As the economy continues its strong recovery, everyone from manufacturers and logistics professionals to developers are analyzing strategic options for storage and logistics. Companies with tangible forecasts or consistent growth trending are looking to lock down space in a shrinking market. In this series we will dive into three basic storage options and help you determine the best type of contract for your unique business.
Dedicated Space is a storage option offering the most amount of security for those looking to reduce their risk in a low vacancy market. Dedicated Space (or Contract Space) requires the customer pay a fixed amount for a certain amount of space. For instance, an agreement may be made to pay $7,500 for 10,000 square feet.
Dedicated Space is an option that is appealing to those who:
- Have a consistent flow of manufacturing and know exactly how much space will be needed over the course of the year.
- Would like to use the Supply Chain to its full potential.
- Are historically or would like to be heavy 3PL users.
- Are doing an inventory build and it is critical to be sure the space will be available.
Dedicated Space is a very safe, low risk option that provides security and peace of mind in a market where many are left scrambling to find the space they need. Other pros of Dedicated Space are:
- Shippers are not charged on a transactional basis, simply by the month. Therefore, the more business done (more turns or through put) the lower your overall transactional space cost.
- Set costs allow for accurate budget forecasting and overall spend analysis.
Drawbacks for Dedicated Space include under-utilization of the space can result in higher transactional costs when analyzed, so it is important to understand that this option may not be optimal for everyone looking to minimize transactional spend, depending on their through put needs. Additionally, overflow is typically up-charged in bulk quantities for the current month and the next (a standard at Nexus is 1,600 square feet), making it important to understand needs before a Dedicated Space program begins.
Dedicated space is becoming a necessity for many companies who have steady year round needs or who are working on inventory build. This option is a perfect match for those who plan to use their 3PL as a workhorse and realize value in their supply chain. As space availability decreases, partnering with a trusted logistics provider who can be prepared for your needs and help you lower your transactional costs will become more and more important.
If you are interested in learning more about the benefits of Dedicated Space, click below to request a consultation and receive a free rate quote.