The Different Types of Warehouses

12 November 2019

People tend to think that warehouses are a simple affair, yet this is almost never the case. One of the main reasons why we have different types of warehouses has to do with the substantial expenses associated with storage. This includes not just the lease/purchase of the storage space, but also the sheer maintenance of these outstanding indoor facilities.

Naturally, you’ll want to choose a type that fits your needs best. The first thing to bear in mind is that production and consumption times for most goods can differ greatly. For example, those working in the food retail industry must have enough room to store inventory in order to guarantee a steady, consistent stock of a particular item that might be available only during a certain timeframe throughout the year.

Private Warehouses

Private warehouses are exclusively owned by large companies that require a great amount of storage/production space. Major manufacturing and engineering organizations, such as Tesla, as well as big retail corporations, such as Amazon, need private warehouses in order to properly conduct their operations.

It usually takes a number of conditions to make a firm completely acquire even one warehouse, as the expenses associated with the latter tend to be quite high. A worthwhile strategic, long-term advantage is one such condition. It is closely connected to and followed by an important presence of the company in a specific region, something which requires a major base of operations to keep up.

It’s also necessary for the warehouse to fulfill a competitive advantage requirement, which is generally achieved through optimum utilization of cubic space.

Public Warehouses

These are usually owned or co-owned by state authorities. Their storage capacity is made available to any individual, company, or partnership organization upon payment of rent. The purpose of these initiatives is to help SMEs and other parties who are not in the position to commit the financial resources needed to buy or let an entire warehouse, but would still benefit greatly from the additional storage space.

Even major retailers can use these, but, more often than not, it’s small manufacturers and growing exporters of goods who benefit from them the most. Their only downside is that they don’t generally allow long-term letting. Certain deals might be negotiable, but this is strictly on a warehouse basis, so you’d have to personally talk to the governing authority and see what you can and cannot do.

Distribution Centres

These are a type of private warehouse. If conventional storage facilities are expected to hold goods anywhere from several months and up to a year, distribution centres will keep merchandise for less than several days. Their main goal is not to store, but actually to enable the easy movement of large quantities of stock.

For instance, you might have a shipment coming in from Australia. The latter might pass through one, two, or several of these facilities, where it will stay overnight (perhaps even less than that), before it can be picked up by the next means of transportation. These warehouses are designed with the precise goal to be central hubs of various distribution networks for large geographic areas.

Co-op Warehouses

Much like public warehouses, co-op storage facilities enable small business owners to store their goods without having to pay the lease on the entire building. The difference between them is that co-op warehouses are owned by a specific type of business association, namely the cooperative society.

Farms and fishing co-ops are quite abundant in both the U.S. and Europe. Aside from the neat perk of expanded storage, co-ops allow individual producers to be part of a bigger network of businesses that works as one in certain aspects of their trading. For example, if a farmer wants to order a shipment of seeds or machinery, they can do it through the co-op and merge their buying power with that of another thousand farmers just like them.

In this manner, small manufacturers can benefit from perks like buying in bulk without having to give up ownership of their organization to a multinational conglomerate.

Bonded Storage

Lastly, bonded storage units are jointly owned by the government, or, in some cases, certain private bodies. A special license is necessary in order to own and operate one of these. They have a very specific goal, namely to temporarily hold imported merchandise until companies pay their custom or excise duty to the local authorities. Because of this, they’re usually found next to major ports.