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.