Price Forecast: General Warehousing & Storage

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  • Tags : Transport & Logistics | General Warehousing & Storage | Price trend | Price forecast | Procurement research | Category market forecast

Recent Price Trend - General Warehousing & Storage

During the three years to 2017, the price of general warehousing and storage has been rising at an estimated annualized rate of 1.0%. Volatility has been low during the period, which is beneficial to buyers because it indicates a low risk of significant price fluctuations. As a result, buyers have the ability to make more accurate cost estimations and budgets.

Price growth is partially a result of increasing input costs for suppliers. Operating a warehouse includes costs such as labor, rent, utilities, depreciation and maintenance and repairs. Of these costs, wages account for a significant portion of supplier revenue. As demand for warehousing services has risen, demand for additional staff has grown as well, thereby inflating average wages. Growth in labor costs has contributed to expanding operating costs for suppliers. Suppliers have transferred these growing costs to buyers in the form of higher prices.

Price growth has also been spurred by increasing demand for general warehousing and storage. Demand primarily stems from businesses that sell physical goods, such as retailers and wholesalers. During the past three years, economic growth has been fueling an increase in consumer spending, which has generated an increase in inventory levels for retailers and wholesalers. As inventory grows, these businesses look for ways to efficiently store and manage their products, resulting in demand growth for warehousing and storage. Furthermore, the growing economy has led to a greater level of business investment, driving new businesses to open. As a greater number of businesses emerge, the number of businesses selling goods will rise, resulting in an expanding downstream market and further demand growth. The growth in demand has reduced competitive pressure on suppliers to offer lower prices, resulting in weakened buyer power and expanding service prices.

Due to growth in price during the past three years, buyers have not experienced significant benefits in delaying their purchases. Although low price volatility allows buyers to take their time in choosing a supplier, buyers are encouraged to secure a service provider now to avoid paying higher prices in the coming three years.


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