This is the first report in a quarterly series that will highlight trends and insights in the dynamic warehousing market. It marks the first time dynamic warehousing has been analyzed in detail and serves to establish benchmarks for future reports and analyses. Dynamic warehousing is a relatively new business model that’s been gradually taking hold in the supply chain and logistics industries over the last
18 to 24 months. It’s an innovative, yet simple concept, that due to its broad-reaching network and data-rich SaaS technology, organically produces a unique dataset that provide insights into important trends in the warehousing, logistics and industrial real estate markets. This first report has three objectives:
- Provide floor-level view of real-world dynamic warehousing details, experiences and expectations.
- Present insights that help individuals and companies discover new options and make business decisions that are better informed
- Establish baseline metrics that will enable deeper historical trend analyses as the market matures over future quarters
This report takes a look at three core aspects of dynamic warehousing:
- Marketplace pricing for pallet storage
- Usage and volume by storage space type (pallet position)
- Inbound/outbound activity within dynamic warehouse locations
Marketplace Pricing for Pallet Storage
Dynamic warehousing is a marketplace in which multiple providers of warehouse space may offer different types of storage space and services at rates that they set. However, the nature of a marketplace is that supply and demand, as well as a number of other comparable factors play a key role determining market rates as well. Those factors may include details such as how much labor is required, the estimated duration of the arrangement, handling requirements, temperature or climate accommodations, regional cost variables, etc. You’ll notice that there was roughly a 10% difference in the asking rates (Non-Activated Rate) and the rate that was actually paid (Activated Rate). However, that difference varied up or down, depending on the pallet position type.
There are three types of pallet storage available through a dynamic warehouse marketplace: Floor, racked and stacked space. The following is an overview of the marketplace rates offered and paid for each type during the first quarter of 2016. Rates are per pallet, per month:
We believe that specific location is one of the primary drivers behind why activated rates are higher in some cases than non-activated rates, and we will continue to monitor and analyze this dynamic over time. We will revisit these rates in future quarters with an eye toward developing trends and a deeper analysis of regional differences and seasonal supply and demand.
Usage and Volume by Storage Space (Pallet Position) Type
A high-level analysis of all new pallet positions acquired through the marketplace reveals a significant change between Q3 and Q4 of last year. Up until Q4, rack space was the pallet position type most transacted.
In Q4 2015, stacked space took the lead by a significant margin. In Q1, floor space became the leading purchased pallet position. Today, there isn’t enough historical data to confidently analyze these shifts. However, in future quarters, these numbers may reflect trends in pallet position preferences, demand and availability.
Inbound and Outbound Activity Within Dynamic Warehouse Locations
Dynamic warehouse space is acquired for a variety of business purposes. Some of the most frequent include:
- Expanding the warehouse network to get merchandise closer to customers (often to reduce shipping costs, improve shipping service, compete with online retailers)
- Handling unforeseen temporary overstock situations
- Ramping up inventory for new product launches and promotions
- Testing viability of a new warehouse location or ramping up a new business without having to make long-term lease commitments.
- Managing a high volume of returns
- Long-term storage of materials or static inventory
Across hundreds of locations in the dynamic warehouse network, new pallets are shipped in and stored pallets are shipped out every day. The details of that activity across the broad network of locations may ultimately provide insights and indicators of industry trends such as shifts in distribution patterns, early seasonal activity and demand, general industry health and growth and more.
The duration of the shelf life of pallets stored via dynamic warehousing steadily got shorter over the course of 2015. This data may reflect (amongst other things) adoption of dynamic warehousing for increasingly diversified purposes. It appears to indicate that the model is being adopted for more logistical and quicker-turn distribution and less long-term storage.
About the Report and Data
The information in this report is based on data from the FLEXE Dynamic Warehouse Marketplace. The data used for analysis included supply, demand, pricing, transaction and activity details related to pallets stored in, or intended for, hundreds of warehouse locations across the United States and Canada through March 31, 2016.