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A yearly cost of $8.31 per square foot of warehouse space, up from $8.22 in 2023, reflects the ongoing rise in real estate expenses. This increase continues a trend from $7.96 in 2022, driven by the scarcity of warehouse space and rising demand, according to data revealed by WarehousingAndFulfillment.com, a division of insightQuote, Inc.
“The latest 2024 survey results reveal notable cost increases across several key metrics, which comes as no surprise as the broader business world grapples with the task of taming pesky inflation, coupled with a few years of significant growth in the 3PL fulfillment industry,” according to the survey.
Key takeaways:
- Warehouse labor costs saw upward movement, as the hourly rate for warehouse staff increased from $15.78 to $16.95, reflecting adjustments in response to rising labor costs or evolving industry norms. The annual pay for warehouse management staff also experienced an uptick, climbing from $55,100 to $57,352, likely driven by factors such as expanded responsibilities or heightened competition for skilled talent.
- The price for picking and packing a single item order increased over 7% to $3.18. Increased labor costs no doubt influenced this increase.
- The flagship pallet storage rate measure increased to $20.37 per pallet, impacted by increased warehouse rental costs and limited warehouse space availability.
- Amidst these cost escalations, the average corporate profit percentage slightly decreased, dropping from 10.49% in 2023 to 9.37% in 2024. This decline shows the prevailing challenge posed by rising operational costs, prompting businesses to explore cost-saving measures and adjust pricing strategies to maintain profitability in a fiercely competitive market.
- In 2024, 85% of warehouses measured their performance, a slight decrease from 89% in 2023, indicating a minor decline in performance tracking.
- This year, the average order-picking accuracy is 99.15%, slightly down from 99.19% in 2023. Similarly, inventory shrinkage improved marginally to 1.24% from 1.38% last year, showcasing better inventory management.
- Regarding accountability, 85% of warehouses acknowledge paying for errors when at fault, consistent with the 89% in 2023 who paid for shipping, picking, and inventory errors. Customer retention has improved as well, with 94.20% of respondents retaining most of their clientele annually in 2024, up from 91.72% in 2023, suggesting that more customers are satisfied and remain loyal to the service.
- Among warehouses with multiple locations, 67% charge the same rates, while 33% charge different rates, which was ran increase in the percentage of similar rates charged as compared to last year’s survey results.
- Occupancy costs represent 31.68% of total revenues in 2024, a significant increase from 24.9% in 2023, while labor costs decreased as a percentage of revenue to 28.59% from 31.7% last year. Finally, warehouses charge an average margin of 17.5% on occupancy costs for dedicated facilities.
- The hourly rate for warehouse staff has also seen a sharp rise, averaging $16.95 in 2024 compared to $15.78 in 2023, which itself was up from $14.97 the previous year. This increase underscores the growing costs associated with labor. The annual pay for warehouse management staff has risen to $57,352 in 2024, up from $55,057 in 2023, highlighting a significant investment in skilled personnel essential for efficient operations.
