Top 20 Warehouses 2023: Demand soars and mergers slow

Switching places on the chart

Each year, Armstrong compiles an annual list of the top North American warehousing companies. Each company has either provided square footage information or enough public information for the research firm to make a reasonable estimate of size.

While Amazon’s estimated 254.6 million square feet of 3PL space would technically top the chart, Armstrong & Associates doesn’t give the company an official ranking for this reason.

The top 10 companies on Armstrong & Associates’ list of Top 20 North American Warehousing 3PLs shuffled around a bit in 2023. DHL Supply Chain North America held onto the top spot with 156.6 million square feet across 515 warehouses followed by Ryder Supply Chain Solutions (No. 3 in 2022) with 300 locations and 95 million square feet; GXO Logistics with 78 million and 294 square feet; NFI with 70 million square feet and 152 warehouses; and Lineage Logistics (No. 8 last year) with 303 locations and 60 million square feet of space.

A newcomer to the top 5, Lineage Logistics has made nearly 90 acquisitions since its founding 15 years ago. Armstrong says the square feet the company currently has doesn’t include its most recent acquisition of eight cold storage facilities covering nearly 1.3 million square feet from Burris Logistics.

“This will narrow Burris’ focus on its food service distribution [Honor Foods] and freight management [Trinity Logistics] businesses going forward,” Armstrong says.

Rounding out this year’s top 10 were GEODIS North America (No. 5 in 2022) with 53.3 million square feet and 146 warehouses; Americold (No. 7 last year) with 39.3 million square feet in 195 locations; FedEx Logistics (No. 11 in 2022) with 38.8 million square feet and 90 warehouses; Kenco’s 38.7 million sf across 111 locations; and Saddle Creek Logistics Services, with 31 million square feet and 80 locations. The latter two companies maintained their positions on the chart.

Kintetsu World Express (No. 21), which had the last spot on the list last year with a North American warehousing footprint of 15 million square feet, missed the top 20 this year. E-commerce fulfillment-focused Radial grew its North American warehousing space, which is mostly in the United States, by more than 15% over the last two years to 16.6 million square feet.

“This accomplishment landed Radial a spot, just making the list, coming in at 20th,” says Armstrong, who reiterates that e-commerce fulfillment remains one of the fastest growing 3PL market sub segments. “Excluding Amazon, we estimate the U.S. 3PL e-commerce market saw a five-year compound annual growth rate of 29.8% from 2017 to 2022.”

M&A, tech and future outlook

Although merger and acquisitions (M&A) continued to be strong in the first half of 2022, that pace has since slowed. By the end of 2022, Armstrong & Associates tracked 17 large 3PL acquisitions (those with purchase prices over $100 million) versus 2021, which saw the highest number (25) of large 3PL purchases since the company began tracking them in 1999.

Fast forward to the first half of 2023 and the number of transactions dropped to four, following the broader trend of much lower M&A activity across the board this year. Although none of these acquisitions were in the U.S. value-added warehousing and distribution (VAWD) market, the largest purchase was made by U.S. investment firm Kohlberg Kravis Roberts (KKR) which acquired all outstanding shares of Japan’s Hitachi Transport System (HTS) for $5.2 billion in March 2023.

With automation, advanced technologies, robotics and artificial intelligence (AI) all increasingly being used in the warehousing environment, VAWD 3PLs have also seen an increase in the level of functional sophistication provided by their warehouse management systems, Armstrong says. Some of the key functions that VAWD 3PLs are using advanced technologies for include inventory management, order picking, labor management, warehouse utilities, shipping and replenishment.

More specifically, Armstrong says many 3PLs invested in cloud robotics that help improve efficiency, accuracy and picking speeds. “By accessing real-time data and analytics from the cloud, these robots can optimize their routes, reduce idle time, reduce human transport/travel time and prioritize tasks based on demand,” he adds.

Looking ahead, Armstrong says he believes VAWD 3PLs will continue to do well given the general lack of warehousing space—which is nearing a critical level in the cold chain—plus ongoing growth in both e-commerce fulfillment and last-mile delivery. “We anticipate the U.S. VAWD market, which saw a compound annual growth rate of 9.4% from 2016 to 2022, to grow by 7% this year,” he adds. “At this point, it appears that VAWD will be the highlight of all four segments in 2023.”

Cold chain 3PL trends

Each year, the International Association of Refrigerated Warehouses (IARW) publishes its North American Top 25 List of the largest refrigerated warehousing and logistics providers in Canada, Mexico and the United States.

The list is determined by total capacity—in millions of cubic feet—of temperature-controlled space operated by IARW warehouse members. The IARW is part of the Global Cold Chain Alliance (GCAA) with two other associations and one foundation. The IARW is the third-party temperature-controlled warehousing industry’s association.

Adam T. Thocher, senior vice president of global programs and insights at the Global Cold Chain Alliance, says there were “pretty big” year-over-year changes to the organization’s list of Top 20 North American Refrigerated Warehousing companies.

And while the overall slowdown in M&A activity did impact the sector, the significant amount of capacity in development during the 2020-2022 timeframe, plus a number of new market entrants, drove substantial growth in the cold chain sector.

“Globally and in North America, we saw entrants to the cold storage market, some coming in on the North American and Global Top 25 listings,” says Thocher. “As this year has continued and we prepare an updated ranking for 2024, we’re expecting these new entrants to grow capacity and facilities and [we also] expect some new networks to emerge.”

This year, Lineage Logistics topped the cold chain warehouse list and is followed by Americold Logistics, United States Cold Storage, Interstate Warehousing and FreezPak Logistics. The only change in the top five year-over-year was the addition of FreezPak and the removal of Versacold from the chart (the company was acquired by Lineage Logistics in 2022).

The top 10 also included Conestoga Cold Storage, Congebec Logistics, NewCold Holdings, RLS Partners and Nor-Am Cold Storage. These rankings largely mirrored 2022’s list with the exception of RLS Partners, which was rebranded in 2023 and Nor-Am, which was ranked 13th last year.

Right now, Thocher says market expansion is still occurring “in the right places.” The turmoil in the capital markets in the early part of the year did slow things down a bit, he adds, “but where there’s a need, we’re seeing capital flowing and the sector growing with the changing consumer behaviors.”

Looking ahead, Thocher expects cold chain warehousing providers to continue finding new ways to deliver healthy, safe food to the populations as efficiently as possible. “Temperature-controlled storage and logistics providers continue to adapt to the needs of their customers,” he says.

More undersupply ahead?

CBRE is bullish on the outlook for warehousing as a whole over the coming year. Despite record construction completions, continued demand from large occupiers will ensure availability remains tight, which puts the vacancy rate in the 3.3% to 3.6% range by the end for 2023.

“Economic uncertainty and difficulties in securing construction financing will cause a sharp drop in construction starts,” the real estate firm adds, “leading to an even greater undersupply of space in late 2024.”