Warehouse Pricing Study Establishes Benchmarks for U.S.

STOUGHTON, WI – A recently completed study of 3PL warehouse prices has for the first time established benchmarks for the United States. The study covers both contract and public warehousing.

Regional price differences are reported. Major metropolitan area prices are reported for principal U.S. logistics locations. The report tracks profitability by region in terms of operating margins, EBITDA and EBIT.

Lengths of contracts reviewed in the study were from 1-7 years. The study found that most contracts have 3 and 5 year terms.

In the report, components of standard warehouse pricing models are given. The major variables are space utilization, labor, administrative costs and margins.

Expected operating margins and profitability measures are compared to actual results for 3PLs in the study. These relationships are reviewed in detail and in reference to the "Negotiation Zone." Statistical analyses were performed showing the effects on profitability of open book relationships and leasing vs. ownership.

"We undertook this study because we had a Japanese consulting client who wanted to know what and how 3PLs and commercial warehouses were charging for their services in the U.S.," said Richard Armstrong, president of Armstrong & Associates, a supply chain management consultancy. "There was not a good source available and the only way to get the information was to put out an RFP. Our report is the first public explanation of what the real prices are in warehousing."

The analysis emphasizes the growth of contract warehousing at the expense of public warehousing. The results indicate however, that profitability is not inherent in either of the models but owes more to company cultures and practices.

The complete study with appendices is available from Armstrong & Associates.

Armstrong & Associates, Inc. is a supply chain management consulting firm specializing in market research, mergers and acquisitions and outsourcing. Armstrong & Associates publishes Who's Who In Logistics. It’s website is: http://www.3Plogistics.com

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