ITS Logistics Distribution + Fulfillment Q1 Index: 50% Drop in New Space Construction While Consumer Sentiment Remains Positive
RENO, Nevada, Feb. 14, 2024 (GLOBE NEWSWIRE) — ITS Logistics today released the Q1 ITS Logistics US Distribution and Fulfillment Index, Powered by Cresa. This quarter the index reveals that the new supply wave will crest soon, as starts fell abruptly in 2023. A total of 282.4 million square feet of projects have started this year after 598 million square feet began construction in 2022. Furthermore, mindful spending became a main theme in 2023 and will likely continue in 2024. Despite inflation, holiday spending in 2023 outpaced the year before, and the annual growth of spending continues, but the rate of growth is slowing and returning to pre-pandemic levels.
“Overall, starts have slowed as the year progressed, and interest rates continued to rise,” said Ryan Martin, President of Distribution and Fulfillment for ITS Logistics. “The third quarter of 2023 saw 66.2 million square feet of starts after 93.1 million square feet broke ground in the second quarter and 100.6 million in the first quarter. In addition, consumer confidence ended the year on an optimistic note but is still far from where it was in 2019.”
Despite the index showing growth, two-thirds of consumers surveyed still perceived that a recession is possible. Credit card balances also spiked in Q3 of 2023, reaching a record $1.08 trillion, according to CNBC. During Q3 of 2023, e-commerce also accounted for 14.9% of total sales, which accounted for a .9% increase from the previous quarter. Of that 14.9% of retail sales, major online retailers – like Amazon, Walmart, Apple, eBay, and others – captured approximately 60% of the e-commerce market share, with Amazon leading at 37.6%.
Overall, economists expect consumer spending to continue growing in 2024 while labor markets will cool. The Personal Consumption Expenditures Price Index, which is the federal government’s preferred measure of inflation, was at 2.6% year over year (YOY) in December, down from 5.5% at the beginning of the year. While January retail sales have not yet been reported, the National Retail Federation has confirmed that the recent pace of lower inflation and economic growth may, in fact, be due to an increase in productivity.
“We’re finding that most employers aren’t reducing pay outright,” continued Martin. “In many cases, new employees are being offered lower salaries due to extreme pay growth over the past 2-3 years. This will likely be a short-term trend due to labor availability in certain markets. Costs remain high, and warehouse workers typically migrate into higher-paying industries if pay is not competitive. Ultimately, consumers continue to shop online and, if they’re voting with their dollars, we need to continue to prioritize the convenience of marketplaces like Amazon.”
ITS Logistics offers a full suite of network transportation solutions across North America and omnichannel distribution and fulfillment services to 95% of the U.S. population within two days. These services include drayage and intermodal in 22 coastal ports and 30 rail ramps, a full suite of asset and asset-lite transportation solutions, omnichannel distribution and fulfillment, and outbound small parcel.
The ITS Logistics US Distribution and Fulfillment Index tracks the Producer Price Index (PPI) for Warehousing and Storage and offers a regional markets overview to optimize warehousing and delivery costs. All major markets in the US are highlighted each quarter via the Index. Visit here for a full, comprehensive copy of the index with expected forecasts for the US distribution and fulfillment sector of the supply chain industry.
About ITS Logistics
ITS Logistics is a premier Third-Party Logistics company that provides creative supply chain solutions with an asset-lite transportation division ranked #21 in North America, the #11 drayage and intermodal provider, a top-tier asset-based dedicated fleet, and innovative omnichannel distribution and fulfillment services. With the highest level of service, unmatched industry experience and work ethic, and a laser focus on innovation and technology – our purpose is to improve the quality of life by delivering excellence in everything we do.
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