Top 20 3PL and Public Refrigerated Warehouses, 2015

Each December, we take a break from looking at what’s going on inside the four walls of the world’s warehouses and distribution centers and consider the sheer square footage managed by the top third-party logistics (3PL) warehouses and public refrigerated warehouses. And again this year, that space is growing.

Following last year’s 4.4% growth in square footage, the biggest global third-party logistics (3PL) warehouses now manage 3.3% more space. These are among the findings of an annual ranking of the Top 20 3PL warehouses supplied to Modern by Armstrong & Associates, a consulting firm specializing in logistics outsourcing. Dick Armstrong, chair of Armstrong & Associates, is forecasting continued modest growth in 2016.

Based on the latest news and numbers, next year seems unlikely to produce many surprises in the public warehousing market as players of all sizes chart steady progress. However, as consolidation continues and conventional practices are challenged, many of the Top 20 spots are up for grabs.

“There are several interesting factors impacting the 3PL area,” Armstrong says. “Lower fuel prices are one thing, but another real challenge is what to do about Amazon. They do some out-and-out 3PL work, no doubt about it. There’s a whole group of vendors contracted with them to use space to sell their product. The key distinction between distribution and 3PL is ownership of items, so Amazon is in the 3PL space.”

Amazon has probably $5 billion to $6 billion of business in this industry, and Armstrong says it is a persistent challenge to accurately classify their position. Much of it could be called 3PL warehousing, or private warehousing, and they play in the value-added space as well. Armstrong says it might be possible to pin down Amazon’s figures for inclusion in the 2016 3PL report.

Armstrong’s Top 60 list includes 3,540 facilities with 763 million square feet, with the average company managing 59 warehouses averaging 215,456 square feet. Armstrong’s full 3PL listings reflect 9,000 U.S. commercial warehousing facilities with 1.9 billion square feet of space under management. As of this publication, Armstrong estimates the total U.S. warehousing market will be valued at $141 billion through 2015.

The Top 10
Exel retains its No. 1 spot on the list, although the gap has closed significantly following second-place Americold’s 23% growth in reported space. Last year, the leader had three times the square footage of longtime second-place GENCO ATC, which fell to fourth after reporting a decrease of 500,000 square feet and 10 facilities. However, Armstrong emphasizes the figures do not reflect the success of GENCO’s acquisition by FedEx.

“That combination is working out very well,” Armstrong says. “FedEx is generating all kinds of opportunities for GENCO, which is taking advantage of those opportunities and bringing a skill set to FedEx they badly needed.”

After two years in third place, Jacobson fell to No. 5 in 2012 before landing at No. 6 in 2013. In mid-2014, French logistics firm Norbert Dentressangle acquired Jacobson, and was in turn acquired by XPO Logistics in mid-2015. It now sits in third place, bumping Ryder, last year’s third finisher, to fifth.

“Dentressangle and XPO? There’s a challenge,” Armstrong says. “France is not a vibrant, growing economy, Europe has been at about 1%, and there’s no sign that it will heat up. Dentressangle has a presence there, a lot of warehouses, and Jacobson has real presence in value-added warehousing in the United States. However, if you look at both companies, I don’t see much potential for them to have organic growth without a lot of cross-selling and help from other XPO entities.”

CEVA, like 15 other members of the list, reported no difference in warehouse space and fell to sixth place. No. 7 through No. 13 remain unchanged. Next year, however, might reflect seventh-place OHL’s acquisition by French shipping company Geodis. NFI and DSC each reported an additional million square feet of space, and so remain tied for No. 13. Armstrong noted the late 2014 news of Goldman-Sachs Group’s acquisition of Neovia Logistics, and the late 2015 news that Denmark-based global 3PL DSV plans to acquire UTi.

The near future
The warehousing market estimates come from the CSCMP annual report, which increases the number every year. “That number, I suspect, is overly optimistic,” Armstrong says. “We know we had a surge and buildup of inventory, and those are being cut back now. But we think those numbers, which are based on Census Bureau data, are probably still over-estimating, generally.”

For instance, in the value-added space arena, Armstrong says about a third of companies didn’t have revenue growth for 2014, and some actually lost money. In terms of square footage of inventory space, Armstrong says many looking for and expecting an inventory upswing haven’t seen it yet. Thankfully, the overall U.S. economy is growing, as evidenced by renewed construction activity.

“That said, the economic climate at home is one that suggests the 3PL market will be pretty ho-hum in the fourth quarter and might continue that way in 2016,” Armstrong says. “I’m not all that optimistic about the first half. We’ll see some new construction, expansions and space, but it’s not going to be hot and exciting.”

Armstrong says he expects the market will continue to grow in 2016. It’s not likely to grow 2.5% like it did in 2014, and although it might match the estimated 4.2% increase in 2015, he adds that 2016 will still probably see growth rates less than 5%.

Top 20 public refrigerated warehouses
This year’s ranking of public refrigerated warehouses (PRW) reflects significant growth as well as increasing consolidation in the PRW industry.

The International Association of Refrigerated Warehouses (IARW) released its annual Global Top 25 List of the PRWs with the greatest warehouse capacity. The Global Top 20 currently operates 96 million cubic meters of refrigerated space—a 6% increase from 2014. The IARW also released a Top 25 list for North America, where PRWs posted 3% growth to 78.8 million cubic meters. The European Top 25 operate 16.57 million cubic meters.

For the first time, IARW also published a list of the Top 25 players in Latin America, in light of rapid growth in that region. Frialsa Frigorificos, which placed 11th on last year’s North America list, tops the Latin American ranking with more than twice the space of the second-place finisher. The list’s companies manage a combined 6.6 million cubic meters of refrigerated warehousing.

In early 2015, Lineage Logistics acquired Columbia Colstor, which placed 15th on the 2014 global list and 10th on the North American list with 1.5 million cubic meters. Lineage’s space under management is now 60% of the space of first-place Americold, and it is one of seven companies to post gains of 10% or more.

AGRO, the result of continued acquisitions of companies around the world, debuted in 10th place with 2.26 million cubic meters under management. U.S. Growers returned to the list, reporting the same 463,415 cubic meters as in its appearance on the 2013 Top 25.

According to the IARW, companies worldwide reported increased capacity and several new companies joined IARW in the past year. As a result, the combined space of IARW total membership—which represents 1,184 temperature-controlled facilities across 60 countries—is significantly higher. IARW members currently own or operate 133.96 million cubic meters—a 7.78% increase from May 2014 when the lists were last published.

“Our industry is continuing to grow to serve the needs of the food industry, particularly in countries outside North America and Europe,” says IARW president and CEO Corey Rosenbusch. “Members are continuing to expand in developed markets, but are also focusing on emerging and developing markets where cold chain services are most needed.”

Editor’s Note: Last year, the list included some significant year-over-year changes in square footage and the number of warehouses. These are often due to variations in the reports each company submits, but Armstrong says this year marks the second-consecutive year with an updated methodology in place. Reports sometimes include forwarding locations, transportation logistics, or 20,000-square-foot warehouses, which Armstrong & Associates work to identify and remove from consideration. Instead, they ensure the list focuses specifically on warehousing facilities of 100,000 square feet or more.