Contract Warehousing definition
What are Public Warehouses, Contract Warehouses, and 3PLs?
When trying to outsource some or your warehouse operations, it might appear some perplexing that there are a wide variety of names for a site that essentially requires another person saving your goods and managing incoming and outgoing tasks. And also as much when I would like to definitively explain the differences, it is just not that facile. There is lots of overlap, and in many cases it just comes down from what the service provider wants to use to describe their service, or just what the person you might be speaking with thinks could be the appropriate term for a certain solution.
Nevertheless, there are numerous generalizations that can be made.
I’ll start with the best option. Public warehouses have historically already been warehouses focusing on what is known as “pallet-in-pallet-out” businesses. They typically charge pallet-based costs. So they essentially have actually a pallet-in charge, a pallet-out charge, and a monthly storage fee per pallet kept. They may supply some moderate transaction/document costs and account management charges. For instance, if you have all of them deliver 10 pallets to 1 of one’s customers, they may ask you for a fee to process the Bill of Lading, and then a fee for each pallet filled on truck. They might in addition charge some type of account management cost, such a monthly cost to keep your account active and process monthly reports.
With a merchant account with a community warehouse, you usually pay only for storage space you used. Therefore you can have 500 pallets kept there one month, and only 300 kept there the following month and only pay for storage of those 300 pallets. In my opinion with public warehouses, these were usually privately owned companies where owner would purchase up huge warehouse structures (usually older structures) at a rather inexpensive per sq ft. This permits him to provide you a reasonable price to store your goods, while still leaving a lot of room for revenue for him.