Using a 3rd-Party Logistics (3PL) VS Setting Up Your Own Warehouse

You are starting a new business or you are an already established business looking to cut down on overhead cost, you ask yourself should I undertake the hassle of leasing a warehouse space and hiring a full staff to run my company? Should I alternatively send my product to a third-party warehouse who’s well equipped in taking care of my distribution needs? In this blog I am going to break down some of the benefits and why you should consider hiring a third-party warehouse who specializes in distribution.

First let’s start with the warehousing or storage of your goods. A typical 2,000- 5,000 square feet warehouse in the Greater Toronto Area for lease can cost anywhere from $2,000.00 – $7,000.00 plus utilities. The current pricing for storage per pallet is anywhere from $12.00- $20.00 depending on the product. Based on the pricing above to lease a warehouse, you can potentially store 133- 350 pallets with zero overhead cost.

Secondly let’s discuss all the additional cost with setting up your own warehouse. You will need finances for warehouse equipment (e.g. forklift, pump truck, walkie, etc.), warehouse racks for storage or floor space to store pallets, bins to store small items or parts. A reliable inventory management system for items location, picking and tracking. A warehouse management system can cost anywhere from $29.00 USD cloud based per month to thousands of dollars depending on your current needs. You will also need office equipment (e.g. desks, chairs, computers, telephone system) and internet service. With 3LP warehousing you are able to save and eradicate all these overhead costs while providing outstanding service to your customers for a fraction of the cost.

Lastly, we will cover staff requirements, wages, WSIB and insurance. The smallest warehouse operation will require at least one to two employees, the minimum wage in Ontario is $14.00 per hour, plus employer tax matching along with WISB and additional cost for each employee. You will also require business insurance and additional insurance to cover all your assets and inventory in case of fire, loss or thief.

In closing the benefits of using a third-party warehouse is an overwhelming better choice than having to set up a warehouse from scratch. Many third-party warehouses are well versed and include complete distribution solutions to meet a customer’s needs. At Antoine Fulfillment we have a team of well-trained staff to fulfill all your warehousing and distribution needs.