As ecommerce continues to gain momentum around the world and more consumers than ever before rely on the convenience and affordability provided by online shopping, warehousing and order fulfillment services are busier than ever before. What’s more, a recent poll conducted by Warehousing & Fulfillment shows that warehouse and fulfillment costs are climbing for a few different reasons.
The Average Costs of Managing a Warehouse
In 2018 and 2019, the average warehouse cost per square foot was $7.79. This increased slightly in 2020 to $7.81, which is a very slim margin. However, the cost of warehouse staff has increased significantly in that same timeframe. In 2018 and 2019, management received an average of $50,500 per year and employees were paid $13.32 an hour. In 2020, management salary jumped to $52.7k while hourly pay only climbed a few cents to $13.47. Corporate profits were 7.25% in 2019, and in 2020, that number rose to 9.77%.
How Much Businesses are Paying for Warehousing
In 2018 and 2019, 64.29% of warehousing and fulfillment service providers said they raised their pricing for their clients – and they raised it an average of 3.67%. In 2020, just under 70% of warehousing and fulfillment service providers raised their pricing, but the raise was slightly lower at 3.30%. Storage charges have also gone up from $13.20 per pallet a year ago to $14.58 today. Shipping discounts have also fallen to the wayside somewhat; last year, warehousing and fulfillment companies provided 20.2% discounts on ground shipping, 39% discounts on express shipping, and 51.3% discounts on LTL shipping. In 2020, ground and express shipping discounts dropped drastically to 13% and 20% respectively, but LTL discounts went up to just over 52%.
Finally, it is important to note that about 51% of all warehousing and fulfillment companies polled charged a routine account management fee compared to 60% just a year ago. However, 91% of them charge for returns processing, which is 7% higher than this time last year. Roughly 84% of warehouses charge receiving fees at an average of $35.30 per hour, and the average charge for a 30-foot container was $330.
Why Costs are Climbing
Warehousing and fulfillment service providers are increasing costs for a wide variety of reasons. These vary based on factors such as the industry, geographical location, and even the quality or number of services provided. For example, products requiring a very specific climate are more expensive to store and ship; meanwhile, facilities that offer increased security charge more than facilities that only offer a minimum. It is also important to note that consumer demands play a role in cost increases, too. The complexities of returns processing, demands for next-day or even same-day shipping, the inclusion of free samples, and more will all have an effect on prices.
Though warehousing and fulfillment services are charging more in 2020 than in years past, the services their clients receive are of better quality and value than ever before. In fact, many small to medium businesses may not even notice a significant price increase this year.
Please Note: The data & statistics provided within this article were sourced from www.warehousingandfulfillment.com.