March 20, 2017

Study: warehousing services market to grow at 6 percent CAGR

Logistics providers plan for growth with technology, alliances, bundled services.

By DC Velocity Staff

The global market for warehousing services is on pace to grow at a compound annual growth rate (CAGR) of nearly 6 percent over the next five years, due to rising demand from the manufacturing, pharmaceutical, and healthcare sectors, a report says.

To keep up with that growth, providers will continue to search for ways to reduce costs and improve service levels, according to the March 15 report from London-based market research company Technavio.

As they plan for that steep growth, warehousing service providers will look at three main strategies in their effort to find cost savings and improve services, according to the report, "Global Warehousing Services Market: Procurement Intelligence Report 2017-2021."

1. Adoption of technology. Top among the technologies that can pay off with cost savings are barcodes used for machine-readable data collection and robots used to increase speed and reduce errors in the order fulfillment process, Technavio said.

2. Optimization of procurement practices. Warehousing providers are building up their ability to provide global services by striking deals with regional suppliers in distant locations. These deals allow the teammates to offer access to warehouses closer to end customers.

3. Bundling of services. Warehousing service providers are adding extra services to their portfolios in order to make themselves into "one-stop shops" that can offer transportation and packaging as well as basic warehousing. The combined collection of services allows clients to reduce overall logistics costs and operational risks, compared to coordinating with multiple vendors to cobble together the necessary functions.

"Both buyers and suppliers of warehousing services focus on major concerns such as regulatory requirements, compliance, and sustainability measures to avoid legal enforcements and meet industry standards to reduce costs and improve service levels," lead Technavio procurement expert Angad Singh said in a release. "Buyers avail [themselves of] warehouse services from a third-party logistics supplier to continue their operations more smoothly and without delay."

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