american warehouse blog

The Market and the Real Cost of Warehousing

There’s a gap between the real cost of warehousing and what the market is bearing. Warehouse costs are more than expected as the cost of labor skyrockets, the real estate market becomes more competitive and the industry’s resources are stretched thin. Compared to 2016, warehouses are capturing lower rates while contending with higher expenditures.

Retailers and manufacturers have three choices for their warehousing and inventory management solutions: self-warehousing, co-habitation or outsourcing. When companies chose to go it alone or with a partner who is not a professional, they often find both their start-up and on-going costs add up quicker than they expected. From warehouse employees, racking, equipment and real estate – the burden is great, especially when you start from scratch. Companies that turn to a 3PL for their expertise, networks and value-added services are set-up to succeed in their supply chain operations.

The level of service and peace of mind provided by a 3PL isn’t inexpensive but eliminates the upfront costs and minimize the risks associated with self-warehousing. Regardless of the option you choose for warehousing, plan costs for the following:

  • RH&D (receipt, handling and dispatch)
  • Storage
  • Operations
  • Administration

The extensive knowledge as well as the centralization of all necessary services and networks makes outsourcing your warehousing and logistics to a 3PL an expense you must budget appropriately for. In the long-term, the expense will pay off in spades allowing you to focus on growing your business.