Industry Description
The specialized storage & warehousing industry in the U.S. comprises operators of storage facilities and warehouses designed for specific commodities or unique storage requirements (NAICS 49319). This industry excludes general merchandise storage, cold storage facilities, and agricultural product warehousing.
The following are some basic characteristics of the specialized storage & warehousing industry:
- Specialized storage & warehousing industry has a combined revenue of $8.1 billion, with a growth rate of 1.5% in 2019-2024
- There are approximately 1,300 businesses as of 2019
- The specialized storage & warehousing industry employs approximately 212,500 people
Industry Trends
The specialized storage & warehousing industry is moderately fragmented and has medium levels of market share concentration, with the top four industry operators comprising approximately 60% of industry revenue in 2019. The largest players have numerous locations across the US, while small players are typically independently owned and operated in 1-2 states. Some key external factors that influence this industry are (i) volatility of oil inventory, (ii) regulatory changes, and (iii) e-commerce increases. Each of these is described in further detail below.
One of the external forces affecting the industry is the fluctuations in oil inventory. Oil is the largest source of industry revenue and oil storage is influenced by the amount of oil inventory. The Energy Information Administration revealed that crude oil stocks were 426 million barrels in 2024 which was due to a rebound in oil imports. This shows there are times of large oil inventory where specialized storage services are needed to store surplus inventories.
Another external force affecting the industry is legal reforms, especially in banking and health. Data compliance and privacy regulations such as the Health Insurance Portability and Accountability Act (HIPAA) have also triggered appeals in archiving systems. In 2022 the average compliance cost per year to organizations was $5.5 million. This means there is a continuous flow of revenue for storage companies that deal with safe storage and compliance services.
The rise of e-commerce is another vital external force, impacting warehousing needs for products that require specialized storage solutions. E-commerce sales were recorded to be $1.1 trillion, which was a growth of over 10% in comparison to the previous year with $940 million. Such growth has created a need for accommodating specialized products such as perishables or electronics that require special handling or are temperature sensitive. Storage facilities are tasked with managing such inventories as the customer base and products offered expands.
The specialized storage and warehousing industry in the U.S has been influenced by external factors such as changes in oil inventory, regulatory reforms, and increased e-commerce sales Specialized items need specialized storages that meet stringent guidelines. In meeting this need operators can sustain moderate growth and profit simultaneously.
Key Performance Metrics
In evaluating the specialized storage & warehousing industry, the following metrics can provide useful information in comparing a subject company to guideline companies and transactions.
- Dock-to-stock time
- Inventory accuracy
- Inventory turnover ratio
- Retrieval time
- Space utilization rate
- Temperature deviation rate
Industry Organizations & Publications
The following organizations publish useful information:
- Council of Supply Chain Management Professionals (CSCMP)
- International Warehouse Logistics Association (IWLA)
- Material Handling Industry of America (MHI)
- Warehousing Education and Research Council (WERC)
Guideline Information: Private Purchase Transactions
Most specialized storage & warehousing companies are privately owned. While there are publicly traded companies, data regarding the sale of 100% of closely held specialized storage & warehousing companies is generally the best source of information to appraise a subject company.
The following are typical appraisal multiples from sale of specialized storage & warehousing companies:
- Revenue multiples between 2.4 and 7.0 times
- Gross Profit multiples between 2.0 and 17.1 times
- EBITDA multiples between 13.5 and 27.0 times
In selecting guideline transactions, it is of critical importance to select transactions that are similar to the subject company. Unique factors for any subject company must be considered to yield credible results. Additionally, industry economic conditions also vary over time, which must also be considered.
Guideline Information: Publicly Traded Companies
Most specialized storage & warehousing companies are privately owned; however, there are a few that are publicly traded, meaning it is possible to compare a subject company based on industry metrics and appraise using industry multiples. However, as with the guideline transactions described above, it is of critical importance to select publicly traded companies that are similar to the subject company. Also be aware that multiples of certain publicly traded companies may not accurately reflect a subject company.
The three largest publicly traded U.S specialized storage & warehousing companies ranked by market capitalization are:
- Enterprise Products Partners L.P. (EPD) – $73.8 billion market capitalization
- Kinder Morgan Inc. (KMI) – $69.4 billion market capitalization
- Iron Mountain Inc. (IRM) – $32.5 billion market capitalization
The Price-to-Earnings (P/E) ratios of these three companies range between 12.8 times and 27.5 times.
Appraisal Rules of Thumb
Please note you should never use a Rule of Thumb in place of a professional appraisal. You will never see a competent professional appraiser do their work using a Rule of Thumb. The professional standards that govern professional appraisal practice, which all professional appraisers should follow, specifically prohibit the use of Rules of Thumb.
Specialized storage & warehousing companies are businesses sold based on sound economics. These economic considerations can be measured using the key performance indicators described above, but such economics cannot be accurately summarized in these simple formulae.