Warehouse capex nearly halves as 60% of DC operators fear disruption

Warehouse and distribution center operators cut planned capital spending almost in half for 2026, with the average capex budget falling to $1.162 million from $2.161 million a year earlier, according to the 2026 Warehouse Operations & Trends Survey. The 21st edition of the benchmark study, conducted by Peerless Research Group for Logistics Management and Modern Materials Handling, drew 119 qualified responses fielded in August and September from professionals averaging $813 million in annual revenue, up from $753 million last year.

The threat of supply chain disruptions dominated concerns, cited by 60% of respondents — more than double the next-highest issue, insufficient inventory space at 27%. Labor attraction and retention for hourly employees ranked third at 23%. Against that backdrop, operators are dialing back infrastructure investment while spending strategically on automation and tightening inventory control.

"People are really focusing on inventory," said Norm Saenz, partner and distribution director at St. Onge Company, which assists with the study. "And supply chain disruption is on the minds of many of the respondents."

Is inventory discipline finally paying off?

The data suggests it is. Average inventory turns rose to 7.2 from 6.3 in 2025, while average SKU counts fell to 8,987 from 9,565. Average peak space utilization eased to 71.6% from 75%, and the share of respondents running at 85%-or-higher utilization during peak dropped sharply, from 39% to 19%.

"Inventory turns are improving as companies focus more on core items," Saenz said. "Companies are increasing their ability to understand their inventory, and reducing SKU counts."

Network footprints show early signs of flattening. Average facility size fell to 195,850 square feet from 222,620, and the share of single-building operators dropped from 42% to 36%, while 39% now run more than three buildings. Saenz expects consolidation ahead: "Building utilization is going down as inventory levels get lower. While we aren't seeing that in the survey data yet, we expect that in the next few years we will see fewer buildings and a reduction in square footage in network."

Where is the bottleneck now?

The shipping dock overtook receiving as the most congested zone, cited by 31% of respondents, up from 9% last year, while the receiving dock fell from 38% to 25%. Storage congestion rose to 22% and the pick area dropped to 6% from 16% — a shift Saenz links to automation's knock-on effects.

"Preparing for automation — all of the handling you have to do on the dock to prepare inventory for automated replenishment — can actually cause congestion because you lose space in the dock area," he said. "Automation is great, but you need to be prepared for what it can do on the inbound and outbound side."

A net 87% plan to expand operations over the next 12 months, up from 80%. Hiring intentions jumped from 25% to 42%, while plans to add square footage collapsed from 33% to 13% and SKU expansion fell from 25% to 12%.

What does the technology picture look like?

WMS adoption slipped from 87% to 84%, with legacy systems leading at 42%. Paper-based picking rose from 40% to 55%, and RF handheld use climbed from 51% to 61%. Autonomous forklift adoption edged up to 16% from 13%, but AMR/AGV use fell to 13% from 18%, matching the decline in shuttle and AS/RS systems.

Single-order picking, the least efficient method, still leads at 70%, though zone picking rose to 37% from 25%. Automated WMS data collection for productivity tracking grew to 59% from 49%. Metrics use is broadening: inventory accuracy tracking hit 83%, on-time shipping 77%, and order cycle time 57%.

On labor, temporary workers averaged 17.3% of peak staffing, up from 16.6%. Turnover improved, with 61% of firms reporting under 15% versus 55% last year, and incentive pay became the top retention tool at 25%. "Temps handling peak periods is not a trend that is going away any time soon," Saenz said, noting automation needs volume and measurable payback.

Channel mix continues shifting: wholesale fell to 42% from 51%, e-commerce to 33% from 44%, while omni-channel rose to 31% and micro-fulfillment to 19%.

Saenz says cautious, targeted automation spending will persist despite market unpredictability: "You can spend less and still get a good return on the right automation."