Guide to international warehousing

Guide To International Warehousing

International warehousing is a strategic imperative for businesses seeking to expand their global reach and enhance supply chain efficiency.

So if you are a logistic professional, supply chain manager, or business involved in international trade and looking to understand the various options and considerations for your warehousing needs this guide has everything you need to know about utilising international warehousing to deliver strategically located storage facilities in key markets, optimised logistics, reduced costs and exceptional customer experiences.

This comprehensive guide explores the intricacies of international warehousing, providing valuable insights for businesses considering this strategic move. 

Keep reading to find out the different types, and the benefits and costs associated with international warehousing.

What is an International Warehouse?

In today’s global supply chain, it is important that businesses enable themselves to reach new markets overseas. International warehouses allow businesses to import, store, and ship to audiences in countries abroad and expand their global reach while ensuring timely deliveries, reduced transportation costs, and improved customer experience. This ensures efficient delivery of products to customers abroad and overseas by centralising supply.

International warehouses are appealing to logistic professionals, supply chain managers, or businesses involved in international trade as they enable lower shipping costs, faster delivery times, and a smoother customer exchange to boost customer satisfaction. 

For global businesses, international warehouses act as a central business hub. They are typically located in major trade centres in countries other than the seller’s origin near reliable transport links and routes.

By establishing a physical presence in key regions, businesses can better serve customers, mitigate supply chain disruptions and gain a competitive edge.

Types of International Warehouse

There are many different types of international warehousing, performing many different functions and services to suit the unique needs and requirements of a variety of global businesses:

1. Public Warehouse

A public warehouse is a warehouse storage facility managed by a third party. Space can be rented for long or short-term depending on demand and requirement.

These third-party facilities offer flexible lease terms and scalable storage solutions, making them ideal for businesses with fluctuating inventory levels or those entering new markets. Public warehouses provide shared infrastructure and services, allowing companies to focus on core competencies.

This is a suitable warehousing solution for businesses that experience seasonal surges, require temporary warehousing, or do not want to spend money to build their own warehouse facility.

In a public warehouse, a diverse range of businesses pay to store their goods and products alongside other vendors.

2. Private Warehouse

Owned and operated by the business, private warehouses offer complete control over operations but require significant capital investment and ongoing management. This option is suitable for businesses with large, consistent inventory volumes and specific operational requirements. This type of warehouse provides companies with control and flexibility over decision-making and business operations in the facility. 

A private warehouse is often used by big retailers who store bulk and excess inventory. Organisations with private warehouses need their own employees, software, and equipment to operate efficiently and effectively.

3. Bonded Warehouse

Bonded warehouses are a secure space for businesses to store goods liable to pay import duty and VAT. Custom tax and VAT on goods and products stored in a bonded warehouse are deferred until goods are sold or removed from the storage facility.

This is a long-term storage solution that helps businesses and retailers improve cash flow by delivering goods closer to their final destination and postponing duty payments.

4. Distribution Centre

A distribution centre is a logistics building designed to store products and perform order fulfilment and packaging tasks. Goods in a distribution centre are often redistributed to the retailer or directly to the consumer.

Additionally, distribution centres also offer value-added services such as product mixing and cross-docking to efficiently meet customer requirements.

5. Fulfilment Centre

Fulfilment centres are an important link in the supply chain that assists businesses in managing inventory, order processes, and the overall customer experience. A fulfilment centre is operated by a third-party service provider who processes, and ships products customers have ordered.

This type of international warehouse allows businesses to outsource warehousing and shipping requirements.

Benefits of an International Warehouse

Implementing an international warehousing strategy can yield substantial benefits for businesses operating in global markets:

Enhanced Customer Satisfaction:
By reducing delivery times and increasing order fulfilment accuracy, businesses can significantly improve customer satisfaction and loyalty.

Reduced Shipping Costs:
Strategic warehouse placement can optimise transportation routes, consolidate shipments, and lower overall shipping costs.

Improved Inventory Management:
Effective inventory control is essential for avoiding stockouts and excess inventory. International warehouses enable better visibility and management of inventory levels across different markets.

Mitigated Supply Chain Risks:
By diversifying storage locations, businesses can reduce the impact of disruptions such as natural disasters, labour strikes, or geopolitical events.

Market Expansion:
International warehouses serve as a platform for entering new markets and expanding customer reach.

International warehousing allows businesses to enable business expansion by reaching and trading with new markets overseas. By streamlining business operations and the supply chain, international warehousing provides businesses with the warehouse storage solutions they need to operate international trade.

Costs of an International Warehouse

The cost of operating an international warehouse is influenced by several factors. Warehouse size, location and the type of goods stored significantly impact overall expenses. For example, storing bulky items requires more space than smaller products. Additionally, equipment costs, inventory turnover rates and labour requirements contribute to operational expenditures

Variable costs such as utilities, maintenance and packaging materials must also be considered. While public warehouses offer a more affordable entry point for businesses new to international trade, private warehouses, though requiring a larger initial investment, can be more cost-effective in the long run.

If you are just starting to trade internationally, it is often cheaper to rent a space in a public warehouse than it is to buy and operate a private warehouse facility. However, while private warehousing is a large initial investment, it is considered cost-effective in the long term.

How Optima Warehouse Solutions can help.

Optima Warehouse Solutions provides software for all kinds of businesses from logistics companies, packaging and manufacturing, to e-commerce. We have developed a powerful Warehouse Management Software package that will make your warehouse more efficient no matter the industry. 

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