If you’re searching for a warehousing option to fit your business model, you may find yourself considering several options that all sound suspiciously similar. Public, contract, and 3PL warehousing are three storage facility options available to business owners today.
Which one is best for your business needs, and how can you budget for these warehousing services in today’s competitive market? Keep reading to learn more about these three options and find out which one best fits your business model. Then, contact the team at Amware to learn more.
Public Warehouses
The greatest benefit of public warehousing is the simplicity of the process. Also commonly known as “pallet-in, pallet-out” storage facilities, public warehouses charge based on the amount of product that moves in and out of the warehouse. Because of this, public warehousing is an excellent option for those looking for a cost-effective storage solution that can scale with the growth of your business.
Charges You Can Expect
- Pallet-In Fee
- Pallet-Out Fee
- Per Pallet Monthly Storage Fee
- Transaction and Document Fee
- Account Management Fee
Contract Warehouses
Unlike public warehousing, which is usually priced based on the amount of product moving within and out of the warehouse, contract warehouses most often charge fees based on the timing and scale required by clients. For example, a client requiring abundant manpower to move fragile stored items can expect to pay more in a contract warehouse than a client requiring less.
Common Contract Warehouse Fee Structures
Within the contract warehousing business, there are several different fee structures most common to the industry, including:
- Activity-Based Pricing: Similar to the fee structure of public warehousing – in this fee structure, you can expect to pay fees based on the key tasks required to warehouse your items, including processing, materials, manpower, and administrative fees.
- Cost-Plus Pricing: In this fee structure, you can expect to pay for all direct costs associated with your account plus an additional percentage markup as part of your contract.
- Alternate Pricing Structures: There are as many ways of calculating costs as there are warehouses. To better understand the pricing structure available at a contract warehouse, ask for a standard contract before signing.
3PL Warehousing
In addition to public and contract warehouses, you can also choose to get your warehousing services from a third-party logistics provider such as Amware. While still considered public warehousing, using a 3PL means you don’t have to worry about finding a warehouse, paying for administrative fees, and managing the day-to-day work. Instead, the third-party logistics company takes care of the entire operation, from shipping to receiving and warehousing. Utilizing a 3PL for warehousing services can add a ton of value to your products as ancillary pick and pack services, combined with truckload or LTL shipping, means better efficiency, which directly translates to increased profitability.
To learn more about Amware and 3PL warehousing options, contact our team today.
FAQs
Public warehouses are ideal for those searching for flexibility, while contract warehouses are best for those who need guaranteed warehouse space for a year or more. Affiliated Warehouse Companies can provide companies with both public warehouse space for rent and contract warehousing solutions.
What is one benefit of using public warehousing over private warehousing? ›
One of the significant advantages of using public warehouses is the cost savings they offer. Businesses can avoid the capital expenditure associated with constructing or leasing their own warehouse space.
What are the main disadvantages of public warehousing? ›
Disadvantages of Public Warehousing
- Long Term Cashflow. While the short term cash benefits of public warehousing outweigh the capital costs of private warehousing, long term storage may cost more. ...
- Limitations of Customized Services. ...
- Increased Risk. ...
- Geographic Position. ...
- Technology. ...
- Growth Mindset.
Contract warehousing offers many advantages, including flexible fee structures like fixed, costs-plus, or a combination of both. It also carries less risk for retailers and manufacturers because they aren't tied to the recurring costs of owning a warehouse.
What is public warehouse in simple words? ›
A public warehouse is a warehouse storage option run by a third party that can be rented for long-term or short-term needs. Public warehouses are a viable option when dealing with seasonal surges or temporary warehousing needs.
What is an example of contract warehousing? ›
Contract warehousing can also apply to just part of a warehouse. For example, a company may commit to a contract warehousing arrangement for 50,000 square feet out of a 150,000-square-foot warehouse.
Why might a company choose contract warehousing? ›
Contract warehousing lets you alter operations to demand, giving you more flexibility. Large businesses with changing demand or abrupt customer orders may benefit from this. You can change your warehouse needs without using up space or signing long-term contracts.
What are the advantages of public warehouses? ›
With no need to lock capital investment into property or bear associated taxes, a public warehouse emerges as a cost-effective alternative. In addition to savings, these warehouses offer value-added services like packaging, labeling, and order fulfillment – thus significantly streamlining supply chain operations.
Which is not an advantage of a public warehouse? ›
No Specialized Services
This can be a rather large public warehousing disadvantage as, if you need these services, you'll have to search them out from a third-party provider on top of the cost you're already paying for the warehouse. In other words, this usually means a substantial extra expense for your business.
What is the difference between public warehousing and 3pl? ›
A public storage warehouse concentrates mainly on the storage function, with other logistics functions secondary. Third party logistics companies, like Brendamour, focus on all functions equally, providing a smooth and seamless operation from the supplier to distribution to customers.
Public Warehousing Requires No Capital Investment.
Conversely, public warehousing offers all of the infrastructure, equipment, and employees in place. There is no capital investment required, which means money will not be diverted away from other essential aspects of your business.
Who uses public warehouses? ›
Public warehouses are ideal for businesses that seek flexibility, scalability, and cost efficiency. Companies can lease storage space in a public warehouse on a short-term or long-term basis. They offer a viable solution for businesses to manage and transport their goods.
What is the key distinction between public and contract warehouses? ›
The primary difference between contract and public warehousing lies in exclusivity and customization. In contract warehousing, a dedicated facility is operated exclusively for a specific client, providing customized solutions tailored to their unique needs.
Which reason below justifies the use of contract warehousing? ›
It allows the company a degree of control yet is less expensive than private warehousing. It provides the warehouse customer with greater control than private warehousing. The risks of inventory loss and damage are minimal in contract warehousing.
How contract warehousing is different than 3PL? ›
Contract warehousing is different than 3PL warehousing.
A 3PL service provider usually stores material on a per-month basis while also providing fulfillment and logistics operations for material. A contract warehouse differs from this, however, in that it is a long-term agreement.
What is the difference between public warehouse and private warehouse? ›
While a public warehouse is owned by a government body or a third-party, private warehouses are owned by a company division. If a business is interested in a private warehouse they will need to make a large upfront investment to secure the building, facilities management, and general maintenance and upkeep.
What are the two basic types of warehouses? ›
Every big company needs a warehouse to store their goods and distribute them further out to clients and customers worldwide. If you want to use a warehouse, you will have two choices - a private or a public warehouse.
What is the difference between a private and contract warehouse? ›
Private Warehouses: Private warehouses are company owned and operated. Public Warehouses: Public warehouses are owned and operated by a third party. They allow companies to store goods under one roof. Contract Warehouses: Contract warehouses are owned by a third party entity.
What is the difference between warehousing and contract logistics? ›
What Is The Difference Between Contract Logistics And Warehousing? Therefore, contract logistics encompasses a far larger range of services than warehousing and distribution. Contract logistics is the process of outsourcing resource management tasks to a third-party enterprise.
