The Differences Between Contract and Public Warehousing - Affiliated Warehouse Companies, Inc. (2024)

FAQs

The Differences Between Contract and Public Warehousing - Affiliated Warehouse Companies, Inc.? ›

A contract warehouse space is different from a public warehouse space in that you will get a guaranteed amount of storage space in it every month. The company running the warehouse will not be able to give away the space you have reserved, and you can choose to either fill it or leave it empty.

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.

A. The most common types of warehouse include public, private, and contract warehouses. Public warehouses serve multiple businesses, private warehouses are used exclusively by a single business, and contract warehouses are dedicated to a single client under a long-term agreement.

Public warehouses are owned and operated by third parties. Some (but not all) public warehouses are third-party logistics (3PL) warehouses, which allow organizations to outsource warehousing, distribution, and fulfillment services. A private warehouse is one that a company owns and operates itself.

Contract warehousing is a subset of third-party logistics (3PL) where a dedicated storage facility is operated exclusively for a specific client. In contrast, general 3PL warehousing provides various logistics services beyond storage, such as transportation and distribution.

Warehousing and logistics are often used together or in tandem because they are essentially two sides of the same coin. Warehousing deals with the storage of goods while logistics focuses on transportation of the goods.

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.

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.

Difference Between Warehouse and Warehousing

A warehouse can be any physical building that is designed to keep items secure. Warehousing is the process of using and optimizing an inventory warehouse, which includes product maintenance, and handling, and other warehouse services.

While private warehouses allow for more control and customization, they may offer, for an additional fee, a different range of additional services. Public warehouse costs are based on the total space the materials or products occupy, making them a cost-effective solution for many businesses.

What are the main disadvantages of public warehousing? ›

Bonded warehouse

These warehouses are under the control of the Tax Agency and need to be authorised by it. They may be: Public: Used by any company that requests it, as part of its business. Private: Used exclusively by the company or the authorised holder.

'Public customs warehouses' are available for use by any person for the customs warehousing of goods, whereas 'private customs warehouses' can only be used by one authorised person.

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.

Warehousing services offered by third-party logistics (3PL) companies tend to fall into one of two categories: general warehousing or contract warehousing. Broadly speaking, general warehousing offers the most flexibility and scalability, while contract warehousing provides more control and stable costs.