FOR IMMEDIATE RELEASE

Warehousing in North America – 2006

STOUGHTON, WI, May 22, 2006 – A major white paper on warehousing has just been released. The report, “Warehousing in North America – 2006,” benchmarks prices and practices. In addition it includes basic industry statistics and major player information.

The author reports that U.S. commercial warehousing revenues are $28.8 billion. “The industry grew 9.5% last year and we forecast another strong year for 2006,” said Richard Armstrong, author of the report.

The report benchmarks contract and public warehousing in separate sections. Contract warehouse relationships are measured by operating margins, EBITDA and EBIT margins. Regional differences are reported for both contract and public operations. Key performance indicators (KPIs) and value-added services frequencies are included.

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. This standard costing methodology is used for both contract and public warehousing. Gain-sharing, single-factor carton pricing and other key pricing elements are explained. Public warehousing pallet handling charges were found to vary regionally from $5.75 to $6.79. Package handling, storage and value-added service charges are detailed in the report.

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 versus ownership.

“We undertook this study originally 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 Armstrong. “There was not a good source available. Our report is the only public explanation of what the real prices are in warehousing in North America.”

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. It can be purchased by phone at +1-608-873-8929, or online at: https://www.3plogistics.com/shopsite/index.html.

About Armstrong & Associates: Armstrong & Associates, Inc. is a supply chain management consulting firm specializing in market research, mergers and acquisitions and logistics outsourcing. Armstrong & Associates publishes Who’s Who In Logistics. Recent research papers include: “Is Bigger Better? Third-Party Logistics Financial and Acquisition Results for 2005,” and “Trends in 3PL/Customer Relationships.” In addition, Armstrong & Associates maintains databases of warehousing companies, freight forwarders, third-party logistics providers, and distributors.

For more information, contact: Richard Armstrong (800) 525-3915 or e-mail Armstrong@3PLogistics.com.

Source:

Armstrong & Associates, Inc.
100 Business Park Circle
Suite 202 Stoughton, WI 53589
Phone: (608) 873-8929
Fax: (608) 873-5509
Website: www.3PLogistics.com