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Public warehousing offers flexibility in that it is easy to change the location, size, and number of facilities, allowing a firm to quickly respond to supplier, customer, and seasonal demands.
Private warehouses are relatively fixed and difficult to change because buildings have to be constructed or sold.
Public warehousing can also offer significant scale economies since the volume for each customer is leveraged with that of other users.
This results in high-volume operations that can spread fixed costs and justify more efficient handling equipment.
Best Regards
Private Warehouse
A private warehouse is owned by the company that manufactures or distributes their products. While this option allows the most direct control of all aspects of warehousing; personnel, equipment, security, etc., it is often cost prohibitive because of the large amount of capital required to build or buy a warehouse. In addition to the cost of the facility one must also consider the cost of required equipment such as forklifts and storage racks. Further cost considerations are hiring and training personnel, increased payroll, building maintenance, ongoing safety training, liability insurance and property taxes.
Public Warehouse
Public warehouses offer a solution that circumvents the need for a large capital outlay. Leases are usually month to month at a fixed rate per square foot. A public warehouse can provide a cost effective solution to seasonal or unexpected increases in inventory. Public warehouse space is usually more expensive than contract warehouse space.
