Types of Warehousing: Private, Public, And Contract

Deciding which type of warehousing option best serves your company can be a large undertaking with many factors to take into account. Within this post, you will find an overview of all the various types of warehousing as well as specific details that define each type to help distinguish which one is right for your company. Each type of warehousing offers its own benefits, with some outweighing others.

WSI Supply Chain Solutions offers our customers the attention and support to choose the best warehouse option for their company ultimately. After reading, get in touch with one of our experts to get started!

Public or On-Demand Warehousing

Public warehouses are an attractive choice for many companies because it allows a third party to manage the warehouse itself. The company is a tenant who rents the space. This rental can be in either long-term or short-term contracts. A public warehouse contract may benefit you greatly if your company faces a seasonal surge in a particular product and needs temporary short- or long-term storage.

The third party who manages the warehouse space also handles inventory control, packaging, and fulfillment of the product being stored, a bonus that reduces the company’s responsibility. With a private warehouse, all those tasks would need to be managed independently. Not to mention, the system software already used in public warehousing streamlines the process.

The process is worry-free, as all these services come included in your lease with the warehouse. Learn more about one of our public warehouses WSI’s Dallas Fulfillment Center.

Private or Dedicated Warehouses

The company itself fully manages private warehousing. This alternative might be a good fit for you and your company if you have several different types of products that need specific care and attention. Private warehousing also offers management flexibility because your company manages product fulfillment, packaging, and inventory control independently. Not working with a third-party company allows you to make decisions freely without having to depend on others.

The most prominent feature of this option is that the entire management systems and software are the responsibility of your company which creates another aspect to manage. But on the flip side of the coin, you have more independent control over the warehouse’s day-to-day if that is what your company needs. Explore our WSI’s Chicago Warehouse for more insights on how we control the day to day operation with extreme accuracy and efficiency.

It is important to consider cost/benefit analysis when it comes to private warehousing. While you’re not paying to employ the people of the third-party warehouse company to manage your product, you are paying people within your own company. Your company might even need to employ more people to help manage the fulfillment systems since they are not already in place. Again, private versus public warehousing has several components to the decision, and cost/benefit analysis is a way to measure which option is right for your company.

Contract Warehousing

Contract warehousing is the third choice to consider when deciding your company’s warehousing needs. Contract warehousing is where the warehouse is owned by a third-party entity but operated by you and your company. A contract is drawn up between the company whose goods are being stored and the warehouse owners, similar to a rental lease. This contract details the amount of time that the warehouse will be in use as well as the fee structure to be used for the duration of the contract. Then the warehouse’s day-to-day is operated by your company, including but not limited to, providing the labor and skills to run and manage the operations. If your company has the bandwidth to provide both of these vital elements, then this warehousing option might be best for you. It allows for some control but is not as much of an investment as owning the warehouse space itself as well as operating it.

Shared vs. Dedicated Contract Warehousing

Under the contract warehousing umbrella, we have shared and dedicated contract warehouses. Shared contract warehousing is where the warehouse space is split amongst several different customers, whereas dedicated contract warehousing has a sole customer. Having a shared warehouse contract limits the amount of space available, along with customization and special services that the shared warehouse company can provide. A dedicated warehouse space allows for increased customization and specialization from the warehouse company. With a dedicated warehouse contract, all the prices are fixed, and the “tenant” agrees beforehand, allowing for more predictable costs for the duration of the contract.

Specific Product Type Warehouses

Climate-Controlled Warehouses

If your company requires a product-specific type of warehouse, then you will need to consider that when choosing your warehousing solution. Products such as medicines, cosmetics, or food products require climate-controlled warehousing to maintain product integrity. These warehouses offer the client the ability to increase the shelf-life of products and cater specifically to the needs of the client and their products. The biggest drawback to consider would be that climate-controlled spaces require a lot of energy to regulate the temperature, which can become costly.

HAZMAT Warehouses

If you are working with any hazardous materials that need extra care in handling, you will need to look for a specific HAZMAT warehouse — these spaces subscribe closely to high-safety standards. Though they are similar to a climate-controlled warehouse in that both follow specific safety standards, HAZMAT warehouses also comply with government regulations for the handling of hazardous materials.

These spaces often come with a team of trained individuals to manage the warehouse because of the specific nature of the industry. This is a perk as it results in fewer workplace accidents. However, something to keep in mind with HAZMAT warehouses is that running these facilities can be pricey, due to the required 24/7 security detail of the warehouse per government regulations.

Bonded or Foreign Trade Zone Warehouses

When shipping products internationally or bringing materials into the country, you need to go through customs to certify your product. Bonded or foreign trade zone (FTZ) warehouses are spaces dedicated to products either coming into or going out of the U.S.

These warehouses are usually located near borders, airports, or port cities. They primarily serve as storage for imported products, which usually require paying duties or customs taxes. In a bonded warehouse, the company or proprietor of the goods only pays duties upon the release of a product. However, in an FTZ warehouse, the duty is paid among entries for U.S. consumption.

The advantage of these types of warehousing is that the company can control its money until the goods have been moved out of the warehouse. One component to acknowledge with bonded or FTZ warehousing is the complex rules and regulations of import duties and ways to get imported materials through U.S. customs.

Warehouse Options from WSI Supply Chain Solutions

Here at WSI Supply Chain Solutions, we have a vast network of warehouses to choose from for all our clients. As you’ve read and learned more about the variety of options for your company’s warehousing needs, you can see that each one benefits our specific customers. WSI’s warehouse locations offer your company the type of supply chain support you need.

For assistance in selecting the best warehouse for your company, contact WSI Supply Chain Solutions today to speak with one of our experts.