The warehouse and fulfillment sector is set for double-digit growth over the next five years as the industry continues to adjust to a global e-commerce boom that accelerated during the pandemic and is on track to slacken only slightly as vaccine rollouts slow the spread of covid, according to a report released today by market research firm Interact Analysis.
“Whilst demand is likely to flatten out as the virus is brought under control, the signs are that the e-commerce habit will have been embedded for the long term. Warehousing and fulfillment centers will continue to play a key and growing role in the world of retail,” Irthlingborough, England-based Interact Analysis said in its “Warehouse Building Stock Database.”
Today, North America and Europe have a disproportionally high quantity of warehouses relative to their population, the firm said. However, the burgeoning middle class and demand for retail goods in developing countries will mean that by 2025, China, the U.S., Japan, India, and Germany will account for more than 50% of the future global warehouse building stock of 180,000 units.
That number of DCs would mark a quick rise from the current stock of warehouses which reached 150,000 in number by the end of 2020, covering 25 billion square feet in total. Retailers and developers are expected to bring 28,500 new warehouses into service in by 2025 to meet e-commerce demands.
“While many industrial and service sectors continue to reel from the effects of the COVID-19 pandemic, warehousing and fulfillment centers are a real growth area, with staffing set to increase by 50% by 2025,” Jason dePreaux, principal analyst at Interact Analysis, said in the report.
“There has been a surge in automation projects caused by labor shortages in some markets. Yet 60% of all warehouses are in regions where the cost of labor is under $10 an hour and automation has yet to gain a firm foothold. As developing economies advance, which they inevitably will, we can expect to see major growth in automation in these regions too,” dePreaux said.
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