Celebrating 75 Years of Service to the Greater Houston Area

Q4 2023 Public Warehousing Review & Outlook

inside of warehouse building stocked with packages

The fourth quarter has been marked by a convergence of global events, technological advancements, and strategic shifts that have reshaped the landscape of the warehousing industry. 

From the resurgence of reshoring initiatives to the impact of critical global events and crises, several forces have influenced the warehouse and logistics sector. 

Despite the uncertainty, the global warehousing market is expected to reach an estimated $1,007.5 billion by 2028 with a CAGR of 6.9 percent from 2023 to 2028. Staying current on market changes and knowing how to adjust can help drive long-term success.

We’ll outline the key trends, technological innovations, and emerging opportunities that will shape the outlook for public warehousing in the upcoming year.

2023 Q4 Recap & Predictions 

Texas has secured its place as the premier destination for public warehousing. With our strategic location in Houston, American Warehouses solidifies its standing as a leading and all-encompassing solution for shippers that require secure storage and transportation solutions for hazardous and combustible materials.

Technological innovations and supply chain issues continue to impact the global market, and companies are diversifying suppliers, embracing multi-modal transportation, and building contingency plans for effective risk management.

To stay ahead of the curve in this competitive market, public warehousing companies are quickly adapting to an industry driven by technological advancements, changing consumer demands, and the need for greater efficiency. 

  • Logistics providers will invest more heavily in technologies like blockchain, the Internet of Things (IoT), and artificial intelligence (AI) to enhance visibility, traceability, and efficiency. 
  • Warehouses will have to prepare for rising logistic costs and labor shortages.
  • Companies will continue reshoring to address supply chain challenges.  

Industry Challenges & Trends 

In the wake of a global pandemic, the conflict in Ukraine, and China's economic slowdown, American companies are reassessing their global supply chain strategies to better adapt to market challenges. 

There has also been a significant uptick in U.S. business logistics costs, reaching a historic high of $2.3 trillion. Despite a return of consumers to physical stores, one of the key drivers for the warehousing market is the rapid expansion of the robust e-commerce market. 

Increased digital demand and costs have led many warehouses to adopt AI and automation technology to improve workflows and streamline operations. 

  • Public warehousing will invest more heavily in AI and automation technology to meet consumer demand. 
  • A greater emphasis will be placed on sustainability and space efficiency when redesigning or retrofitting warehouse facilities, especially as companies continue to scale back their workforce.
  • Many companies are reshoring to the U.S. and Mexico to avoid increasingly frequent supply chain issues. 

The Reshoring Movement

In response to global supply chain disruptions, many companies are reshaping their strategy by relocating. According to Kearney's 10th Annual Reshoring Index Report, American companies are actively advancing their reshoring plans, and to great success.

The progress of these reshoring efforts has prompted companies that previously adopted a wait-and-see approach to manufacturing locations, to now seek facilities in Mexico and the United States. 

American imports of Mexican manufactured goods have surged by 26 percent since 2020 according to the Kearney report, reflecting the drastic shift in supply chain dynamics. This movement will lead to a further increase in demand for effective storage solutions from the public warehouse market.  

  • There’s growing demand for warehouse properties that can seamlessly accommodate both distribution and manufacturing requirements to minimize transportation costs.
  • Reshoring can improve quality control, production scheduling, and inventory management for more efficient warehouse operations.

Technological Investments

Warehousing and logistics companies are strategically implementing automation and AI technology to help streamline operations and reduce costs. Notably, third-party logistics providers (3PLs) and shippers are taking a lead in embracing these transformative technologies, while collaborating more closely to improve decision-making and efficiency. 

According to the 34th Annual State of Logistics Report by the global consultant firm Kearney, 96 percent of 3PLs respondents and 86 percent of shippers have migrated to the cloud, while 80 percent of 3PLs and 77 percent of shippers are already investing in IoT technology to optimize operational processes and enhance overall efficiency.

Additionally, the global trend toward urban living has presented unique challenges for logistics operations, primarily due to increasing congestion in these areas. To address these many challenges, including congestion and pollution, companies are implementing innovative solutions such as strategically located micro-fulfillment centers, electric delivery vehicles, and autonomous delivery robots, to optimize last-mile delivery for quicker and more sustainable options.

  • Integrated technology solutions such as automatic picking tools, guided vehicles, warehouse management systems, and automated storage and retrieval systems will become more widely used. 
  • North America is leading the market thanks to advanced functionalities such as Web Map Service (WMS), which enables efficient order fulfillment, barcode scanning, and improved inventory management. 
  • There will be a greater focus on collaboration and communication between shippers and logistics providers going forward to improve operational efficiency and reduce costs.

The Takeaway

The warehousing and logistics landscape is undergoing a transformative phase marked by supply chain challenges, technological leaps, and a pronounced focus on enhancing operational efficiency. 

Public warehousing is experiencing a surge, fueled by factors like pricing, demand, service quality, and more. This is especially true in Texas, with cities like Houston emerging as an optimal hub for efficient storage and logistics.

By working with American Warehouses, you partner with an experienced operator with the expertise and state-of-the-art facility designed to handle hazardous materials and combustible chemicals safely and efficiently.

For 75 years, American Warehouses has been a trusted partner for businesses navigating commercial inventories in the Houston, Texas region. Contact us today for more information and discover how we can support your logistics needs.

Free Informational Circular

Fill out the form to get your instant download of this convenient document highlighting how AWI helps companies maximize their supply chain operations.

Thumbnail of one-sheet download

Leave a Comment