Report says Canadian warehousing and storage industry performing well

by Inside Logistics Online Staff

Industry research firm IBISWorld released a June 2024 report on the Canadian warehousing and storage sector, showing a compound annual growth rate (CAGR) of 3.3 per cent over the past five years and reaching an estimated $2.3 billion in revenue in 2024.

The report says general warehousing and storage services in Canada have seen strong growth since 2019, especially through pandemic-era lockdowns and the economy’s immediate recovery. Consumers’ rapid shift to e-commerce through COVID-19 drove demand for warehousing providers’ highest-priced services but also posed challenges, as products sold online required more space and labour-intensive handling.

IBISWorld’s analysis goes on to say that strong economic conditions and consumer spending paved the way for heightened manufacturing capacities, which drove demand for providers to help store goods throughout the supply chain. Technological advancements, like inventory tracking and scanning, improved efficiency and reduced errors, helping service providers stay attractive against in-house substitutes.

Economic expansion has fueled warehouse usage

While demand for storage and warehousing services originates from all sectors of the economy, most clients are in the manufacturing, wholesale and retail sectors. When these sectors perform well, manufacturing and sales capacities climb, which translates to an uptick in revenue for storage and warehousing services. Solid consumer spending has kept manufacturing, wholesale and retail clients in need of more storage services, bolstering revenue.

E-commerce trends benefit revenue but strain profit

The rise of e-commerce has facilitated the shipment of smaller goods on a more frequent basis, improving demand for warehousing services. As online sales channels have enabled businesses with limited or no brick-and-mortar retail presence to market their products to consumers, many of these businesses have relied on third-party logistics providers for distribution and warehousing.

General warehousing and storage industry in Canada outlook (2024-2029)

Despite fears surrounding a recession, the Canadian market has begun to take a course toward correction in 2024. As the consumer price index’s upward trend decelerates, consumers will spend less on essential purchases and expenses. Rising wages will also help disposable income climb at a much more pronounced pace than in recent years, giving consumers more spending power.

For the full report, visit here.