Public warehousing – the pros and cons

According to a recent American study
compiled from a consensus of trade
publications by four US warehouse
specialists, the advantages are:
• Zero capital investment in
warehousing:
• For companies that are expanding,
public warehousing provides
economical and practical means to
reach out to new markets;
• It allows users to adjust for seasonality,
renting as much warehousing space as
needed during the peak season – and
with the distinct advantage of allowing
storage costs to vary directly with
volume.
• It is reduced risk and low opportunity
cost – with no commitment of funds in
public warehousing and the user firm
being able to switch to another facility
in a short period of time, often within
30-days.
• A major advantage to justify perhaps
half of all public warehousing today is
that it is possible – since they handle
the requirements of a number of
firms – that their volume allows them
to pay consolidated freight rates and
not the much higher freight costs that
result from shipping small quantities at
premium rates.
• The user gains access to special
features and services: Most can offer
specialised services – like brokencase
handling, packaging services for
manufacturer products for shipping,
breakbulk services, and freight
consolidation services. Some examples
of special features are: temperaturecontrolled,
cool and cold storage; crane
capabilities; ultraclean segregated
area; guard service around the clock;
attractive facilities and amenities; and
dedicated docking areas for special
customers;
• Greater flexibility for change – as
public warehousing is only a shortterm
contract, and thus, short-term
commitments.
• Tax advantages;
• When a company uses a public
warehouse, it knows how much exactly
is spent on storage and handling costs
since the monthly bill displays all
necessary information.
Disadvantages, on the other hand, can
be: Communication problems with
incompatible computer terminals and
systems; lack of specialised services; or
space may not be available.