Ti has formulated its warehouse cost index, which looks to track overall warehousing costs in North America, Europe, and North-East Asia. The index utilises inputs from warehousing rent, labour, and energy costs to determine the current state of overall warehousing costs, as well as estimate the future direction of costs.
Warehouse Cost Index – Major Regions
Ti’s Warehousing Cost Index details that warehouse costs have been rising steadily since Q1 2022 across the board and increased in all three major regions into Q3 2023. Costs therefore remain elevated across all three major regions in comparison with Q3 2022.
However, year-on-year cost growth in Q3 2023 slowed significantly for Europe and North-East Asia in comparison with the previous quarter, whilst year-on-year cost growth increased slightly for North America in Q3 2023.
Elevated operating costs in North America and Europe are being primarily driven by historically tight vacancy rates, despite increasing supply and stabilising demand. In Europe, although the overall average market vacancy rate in Europe is now higher (4.3%), modern space remains limited in most markets which is contributing to continued robust prime rental growth. Similarly, vacancy remains well below the 15-year average of 6.2% in the US.
North-East Asia on the other hand have recorded much higher vacancy rates than its North American and European counterpart as supply strips demand more rapidly. Furthermore, warehouse costs in Japan dropped slightly for the first time in over a year following a decline in wages; inflation-adjusted real wages, a barometer of consumer purchasing power, dropped in September by 2.4% from a year earlier after a revised 2.8% fall the month before, data from the Ministry of Health, Labour and Welfare showed. As such, the region has seen much less intense cost growth compared to North America and Europe.
Looking forward, warehousing costs in North America and Europe are likely to remain elevated, although Europe may continue to see further slowing cost growth in line with slowing inflation. North-East Asia on the other hand will likely see overall operating costs decrease as supply continues to outstrip demand.
An overview of the data is available via Ti’s free quarterly tracker reports, which provide an up to date view of overall market dynamics and developments for air, sea, road and warehousing. You can download the free reports here.
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