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Supply chain Services

Contract
Warehousing

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WHAT IS CONTRACT WAREHOUSING?

Contract warehousing is a form of warehousing whereby the customer has signed a contract with a warehouse provider which binds him to use the warehouse services for an agreed period of time (usually in years) and at an agreed cost structure.

WHAT IS PUBLIC WAREHOUSING?

Public warehousing is a form of warehousing whereby space is sold or leased out to customers for a period of time as stipulated in their contract. This is often the choice for organisations seeking to take advantage of the cost savings, the bulk of which are renovating of the warehouse, purchasing equipment and staffing.

PERIOD OF COMMITMENT

PUBLIC WAREHOUSING

The contract is drawn up based on the number of months you expect to use the facility. As such, you will be required to pay on a month by month basis. For instance, if you have 500 pallets worth of goods in March, at the end of the month you will pay for 500 pallets worth of space but if in April, you have 300 pallets worth of goods due to a sudden sale, you will only need to pay for 300 pallets worth of space at the end of April. This is one example and may differ due to the agreed terms in the contract.

CONTRACT WAREHOUSING

The contract is usually drawn up based on the number of years you are using the facility. Why the large difference? This is mainly due to a trade-off for a larger number of services/ more specialised services available which will be further explained below.

TYPES OF SERVICES PROVIDED

PUBLIC WAREHOUSING

In general, the types of services provided by public warehouses generally include, pick and pack warehousing, order consolidation and may include custom packaging or even light manufacturing services such as light assembling. Any additional services such as temperature controlled storage spaces or the like are usually dependent on the availability of the necessary equipment within the facility and may incur additional costs upon usage.

CONTRACT WAREHOUSING

As for contract warehousing, due to the longer time period, they are more willing to procure the equipment necessary to store your good as they are able to spread out their costs over the longer duration. Hence, a simple rule of thumb is that they are willing to store almost anything, as long as space permits and any additional costs in procuring the necessary equipment are paid for by the customer. Hence, they are usually able to accommodate a wider array of goods.

PRICE STRUCTURE

PUBLIC WAREHOUSING

Historically, public warehouses often operate based on the movement of pallets. As such, some of the common fees incurred are pallet-in and pallet-out fees, storage of the pallets and certain administrative costs for documents or account management. However, the costs charged per pallet may differ based on factors such as difficulty in moving, how fragile the good is, the number of pallets that can be stacked, risk of theft, value of the good and other hazards that may be associated with the good. Furthermore, public warehouses can also support the storage of other goods such as drums of metal, rolls of paper and the like.

CONTRACT WAREHOUSING

As for contract warehousing, their operations are similar to that of public warehousing. However, there are a few additional pricing models available due to longer time periods.

— CONTRACT WAREHOUSING

The contract is usually drawn up based on the number of years you are using the facility. Why the large difference? This is mainly due to a trade-off for a larger number of services/ more specialised services available which will be further explained below.

— Cost Plus

Due to the higher unpredictability of the type of goods stored, contract warehousing may adopt different pricing structure known as the “cost plus” which refers to the storage provider tracking the actual cost of storing and moving your goods and then marking it up by an agreed percentage. This is equivalent to having a private warehouse within the warehouse premises as space, workers and equipment will be dedicated to that area. This helps to ensure that the warehouse provider profits from the service as it eliminates estimating the costs needed to store goods of varying nature.

— Mix of Both

A third option can be a mixture of the above two methods or adopting alternative price methods. This is often not surprising as the nature of goods being stored can vary greatly from one customer to another. As such, as long as the warehouse provider and customer agrees, the warehousing solutions will be provided.

COST SAVING

These are generated from saving the cost of constructing and staffing a private warehouse and also, with a longer bond period, it is often easier to negotiate for better storage rates, hence lowering the costs incurred further.

STORAGE OF MORE GOODS

As storage providers are able to spread the cost of procuring the necessary equipment over a longer period of time, they are more capable of storing a wider range of goods.

CONSISTENCY

By having a longer bond period, customers will not face any large fluctuations in storage prices as the cost and increments over the years have already been stated and agreed upon. As such, customers will not face any large spikes in prices due to changing demands for storage area.

As such, contract warehousing is usually more suited for individuals or companies that are,

 

  1. Seeking a long-term storage facility
  2. Selling goods which need to be stored under special circumstances
  3. Looking to stabilise their expenditure

WHY CHOOSE 
M&P
INTERNATIONAL FREIGHTS?

FREIGHT FORWARDER 

AND CUSTOMS BROKER

Unlike other freight forwarders, we also provide a full range of customs brokerage services.

GLOBAL OPERATION HUBS

Established in 2006, we serve globally via our operation hubs in China, Indonesia, Malaysia, Singapore and Philippines.

ONE-STOP PROVIDER

M&P International Freights offers a comprehensive suite of services to ensure a seamless shipping experience. From customs clearance and cargo insurance to international courier services and door-to-door shipping, we handle every detail under one roof, simplifying your logistics management and streamlining your operations.

COMPETITIVE PRICING

Being one of the largest international freight forwarding company, we are able to provide cost efficient pick-up from any cities around the world.

With a wide network of partners in Singapore, we are confident of providing contract warehousing services at very competitive rates. Contact us for more information today!

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