Public warehouse is appropriate when considering temporary storage and low throughput volume for the product. It charges differently for type of services used. The public warehouse sells service on a space basis per time period- dollars per square per time period. Here are factors to consider affecting public warehousing rates.

Value
The risk increases with higher valued goods. Thus rates also increase according to the values of the product.

Fragility
Warehouse rates may change according to how susceptible the product is to damage because the warehouse needs to consider the safety of the product.

Damage to other goods
In a warehouse setting, incompatible stored products have the risk of damaging each other. The product may damage another or the product is vulnerable to damage by others. Examples are chemicals and food products.

Volume and regularity
Although a public warehouse it also incurs fixed costs such as utility expense. Thus it needs to spread its fixed cost over the volume and regularity of the product.

Weight density
Warehouse charges rates in terms of space. If the product occupies more space, warehouse rates are higher.

Services
Different type of product may need different variety of services. As the services have associated costs, hence the warehouse charges for services.

Reference: Johnny Tan, Oh Hui Ling, Cheryl Wee-Teo, Distribution Centre Management, Fourth Edition (2007)

asif @ 1/18/2009 05:00:00 AM

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