Contract Warehousing [Explained]

Posted on August 28, 2020

contract warehousingThe personal storage industry is worth more than $38 billion. This doesn’t include the billions of dollars companies have at stake when looking for a reliable way to handle and store its products.

Contract warehousing is a tried and true solution to delays in the supply chain process. With a credible contract warehousing facility in your arsenal, you can spend more time focused on building better products and services for your customers.

Take a look at this overview of how contract warehousing works.

What is Contract Warehousing?

Manufacturers and distributors can work with independently owned warehouses to process goods for shipping. Contract warehouses are a central place for businesses to store goods so that the fulfillment process is easier to manage.

Unlike centers that are corporate-owned, contract warehouse managers can service more than one business at a time. The advantage is a warehouse team with knowledge of how to handle products across industries.

Corporate-owned warehouses allow companies to maintain complete control over their products. While you won’t get this same level of control with contract warehousing, you have far more security and decision making power than you would with a public storage facility.

If you’re willing to partner with your contract warehouse team, this service is for you.

What Services Should I Expect?

No two contract warehousing facilities are exactly the same. You should expect a range of services that help your products reach their destination faster and easier.

Here is a few services contract warehouses offer customers:

  • cross-docking
  • packaging
  • inventory control
  • just-in-time inventory management
  • transportation/shipping
  • quality control

Some contract warehouses also handle import and export. Be sure your contract warehousing team has an established track record of importing and exporting before getting started.

Ask for past customer referrals or how your products will be handled based on their shipping category to make sure the team has a solid game plan. There is no one-size-fits-all approach to offering contracts to businesses.

Contract warehouses give you the flexibility to tailor available services to your needs. Because contract warehouses have the flexibility to work with vendors who aren’t on a corporation’s approved vendor list, they can source affordable partners to get your products to their destination cheaper.

Why Can’t I Build My Own Warehouse?

Owning real estate makes sense for certain businesses. But most small to medium-sized businesses may not want the overhead cost of building and maintaining a private warehouse facility.

Leasing a warehouse space from a third party is much more beneficial because you have the advantage of focusing on the management of your products instead of the management of the entire facility.

What Are the Costs?

Unlike public warehouses where you pay storage fees and inbound/outbound transaction fees, contract warehouses only charge customers for the services they select. You can add or remove services in your contract that doesn’t work for your business.

Clients gain the advantage of getting the same level of service they’d receive at their privately owned warehouse using contract warehousing.

Choosing A Contract Warehouse

contract warehouseContract warehousing can save your business time and money in the long run. The key is finding a company with proven experience that understands the nuances of working with the ports of New York and New Jersey. The Port Authority of New York and New Jersey is an agency that has been created by these two states. They operate sites all around NYC and New Jersey.

In New Jersey:

  • Port Newark
  • The Elizabeth – Port Authority Marine Terminal
  • Port Jersey

and in New York:

  • Howland Hook Marine Terminal
  • The Red Hook Container Terminal
  • The Brooklyn-Port Authority Marine Terminal

These areas combined make up one of the busiest container terminals on the East Coast.

If you are doing business within 25 miles of any of these terminals, you will want to choose a contract warehouse that has its hands on the storage, shipping and distribution of your products. There are several factors to consider when looking to contract with a warehouse.

Why a 25-mile limit?

If a contract warehouse is located within this radius, a single driver can handle import and export container delivery for you in a single day. This area of NY/NJ is one of the most congested. Roads within the terminals and surrounding them are some of the busiest in the nation. If truck drivers need to go further than 25 miles, your truck’s movements may be limited. You will want your goods shipped out of the Port as quickly as possible to avoid storage fees.

Use a Warehouse With Its Own Trucks

Picking up your bulk containers from the Port and delivering them to our facility or your customers is easier when the contract warehouse you choose has its own fleet of trucks. For an added benefit, you will want to contract with a warehouse that sits next to rail lines for easier access to major highways and airports.

Choose a Warehouse to Meet All Your Needs

Your business relies on the good intentions of places such as the Port Authority and a warehouse facility to move your product as quickly as possible.

Make sure to ask:

  • How long has that warehouse been in business?
  • Are they reliable or have you or another business had problems there recently?
  • What kind of customer service do they offer?
  • Do they have employees available before and after normal business hours?

It’s important to know the answers to these questions before signing off with a warehousing facility.

Look to Longevity of Warehouse Employees

It may not seem important, but a facility with a revolving door of employees is a red flag when you’re looking for help for your business. Employees who work for a warehouse over time understand their products, know what needs to be done without cutting corners, and are likely to handle and ship your products without delays or damages.

Look at what type of team is involved in the daily operation of that warehouse. Quality Warehouse & Distribution has over 40 years in the business and many of our employees have been with us for years. They know the business and they know how to make it work for you.

How Does a Warehouse Stack Up Against Competitors

There are plenty of warehouses out there. You should know what goes into your fair price fees. If you expect excellent customer service, prompt pick up from the Port facilities, warehouse storage, deliveries to customers, and insurance that protects not just yourself but your clients, a fair rate will apply. It may not always be the lowest rate, but you will get the quality and peace of mind you deserve.

Quality Warehouse & Distribution has customized services to our warehouses and a commitment to excellence. Our Edison NJ facilities specialize in standard pier containers, overweight pier containers, rail transportation services, and rail siding for stripping and stuffing rail boxcars. We handle all sizes and freight transportation. When looking for a contract warehouse, look no further than us.