Written by Aisha Ahmad (Research Lead), Sophie Aguas, Vaishnavi Akella & Alec Ke
KEY POINTS:
Recent changes and growth in U.S. warehousing are impacting operations and standards.
Chinese logistics operators are expanding in U.S. warehousing.
The Producer Price Index for new warehouses has leveled off, contrasting with its rapid pandemic growth.
The U.S. warehousing industry fluctuated due to the pandemic and e-commerce growth but is now steady and optimizing.
Automated warehousing has revolutionized logistics and retail, enhancing efficiency and flexibility.
U.S. warehouse jobs peaked in 2022 but have since stabilized.
The U.S. warehousing industry has undergone significant transformations in recent years, driven by regulatory changes, the expansion of e-commerce, and advancements in automation. This article covers various aspects of these changes, including trends in warehouse establishment numbers, employment, and wages, providing a comprehensive overview of the industry's current state and outlook. Through detailed analysis and data, we can examine the growth and current situation of U.S. warehousing, showcasing how these factors are reshaping the industry.
Current Events
Recent news highlights that there have been changes in the U.S. warehousing industry, impacting operations and standards. This includes regulations and warehousing growth from foreign e-commerce.
Moreover, warehousing laws have been put into place around the country to enhance safety for warehouse employees. In 2022, California released the Warehouse Quota Law, which lets employees write explanations for their productivity expectations in the warehouse, including any discipline that would get taken if expectations weren't met. In a recent NY Times report written by Noam Scheiber, Amazon was fined $6 million dollars for violating that safety law in June 2024.
Findings pinpoint that Amazon violated the law more than 59,000 times in Southern California. The reason behind such violations is due to Amazon’s goal of warehouse employees having to reach a certain number of items being operated in the facility. For example, if an employee is not scanning enough items and therefore not making rate, they will get written up.
Hence, Amazon runs into high amounts of injury, including rates that are higher than Walmart. In response to the fines, Amazon has stated that that they have invested millions of dollars towards warehouse employee safety.
Another significant event in U.S. Warehousing is the growing presence of Chinese Logistic Operators. As e-commerce and supply chain demand continue to rise, China increasingly integrated its logistic networks with international supply chains. In response to the rapid growth of Chinese discount retailers like Temu and Shein, which grew rapidly in the American apparel and home goods industry in recent years, logistics providers have been building U.S.-based supply chains to speed up customer fulfillment and compete with American companies’ faster delivery times.
According to an article by the Wall Street Journal, Prologis, the largest global industrial real-estate operator, estimated that Chinese third-party logistics providers and e-commerce companies accounted for 20% of the net new warehouse leasing across the U.S. in 2024 through the third quarter, showing a sharp increase over recent years. In New Jersey, one of the primary leasing locations in major U.S. logistics markets, China-based logistics companies leased 5.6 million square feet of warehouse space through the third quarter. In comparison to all of 2023, the amount of warehousing space leased by those companies in that region nearly tripled in one quarter.
On the other hand, the entry of Chinese logistics operators also raises concerns about data privacy, security risks, and the potential for increased dependency on Chinese supply chains, especially considering ongoing geopolitical tensions after the 2024 presidential election. U.S. regulators have increased scrutiny of foreign involvement in critical industries, which could lead to stricter regulations in the future.
Producer Price Index for New Warehousing
As the world recovers from the COVID-19 pandemic, the nationwide Producer Price Index (PPI) for the construction of new warehouses has slowed in growth to stabilize at a relatively constant level. The PPI for new warehousing construction captures the price that construction firms receive per unit of warehouse build. By analyzing the PPI of warehousing in the United States, it becomes clear that warehousing is no longer the same booming industry it was during the COVID-19 pandemic.
The graph below represents data from multiple industries’ prices to build new warehouses in the United States from 2004 to 2024 (Figure #1). Since 2004, the PPI for new warehouse building construction has been steadily increasing. The rate of increase was particularly sharp from 2020 to 2022, with a notable rise of 37.96%. This surge was driven by the increase in price for construction materials such as cement and concrete, which are now 40% more expensive than before the COVID-19 pandemic.
Companies are also adjusting their supply chains and inventory strategies to align with more typical, pre-pandemic consumer spending patterns. As part of this shift, many are drawing down on excess inventory and adopting leaner inventory management approaches, such as "just-in-time" strategies. These strategies align better with recent consumer trends that follow instant gratification preferences, such as overnight shipping or rapidly changing popular trends.
Additionally, some businesses are opting to sublease storage space, with the amount of U.S. warehouse space being subleased reaching a record high of more than 156 million square feet in the fourth quarter of 2023—over three times the amount available during the same period in 2021, according to Savills. As a result, manufacturers and retailers are scaling back on overstocking, while focusing on optimizing the efficiency of their existing warehouses rather than expanding their physical storage capacity.
Number of Establishments in Warehousing (U.S Total and by State)
As companies dial back on their net investments into new warehouses, the total number of establishments in warehousing in the United States has also slowed in growth. The graph below represents the total number of establishments in Private NAICS 4931 Warehousing and Storage for all establishment sizes in the United States (Figure #2). From 2001 to 2023, there has been a 73% increase in the number of warehousing establishments of all sizes.
Although the total number of warehousing establishments in the United States seems to generally increase, even post-pandemic, the percentage difference from a year ago for the total number of warehouse establishments in the U.S. indicates that companies really are dialing back on the number of new warehouses they build.
The graph below represents the percentage difference from a year ago of the Number of Establishments in Private NAICS 4931 Warehousing and Storage for all establishment sizes in the United States (Figure #3). For instance, a value of 6.42% in 2022 indicates that in 2022, there were 6.42% more warehousing and storage establishments in the United States than in 2021. 2022 also happens to have the highest value represented on the graph, indicating the steepest growth in warehousing at that time. This aligns with the fact that during the pandemic, many companies were rapidly expanding their warehouses to keep up with the growth of e-commerce shopping post-pandemic, which required a higher number of storages across the country to be readily shipped at near any time.
However, in 2023, there is only a 3.63% growth in warehouses in the United States, a steep decline from the 6.42% growth in 2022. This indicates that while the number of warehouses is still increasing, as the percentage is still positive, the rate at which they increase in number is rapidly declining.
States like Texas (Figure #4) and Michigan (Figure #5) have seen a steady increase in warehouses, as shown through data from the U.S Bureau of Labor Statistics. One reason of growth for warehousing in these states is due to an increase in imports coming in from nearshoring at Mexico and Canada, where goods such as automotive parts or e-commerce merchandise are being stored. Texas also has a crucial location at the Gulf of Mexico, having imports transfer from ports to warehouses. Should President Trump enforce the high tariffs he promised during his presidential campaign, activity for these new warehouses may significantly decrease as trade falters post-tariffs.
Growth of Automated Warehousing
As companies focus on improving their existing warehouses, one such improvement has been the shift towards automated warehousing. Recent growth of automated warehousing has significantly affected industries such as retail and e-commerce. Witron, a company focused on developing storage systems and automated warehousing processes, has especially given rise to these expansions.
Providing tailored solutions to each aspect of warehousing, companies like Witron are dedicated to creating a variety of systems to guarantee a smooth delivery. Retailers such as Meijer have recently updated their systems with Witron’s solutions, and have seen a great increase in their efficiency, storage, and speed. With their concentration on “optimal material flow” they can focus on making sure there is proper customer benefit and satisfaction.
Several systems are used for essential everyday foods, which is the reason for such a huge impact with logistics. OPM – Order Picking Machinery- is an example of an automated case picking machinery and is used in dry, perishable, and frozen goods warehouses. Because these goods are so common globally, they’re currently providing efficiency in more than 90 projects that are located in 13 different countries. Module Picking System is another process that involves bulky and large volume items and is very cost-efficient.
Although this is a system that is user supported, other solutions such as pick-by-light (a smaller Witron process) that are used in Module Picking System, still make this drastically more efficient. Finally, BOS is a Box Order System that sets new standards in box handling and ergonomics. This is extremely important as the flexibility of the machine makes it easy to handle different types of goods including beverage crates. Overall, each of these solutions, and many more, solve specific issues that can easily be customized to the company utilizing them.
Chinese logistics operators have also been leading in the progression of automated warehouse technology. According to New Light Enterprises, leading firms like Cainiao, JD Logistics, and SF
Express have established multiple large-scale distribution centers in the U.S., bringing with them advanced technology, automation, and AI-powered warehouse management systems. These international operational expansions, as well as the significant capital investments they bring, may bring lasting changes to the American logistic industry.
One of the most notable effects of Chinese logistics on U.S. warehousing is the increased demand for the implementation of new technologies in warehousing facilities. Chinese operators establish U.S.-based distribution to support the growing demand for goods imported from China, delivering streamlined last-mile delivery that cut down both shipping time and last-mile transportation costs. As these logistic operators bring
Chinese automation and robotics to their U.S. warehouses, traditional U.S.-based companies are being pushed to upgrade their infrastructure to stay competitive in terms of efficiency, capacity, and costs. In addition, Chinese logistics operators can often offer lower-cost services due to their streamlined supply chain processes and the ability to leverage economies of scale. In the face of growing competition, many U.S. companies, especially small and mid-sized operators in the warehousing sector, feel pressured to adopt similar technologies or risk losing market share to these larger, international competitors.
Warehousing Employment and Wages
Throughout the years, fluctuations have been seen for warehouse employee numbers in the U.S. According to an article written by John Kingston in Freight Waves, by September 2024 warehouse jobs decreased by 11,000 to 1,776,600 jobs. This differs from May 2022 where warehouse jobs were the highest at 1,942,200. Warehouse jobs were higher in 2022 due to the post-pandemic shortage of warehouse workers. Hence, more hiring was needed to run operations. As we transition into 2024, there were 1,765,000 jobs in March and 1,782,800 jobs in July.
Data from FRED provides thousands of persons for all U.S. employees in warehousing and storage (Figure #6). When lockdown restrictions first took place during the COVID-19 pandemic, the employee numbers decreased sharply from 1,342 in March 2020 to 1,263 in April 2020. However, U.S. consumers transitioned from shopping in stores to online, which created a new demand for e-commerce warehousing, and hence new employees. Therefore, the number of warehouse employees increased to 1,568 in December 2020. From June 2021 to February 2022, the number of people employed increased from 1,600 to 1,920.
This growth came from the lifting of lockdown restrictions and a decrease in unemployment, which led more people to find new jobs. Now, the changes of people employed in warehousing has been stable due to stabilized practices in warehousing, where supply chain adjustments have been made such as optimizing inventory levels and automation for warehouse efficiencies, which requires less warehouse employees.
Samples of various warehouse employee numbers can be seen throughout different states. For example, data from the U.S Bureau of Labor Statistics reports that the numbers in warehouse employment in Michigan represents the overall growth and decline of warehouse employment across the U.S. over time (Figure #7). It is essential to highlight that from 2007 to 2009, warehouse employment in Michigan declined at 16.5% due to the Great Recession due to less consumer demand, financial difficulties, and supply chain disruptions. Since then, Michigan similarly saw the growth of warehousing for e-commerce, COVID-19 disruptions, and post-pandemic effects that caused the increase of warehouse employment.
Another factor contributing to the rise in warehouse employment is the increase in manufacturing jobs, driven by higher production levels. This includes innovative goods such as electronics, automobiles, renewable energy equipment, medical devices, and processed foods & beverages. More production means the need for more warehouses to store the extra goods. Thus, data from the U.S Bureau of Labor Statistics provides all employees in thousands for material handling equipment manufacturing, which correlates to the growth for employees in U.S warehousing (Figure #8). The BLS also reported an increase in their hours of labor, which correlates with an increase in hours for employees in distribution or warehousing operations as well (Figure #9).
Moreover, higher amounts of labor from warehousing employees have significantly increased their wages throughout the years. The BLS reports that on average, the U.S. annual pay for warehouse employees working in a private warehouse (such as one owned by a retailer) during 2023 was $51,865 (Figure #10). Warehouse employees' wages can differ depending on whether they are paid an hourly rate or a piece rate, which means being compensated based on the completion of specific tasks like selecting items.
The BLS also shows that In Michigan, the average annual pay for the U.S. warehouse employees working in a private warehouse during 2023 was $54,745, just 5.5% above the national average (Figure #11). Although the number is higher now, wages previously decreased in 2015 from $53,773 to 2020 at $47,561 because of the increased automation leading to less labor productivity. Nonetheless, due to the COVID-19 pandemic creating a high demand for e-commerce items, hence a larger demand for productivity given labor shortages, wages finally spiked an increase at 13%.
Conclusion
In closing, the U.S. warehousing industry is experiencing growth by regulatory changes, technological advancements, and the expansion of global e-commerce. Companies are increasingly focusing on optimizing existing facilities and integrating advanced technologies to enhance efficiency and competitiveness. As the sector continues to evolve, strategic innovations and continuous improvements will be key to sustaining warehouse growth and meeting future demands.
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