Q: What is the difference between a public warehouse and a 3PL company?
A: The term Third-Party Logistics (3PL) describes a company which may offer a great array of logistics related services. Public Warehousing is one of these (but not necessarily) along with value-added services, packaging, contract warehousing, transportation, brokerage, intermodal service and real estate services. The largest 3PLs are global enterprises whereas smaller 3PLs may be regional players or even single-city providers.
Many organizations which formerly were identified as public warehouses frequently assume the new terminology as their services have expanded and diversified.
Q: How do you charge for your services?
A: Warehousing Services are typically charged on a direct usage basis without any long-term commitment on part of either warehouse user or provider. Categories of charges generally pertain to space usage, warehouse labor hours, clerical charges.
Before we quote on a specific project, we gather all relevant information as provided by the customer to enable us to translate the project into anticipated space needs and labor requirements. Quoted rates are then predicated on such parameters and are typically structured on a per unit of measure basis such as “per pallet”, “per kg” or “per case”. The unit of measure might be stipulated by the client as to conform with their systems. The obvious preference will be to charge on the same unit of measure as is being used to track inventory and activity.
When little if any information is available about a given project, we simply quote on a per square foot and per labor hour basis. Such a rate structure takes risk and assumptions out of the equation. We keep track of labor hours and measure space and are able to account for it. A square foot storage rate is sometimes also used for large pieces of business where the footprint does not vary much month-to-month and where throughput is not predictable.
Storage charges can be quoted in several formats: (1) flat monthly storage per unit of measure (UOM), (2) split-month storage per UOM (see detailed explanation below), (3) anniversary storage per UOM or (4) flat monthly rate per square foot. Of these, Option 2 is the most commonly used method in the public warehouse (multi-client per facility) arena.
Handling charges are generally invoked upon receipt of inbound product. Labor hours are incurred both for the inbound as well as for the outbound movement of product. The IN and OUT handling rate usually covers both activities and is charged once at the time when the product is received regardless as to when the product is shipped out again.
Handling Surcharges are charges pertaining to additional handling activities such as container floor-unloading / palletizing, case picking, labelling, stenciling, shrink-wrapping etc. Such activities may not occur on a regular basis and are therefore better quoted separately rather than being incorporated in a single handling rate. If for example the handling IN/OUT rate is quoted on a per pallet basis, it makes sense to have a case picking surcharge (on a per case basis) which would only apply to orders that require the (less than full pallet) case picking service.
Clerical charges are frequently identified as a “Order Processing” or “Bill of Lading” charge. These cover the costs not only of order processing but also of receiving the inventory, customer communication and reporting.
Cross-dock charges are often simplified and bundled into a single flat rate which covers all expected labor, dock-space and clerical work. Some clients request a simplified rate structure and such requests can usually be satisfied. Our inherent preference is to charge for services as they are incurred and in a transparent, accountable manner so long as the tracking of related activities does not become excessive.
Value-added services are quoted in a number of ways. Typically, the rate will be on a UOM basis predicated on some agreed-to assumptions regarding productivity and volume parameters.
Q: What is split-month storage?
A: This is a popular method of charging for storage whereby pallets arriving in the first half of the month incur the full monthly storage rate, pallets arriving in the second half of the month incur half of that storage rate and pallets on-hand at the beginning of the month incur the full monthly storage rate.
Such storage rates are invariable predicated on an expected average inventory turn ratio. Essentially the warehouse rewards the depositor (client) with a lower storage rate in return for an on-going through-put of inventory which generated additional handling revenue for the warehouse. By comparison, a flat storage rate is not predicated on inventory turn.
Q: What are your hours of operation?
A: Our hours of operation are facility and client specific. Our default hours for a single shift operation are from 7:00 a.m. to 3:30 p.m. The office and management will always be available until 4:00 p.m. At the same time, ANEX serves some customers with a second shift and on weekends. Of course, specific hours of operations requirements are best addressed in advance and structured as to make it most cost-efficient.
When a customer has an urgent service requirement, the ANEX Team is pledged to be there to serve the need even when it was not possible to plan in advance expanded hours of service.
Q: How long is the contract?
A: The public warehousing agreement is a month-to-month contract as governed by the Uniform Commercial Code, Section VII. While many warehouse users have long-term relationships with their warehouse providers, the public warehousing platform provides great flexibility in the event of major changes. Long-time users of public warehousing services view it as a strategic advantage. This relationship works particularly well when there is no need for major capital investment. Generally, when a significant capital expenditure is required, the warehouse user and provider will enter into a warehousing contract whereby the expense can be amortized over the period of the contract.
Q: What is Warehouseman’s Legal Liability Insurance?
A: This essential public warehousing insurance coverage is frequently misunderstood. To begin with, it must be understood that the warehouse operator does not hold title to the goods. The party which holds title to the goods needs to maintain primary insurance coverage because according to the IWLA promulgated Terms and Conditions “the warehouse shall not be liable for loss or damage to goods tendered, stored or handled however caused unless such loss or damage resulted from the failure by warehouse to exercise such care in regard to them as a reasonably careful person would exercise under like circumstances…”
Thus, the warehouseman’s legal liability insurance covers the warehouse from claims in the event that the warehouse failed to exercise such duty of care as described in the Terms and Conditions. This is one policy in which the client should never request to be named as co-insured because it would in effect nullify the coverage since you cannot cover yourself for a claim by yourself.
Q: What are your Terms and Conditions?
A: ANEX uses the Standard Contract Terms and Conditions for Merchandise Warehouses which have been approved and promulgated by American Warehouse Association, October 1968; revised and promulgated by International Warehouse Logistics Association, January 1998 and November 2008. Click here for the full text.
Q: Do you do same day shipping?
A: Yes, we do.
Q: Do you allow Customer Pick-ups?
A: Yes, indeed, we always accommodate our clients’ customers if they wish to pick up their order rather than it being delivered to them. We view this as an important service as a direct extension to our clients’ customer service.
The important thing about customer pick-ups (a.k.a. Will Calls) is that the order needs to be released for shipment by the client prior to the arrival of the customer so that the order can be picked and staged on the dock for a pickup without delays.
Q: What are your minimum charges?
A: ANEX has certain default minimum charges pertaining to monthly storage ($500) and inbound receipt ($25). There are situations where the minimums either do not play a role at all or where they would become an unreasonable burden. We evaluate the specific circumstances on a case by case basis and have waived such minimums in some situations. New upstart companies often qualify for such consideration.