Business, Freight News, Logistics

US Warehousing Responds to Market Dynamics

[ February 14, 2025   //   Gary G Burrows ]

Warehousing costs are estimated to account for 13 percent of the total supply chain expenses, while last-mile delivery holds the largest share at 41 percent of supply chain costs, according to ITS Logistics.
In its first quarter U.S. Distribution and Fulfillment Index, ITS Logistics’ Producer Price Index showed a 1.03 percent increase in warehousing and storage services from August to December 2024.
“This increase could be attributed to several factors, including seasonal demand fluctuations, inflationary pressures, or higher operating costs such as labor, energy, or real estate expenses,” said Ryan Martin, president of distribution and fulfillment for ITS Logistics, the asset-based supply chain logistics provider.
Citing a recent Wall Street Journal article (https://tinyurl.com/mrxhtjpy), developers braking on the construction of new buildings have constrained the new space available, while pricing has increased.
According to Cushman & Wakefield, about 426 million square feet of new warehouse space was established in 2024, down 31 percent from a year earlier. Average asking rent across the U.S. also rose to 13 cents per square foot in the fourth quarter, which was a 4.5 percent increase from 2023 and a 61 percent increase from the fourth quarter in 2019.
“From a business perspective, this rise suggests that providers of warehousing and storage services are adjusting their prices in response to market conditions or cost structures,” Martin said. “For customers, this highlights the importance of strategic planning and potential renegotiation of contracts to mitigate cost impacts. For service providers, the consistent increase reinforces the need to maintain competitive service quality while managing operational efficiency.”
This growth suggests a stabilization and slight rebound in warehousing costs after the earlier declines observed in the third quarter, ITS Logistics said.
The ITS Logistics US Distribution and Fulfillment Index tracks the Producer Price Index for warehousing and storage and offers a regional markets overview to optimize warehousing and delivery costs. All major markets in the U.S. are highlighted each quarter via the Index. A copy of the index is available at https://tinyurl.com/udub7e3r

Tags: ITS Logistics