3PL Market Roundup – Q4 2024

A review of 3PL storage rates around Australia

Welcome to uTenant’s 3PL Market Roundup report for Q4 CY2024. This report looks at ambient pallet storage rates across Australia from October to December; providing valuable insights for businesses seeking third-party logistics (3PL) warehousing solutions, whilst also allowing 3PL providers to benchmark their own rates. We leverage data from our Warehouse Storage & 3PL (PalletMatch) service to present median storage rates for each State and give you an indication of the current 3PL landscape.

Overall, the national median pallet storage rate decreased by about 8% compared to the previous quarter, reflecting a shift in demand patterns and continued competition amongst 3PL providers across the country. The ongoing pressure on 3PL providers to keep supply chain logistics costs down saw most State’s experience a decrease in their median pallet storage rate.

Macroeconomic conditions in Q4 2024

In the RBA’s most recent Statement on Monetary Policy (November 2024), they forecast that inflation would not return to the target range until 2026.  While headline inflation is expected to be in the target range in the first half of next year, part of this is due to temporary cost-of-living relief.

The RBA stated, “On the one hand, if conditions in the labour market are stronger than expected and productivity growth remains weak, this could slow progress in bringing inflation to target. On the other hand, household spending might not increase as quickly as expected, which could mean that inflation returns to target faster. Heightened geopolitical risks and potential changes to trade and fiscal policies abroad add to this uncertainty.”

The recovery in GDP growth is expected to come a little later than was forecast in August, but household spending is still expected to increase as real incomes rise in response to tax cuts and easing inflation. The Australian Retailers Association predicted that Australians were expected to spend $69.8 billion during the lead up to Christmas (up 2.7% on 2023 figures from Roy Morgan). So, we’ll have to wait and see if slower GDP growth may lead to more cautious consumer and business spending in 2025 instead, and potentially reducing demand for goods and warehousing services in the short term.

Storage rates around the country

The data presented in this report is based on uTenant's internal data set, gathered through our PalletMatch service (undertaken with our National network of 3PL providers and customers), and may not be fully representative of the entire Australian 3PL market. It’s important to note that, pallet storage rates can vary widely based on factors such as location, warehouse size, services provided, duration of storage, and the specific business industries we're working with.

The National median storage rate for Q4 2024 is $4.00 pppw¹, down from $4.35 pppw¹ reported in Q3.

This quarter, Victoria had the greatest variation in storage rates with a low of $2.57pppw¹ and a high of $5.95pppw¹. Ambient pallet storage rates in New South Wales overall were higher, but their range smaller, with a low of $3.85pppw¹ and a high of $6.50pppw¹. Queensland’s range of $2.94 pppw¹ to $4.40pppw¹ tightened up compared to last quarter, as did South Australia with $2.80pppw¹ to $4.25pppw¹, and Western Australia with a range of $3.50ppw¹ to $4.80pppw¹.

Each quarter, uTenant's network of 3PL providers share their pallet storage rates with the PalletMatch team; enabling us to produce this insightful industry report for 3PL providers and product owners alike.

The 3PL landscape

The Australian logistics market this quarter has faced a mix of stabilising and disruptive forces. Whilst inflationary pressures have eased slightly compared to the same period last year, the RBA’s persistent focus on interest rates continues to impact consumer spending and inventory holding patterns.

Globally, the ongoing recalibration of supply chains post-pandemic has resulted in fluctuations in demand for warehouse space. Geopolitical uncertainties, including trade tensions and fuel price volatility, remain critical influencers of 3PL operations and pricing strategies. Additionally, Australia’s labour market constraints, particularly in regional logistics hubs, are applying upward pressure on costs.

As predicted in our Q3 2024 3PL Market Roundup report, we did not see the usual import inventory growth leading into December. Year-end peak would normally cause pallet storage rates to increase with the rise in demand for space and services, however, contrary to this, we saw storage rates come down quarter-on-quarter in the majority of States.

Customers with niche storage requirements, like frozen, temperature control or dangerous goods, continue to battle with scarcity in available warehouse space. On the upside for 2025 though, a handful of 3PL providers are opening new frozen and temperature control warehouses, but this will likely just service the current demand (and gap in the market) and be filled up very quickly!  

In every State, except New South Wales, we saw some 3PL providers discounting their pallet storage rates for short-term gains. Afterall, it’s better to secure clients and fill those warehouses, than have pallet rack locations sitting empty. So, until the market normalises, there are opportunities for businesses to secure lean pallet storage rates if you look in the right place.

A theme that was present throughout 2024 was demand outstripping supply – not linked to consumer spending, but to the availability of goods at point of sale and ability to service. This was not all due to global forces and offshore supply chain disruptions though, there was plenty of challenges locally with labour shortages, union activity, and rising costs. It all made for a very uncomfortable 2024 in supply chain logistics, to put it nicely.

The RBA’s uncertainty on outlook will just continue to fuel uncertainty in the 3PL market and likely result in extremely varied pallet storage rates around the country. Operational costs, property, the labour market and demand will all play big roles in influencing pallet storage rates in each State in 2025.

So, where does this leave 3PL providers trying to price their services, and businesses trying to forecast demand and supply? Well, just as unsure as the rest of us. As cliché as it is, the only thing we can be certain about is uncertainty!

3PL landscape insights

Recommendations for businesses

1. Benchmark your costs: Use the rates in this report to compare your current storage rate agreements. If you’re paying significantly above the average, consider renegotiating terms or exploring alternative 3PL providers.
2. Enhance forecasting accuracy: With rates influenced by macroeconomic factors, improving inventory forecasting can help mitigate over-reliance on expensive storage.
3. Explore value-added services: Assess whether your 3PL provider offers complementary services that can offset storage costs, such as cross-docking or fulfillment services.
4. Invest in technology: Utilise warehouse management systems (WMS) to gain visibility into your storage needs and identify opportunities to consolidate inventory.

As we look to the next quarter (Q1 2025), several factors will likely shape storage rates:

• Seasonal demand spikes tied to back-to-school and Easter periods may drive short-term rate increases.
• Continued investment in regional infrastructure could create new opportunities for businesses to access more affordable 3PL warehousing solutions.
• Global supply chain shifts, such as reduced reliance on single-source manufacturing, may ease rate volatility.
• An economic stimulus package announced for China and improved trade activity could increase demand for 3PL services, pushing pallet storage rates higher.

By staying informed and being proactive, businesses can better navigate the dynamic 3PL landscape. With the support of uTenant, businesses can benchmark and secure the best warehousing solutions for their needs, whether that be better 3PL storage rates or sharper rent if leasing your own warehouse.

Additional considerations

Beyond the headline rates, several other factors can influence the final cost of ambient pallet storage and should be taken into consideration:

• Warehouse features: Warehouses with advanced features like state-of-the-art security systems, temperature control, automation, or environmental sustainability credentials will naturally command higher rates compared to basic storage facilities.
• Contract terms: The length and structure of your contract with a 3PL provider can significantly impact the final cost per pallet. Negotiating longer contracts or committing to minimum storage volumes may lead to lower per-unit rates.
• Location: As mentioned earlier, prime locations in major cities will typically have higher storage rates than regional areas. Businesses should consider their specific needs and distribution requirements when determining the optimal warehouse location.

The 3PL market remains dynamic

Overall, the 3PL market remains dynamic, with both challenges and opportunities for 3PL providers and their clients in Q4 2024.

In Q4 we saw median pallet storage rates decrease in secondary regions (Queensland, South Australia, and Western Australia) and slightly increase in primary regions (New South Wales and Victoria).

While inflation is easing, costs for 3PL providers (such as labour, utilities, and infrastructure) are still high. This means pallet storage rates will likely stay where they are and could even rise if temporary cost reductions (like energy relief) reverse.

For businesses relying on 3PL services, understanding these inflation dynamics can help forecast future storage costs and negotiate contracts that consider potential price adjustments.

The 3PL Market Roundup report is published on a quarterly basis, in the month following the end of the calendar quarter. See 3PL Market Roundup - The methodology behind the numbers, for a deeper explanation of the report and its purpose.

It's important to note that the pallet storage figures in this report are based on uTenant’s network of 3PL providers and will change over time. To get accurate and current pricing information, we recommend contacting us directly to discuss your specific 3PL and warehouse storage needs.

- uTenant PalletMatch Team

uTenant’s team of experts have extensive knowledge of and experience in supply chain and logistics operations. With its vast 3PL provider network, uTenant is able to match clients with warehouse space specific to their current or growing needs. To put it simply, uTenant's purpose-built PalletMatch platform matches those looking for warehouse space, with those who have it – across Australia and New Zealand. Find out more about PalletMatch and how it can help you.

If you have warehouse space to fill, get in touch with the uTenant team now.

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¹Benchmarked on per pallet per week (pppw) or part thereof.

Published: 24 January 2025