FulfillmentCompanies.net, a leader in fulfillment matchmaking services, recently released its 2020 Warehousing and Fulfillment Pricing and Costs Survey. Results revealed that while the cost of running a warehouse is steadily increasing, profits are also rising. The cost of leasing warehouse space in 2019 was $7.79 per-square-foot, and profits were 7.25 percent. Costs rose steadily to $7.81 per-square-foot in the 2020 survey. However, profits took a jump to 9.77 percent. Increases in fulfillment costs and pricing across the board are helping the industry maintain steady profits.
About the Annual Warehousing and Fulfillment Costs and Pricing Survey
This year’s survey had record response rates from more than 600 warehouses within the company’s network. Respondents were largely single location regional fulfillment companies who were surveyed confidentially. Specific warehouses were not recorded alongside responses nor were their geographic locations noted. To accommodate for entry errors or misunderstandings related to the questions, researchers did not include responses that fell far outside the averages outlined. When respondents used various formats for a single question, researchers chose to use the most common format.
Key Findings in Our Annual Survey
Demand for warehousing and fulfillment services is steadily increasing, mainly due to the popularity of e-commerce fulfillment services. In order to keep up with demand, warehouses are spending more on labor and leases. Across the board, researchers found warehousing and fulfillment companies are increasing their pricing to accommodate for demand. As a result, the industry has been able to increase profits. Consider these highlights from the survey.
Warehousing Costs Increase
- The cost-per-square-foot to lease warehouse space averaged $7.81.
- The average starting hourly rate of warehouse staff is $13.47 per hour.
- Warehouse managers make $52,765 per year on average.
Fulfillment Prices are Up
- 69 percent of respondents increase pricing on a regular basis.
- Of those that increase rates, 92 percent increase pricing annually, while 8 percent do it every two or more years.
- 3.3 percent is the average price increase year-to-year.
- The average pick and pack charge for a single item B2C order is $2.96, slightly up from $2.86 in 2019.
- The average pick and pack charge for a single item B2B order is $4.27, slightly up from $4.17 in 2019.
Warehouse Profits are Positive
Corporate profit in the last three surveys is as follows:
- 2017: 8.83 percent
- 2018-2019: 7.25 percent
- 2020: 9.77 percent
3PL Industry Fee Trends
In addition to pick and pack fees, respondents revealed average increases in various other fee categories too. For example, storage fees were $13.20 per pallet and $2.85 per bin in 2019. In 2020, these increased to $14.58 per pallet and $3.3 per bin. For the 56 percent of respondents that charge a setup fee, the average jumped from just $336 for new clients in 2019 to $520 in 2020. Returns fees also trended upward to $4.05 per order, from $3.53 in 2019. Receiving fees on the whole increased, averaging as follows:
- $35.3 per hour
- $330.20 per 20-foot container/$465 per 40-foot container
- $1.5 per carton
- $7.65 per pallet
Performance Tracking within the Fulfillment Industry
Today’s warehousing and fulfillment companies know the importance of measuring performance to gauge success. Ninety-three percent consistently measure key performance indicators, including these most popular KPIs.
- Order picking accuracy (99.31 percent)
- Inventory shrinkage rate (2.84 percent)
- Percent of customers retained each year (94.59 percent)
Understanding the Warehouse Fulfillment Industry
In a competitive environment, it’s critical that warehousing and fulfillment companies understand the industry. To assist them, FulfillmentCompanies.net updates this survey each year and continues to add questions that will bring about new insights. For example, new questions this year asked about charges for inbound call center services, kitting services, carton fees, and subscription box orders.