4 (Industrial Business Indicator, 2022)
The shortage in the warehouse space available is also a significant reason for the increase in rents for warehouses and storage spaces. In 2021, there was an increase of 8.5% just between Q1 and Q4, showing us how the decrease in storage availability is affecting the rents. It is important to note that the steady increase in rent rates is not beneficial for businesses that want to outsource their storage to warehouses.
Companies are being forced to lower prices to get rid of the excess goods that are draining revenue (Insider Intellegence, 2022)
The supply chain delays have caused a lot of issues for many renowned businesses all over the world. Companies have been unable to get their stock sold and shipped to customers, resulting in an excess of supplies and goods in their storage. It is important for these businesses to get rid of these excess items to save space and related costs, which is why they are forced to lower their prices and sell the goods.
Another 800 million square feet of space is needed to get over the current warehouse shortage (Insider Intellegence, 2022)
The current warehouse space shortage is alarming for many businesses. It is estimated that around 800 million square feet of extra space is required in order to recover from the current shortage. It is crucial for businesses to get access to the space they require to carry out their fulfillment operations smoothly and maintain the inventory they need.
Rents are expected to grow by 10% in 2022 (Freight Waves, 2022)
The rate for rents is not going to go down any time soon. Over the last ten years, the rent rate has only continued to increase. For 2022, the rent rate is going to grow by 10%. It is vital to understand that this increase is mainly due to the decline in availability and vacancy for warehouses and storage spaces.
The current warehouse capacity needs to grow by 15% to avoid any disruptions in the supply chain (Freight Waves, 2022)
Businesses all over the world have faced problems due to disruptions in the supply chain. It is important that the warehouses increase the space they can offer to businesses in order to avoid any problems with the supply chain in the future. Supply chain disruptions can cause delays in the inventory restocking and slow down businesses.
Supply chain disruptions due to warehouse shortage are expected to persist even in 2023 (Freight Waves, 2022)
Warehouse shortage is a problem that has become more prevalent in the past few years. It is an issue that has forced many businesses to face supply chain issues and problems with inventory management. For businesses to keep running smoothly, it is important that warehouse shortage is managed and more space is available for businesses to use.
Warehouse Shortage Statistics Regarding Labour
Labour takes up 50 to 70% of a warehouse’s entire budget (ID Logistics, 2014)
For any warehouse to run smoothly, it is important to invest in labour and the workforce. Most warehouses require a large number of workers to carry out the tasks and organize inventories for businesses. Labour is a huge part of a warehouse and the salaries for workers make up 50 to 70% of the entire budget of a warehouse or fulfillment center.
Amazon’s employee turnover rate is at 150%, with them failing to retain more employees than they lose (Verdict, 2021)
There is a shortage of labour in the warehousing and storage sector. People don’t want to take up these jobs and the leave the jobs they are working in a storage facility. The big companies, like Amazon, are failing to retain employees in their warehouses and fulfillment centers even though they offer some of the best salary packages to the workers.
The injury rate for the warehouse industry is as high as 1 in 20 (U.S. Bureau of Labour Statistics, 2022)
The injury and work-related illness rate for the warehouse sector is 1 in 20 people, which is very high compared to some other jobs. The risk of getting injured while working is what keeps a lot of people from getting a job in the warehousing industry, resulting in the growing warehouse labour shortage.
A whopping 41% of warehouse managers said they are not able to attract or retain their employees (Westernacher, 2017)
It is important to realize that working in a warehouse or storage facility is not a risk-free job, which is why most people hesitate to join. The sector is facing labour shortage because they are failing to attract new employees or retain their existing workers. Most people don’t want to work in a warehouse because along with being dangerous, it also takes a lot of physical activity and is exhausting for the workers.
A warehouse with 100 employees will spend around 3.5 million USD paying for their labour (Westernacher, 2017)
Labour for a warehouse or storage facility is not cheap. In fact, employing 100 workers can cost around 3.5 million USD, which is a lot of money. A significant amount of a warehouse’s entire budget is spent on paying for the labour. It is also a major reason why most businesses want to outsource their warehousing and storage operations; they don’t want to pay so much for the labour.
55% of warehouse managers think labour scarcity is one of the top problems they face (Logistics Management, 2018)
Warehouse labour shortage is not something you can ignore any longer. It is an issue that needs to be addressed. Finding employees that are willing to work in a warehouse is becoming more difficult with each passing day. Most people don’t want to join a warehouse or fulfillment center for a variety of reasons. Warehouses that don’t have access to the technology and robotics needed to automate their operations are facing a massive problem in the form of labour shortage.
The uncertainty is why 48% of industrial businesses are moving to temporary labour (Instawork, 2022)
Temporary labour has become a key player in the warehouse and fulfillment sector. Hiring temp workers to get through the different seasons and loads is a popular choice. Most warehouse managers and businesses are choosing to go with temp labour instead of hiring permanent employees because permanent employees are more difficult to find in these uncertain times during and after the pandemic.
More businesses (47%) want to invest in retaining their employees instead of acquiring new workers (Instawork, 2022)
A lot of businesses want to shift their focus and invest capital into retaining the employees they already have instead of hiring new ones. One major reason is that new employees are difficult to find in the warehousing sector due to the labour shortage. Businesses want to focus on retaining their existing employees to make sure they don’t have to face the labour shortage.
73% of employers had trouble attracting workers in 2021, which is around 3 times more than 2020 and 70% of employers expect this problem to continue in 2022 (WTW, 2021)
More than half of the employers questioned said they are facing problems when it comes to attracting new workers, which is almost three times more than 2020. Warehouses are faced with labour shortages and are failing to hire new workers. In such times, it is important to realize that investing in technology and robotics that can automate warehouse operations can be beneficial for warehouses. If you are a business looking for a warehouse, you should find one that has access to the latest technology and is not burdened by the labour shortage.
Are You Looking For A Top-Notch Warehouse To Outsource Fulfillment For Your Business?
As an ecommerce business in 2022, it can be difficult finding a reliable and secure warehouse and fulfillment center that can help your business out. Meteor Space is a leading fulfillment center, here to provide you with the storage space you need at low rates.
We offer you a complete suite of fulfillment services, taking care of your storage, picking and packing, shipping, and much more. Our state-of-the-art warehouse spreads across 200,000 square feet. Here at Meteor Space, we always have space for your inventory and make sure you can store your supplies with us without having to worry about anything.
We handle all fulfillment steps for you using the latest technology and software to automate and streamline most of the processes. As one of the top warehouses and fulfillment centers in Ireland, Meteor Space makes sure you always get the best service. We offer special services like custom packaging for your online business, helping you stand out and become more memorable.
With our help, you can store your inventory and get it shipped out to your customers as soon as they place an order with your business. You can focus on growing your ecommerce business and develop better strategies while we look after all your order fulfillment needs!
Want to find out more?
Contact us today!
