What Are The Two Basic Types of Warehouses?

There are so many businesses and operations that require you to use a few warehouses to keep things running smoothly. 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. The first option is owned by private corporations, such as your distributors or manufacturers, while the latter option is provided by a third-part company that specializes in We explain both types in more detail below, hoping to help you find the best option for your business.

What is a Public Warehouse?

Public warehouses are owned by companies that offer their services from one month to another. You can hire a public warehouse for a short period or a long-term contract. The payments you need to cover often include multiple storage fees, transaction entries, and possibly even outbound charges.

Most public warehouses charge by every square foot of room you hire, but some also charge per pallet. Apart from storing your goods, you can use these warehouses to manage your inventory, create inventory reports, and provide shipping to customers all over the world. Public warehouses also pay clients once their processed inventory reaches a certain amount. You can also get a discount if you hire a larger capacity or multiple facilities held by the same company.

The good thing is that you won’t have to hire any extra staff, install logistics software or purchase any storage machinery. All of these responsibilities fall to the company that owns the warehouse, including the costs and transfers you made to your clients. Public warehouses are far more comfortable than private warehouses because you don’t have to invest in running the entire operation.

Most public warehouses provide a wide choice of different labor options, advanced features such as product packaging, inventory management tools, and experienced workers. That brings us to the next important thing - types of public warehouses.

There are two different types of public warehouses:

Cooperative Warehouses are used to run operations run by cooperative organizations. Their role is to provide warehousing directly to clients at affordable prices. This type of warehousing aims to support the needs of their client’s businesses rather than make profits.

Distribution Centers, on the other hand, are usually massive buildings with thousands of square feet of space. They are designed to allow quick distribution of goods throughout an existing system. They basically act like interest points allowing businesses to distribute their goods to consumers living relatively close to the center. Most distribution centers are fully operated through computer software that further improves the distribution speed.

What is a Private Warehouse?

A private warehouse is owned by a corporation that focuses only on product distribution. Most of the biggest retail companies have their regional warehouses that cover the needs of all stores in the area.

Most private warehouses don’t offer as many benefits as public warehouses. They are smaller and usually harder to manage. With that said, they are often more accessible for consumers. However, you will have to manage goods, monitor the distribution, and hire staff that will work 24/7. The high costs may turn smaller businesses away, but the companies with massive distribution of products might be better off with private warehouses.

The Difference Between Public vs. Private Warehouses

You will have to be well-informed about economics and adaptability to figure out which warehousing solution is the best choice for your business. One wrong choice can end up costing you a ton of money which could take a considerable chunk out of your profits. Public warehouses are a better choice for most businesses because of the following details:

No extra costs - Since the warehouse provider will cover all expenses, including storage equipment, staff, safety equipment, and so on, you won’t have to think about extra costs.

No property taxes - If you decide to go with a public warehouse solution, you won’t have to pay for any property taxes or penalties. The warehouse provider will take care of everything for you.

Flexibility - If you decide to move your company at any time in the future, a public warehouse provider will simply find you a new warehouse close to your new company location. If you owned the warehouse yourself, you would have to sell it first and then use the money to buy a new warehouse facility.

The Bottom Line

If you still have a hard time choosing which type of warehousing to go with, you can always contact a logistics expert for more information. Contact our team at JRC Dedicated Services for more information today!

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