Advantages of Asset-Based vs. Non-Asset Based 3PL Warehouses: Distribution Technology’s Edge

September 5, 2023 | Supply Chain, Third-Party Logistics (3PL)

In the world of third-party logistics (3PL), the distinction between “asset-based” and “non-asset based” warehouses plays a pivotal role in shaping the efficiency, control over costs, and overall service quality provided to clients. At Distribution Technology, we take pride in being an asset-based 3PL warehouse, owning all of our facilities and equipment. This strategic approach, which has been engrained in our company’s culture since the very early days, offers a host of benefits that not only set us apart but also ensure a seamless experience for our valued clients.

Understanding Asset-Based 3PL Warehousing

An asset-based 3PL warehouse, like Distribution Technology, directly owns the physical property, the building, and the equipment required for effective storage, distribution, and transportation operations. This model empowers the 3PL company with a higher degree of control, flexibility, and cost management throughout the entire supply chain process.

When Distribution Technology refers to being asset-based, it means we maintain ownership of our property and the essential equipment needed for seamless operations. This includes forklifts and other machinery necessary for smooth handling and transportation of goods.

The Advantage of Owning Property and Equipment

One significant advantage of being asset-based is the ability to avoid the pitfalls of escalating lease costs.  In the second quarter, warehouse rental rates in the US reached an all-time high, with the average asking rent for industrial space hitting $9.59 per square foot. This marked a 16.1% increase from 2022, according to Cushman & Wakefield, a leading commercial real estate services firm. This considerable increase continues a trend of rising leasing costs over the past four years, contributing to a 50% surge in warehouse space prices since 2020. With non-asset based warehouses, lease agreements often come with escalator clauses that allow property owners to increase the lease price annually. This can result in a significant financial burden for 3PL providers, which may ultimately be passed on to clients in the form of higher storage fees or service charges.

Distribution Technology’s decision to own all of our properties helps protect our clients from such potential cost hikes. By avoiding unpredictable increases in lease costs, we can offer greater pricing stability and predictability to our clients. This commitment to cost control ensures that our clients can maintain a clear view of their expenses without the worry of unexpected surges.

Control Over Costs and Client Benefits

Being asset-based equips Distribution Technology with the ability to maintain control over various aspects of costs. This control translates to more competitive pricing for our clients which are not subject to a provider’s lease agreements.  Since we can manage our expenses more effectively, we are better positioned to offer cost-efficient solutions that align with our clients’ needs and budgetary considerations.

By choosing to invest in and own our equipment and property, we can also allocate resources more strategically.  This enables us to prioritize maintenance, upgrades, and innovations that enhance the overall efficiency of our operations. Ultimately, these enhancements contribute to a higher quality of service for our clients, ensuring that their goods are handled, stored, and transported with the utmost care.

A Track Record of Excellence

Distribution Technology’s commitment to being an asset-based 3PL warehouse is backed by over 50 years of experience in the industry. Our asset-based approach allows us to adapt swiftly to market changes, economic fluctuations, and industry trends. The security and stability of our owned assets mean we can focus on delivering consistent, reliable, and efficient services.

In a landscape where property owners continue to increase lease costs and price fluctuations are common, Distribution Technology’s asset-based model serves as a safeguard for clients seeking stable and transparent pricing. Our dedication to owning our building and equipment reflects our dedication to serving clients’ best interests while maintaining the highest standards of professionalism.

The Bottom Line

In the realm of 3PL warehousing, the choice between asset-based and non-asset based models are a crucial determinant of success. Distribution Technology’s commitment to being an asset-based 3PL warehouse brings numerous advantages that ultimately benefit our clients. The control over costs, the ability to avoid escalating lease fees, and the power to offer competitive and stable pricing are just a few of the reasons why Distribution Technology’s asset-based approach stands out.

With over five decades of experience and a strong foundation built on owning property and equipment, Distribution Technology continues to be a reliable partner for businesses seeking exceptional third-party logistics services. Our asset-based advantage is not just about ownership; it’s about delivering a superior experience to our clients and ensuring that their supply chain operations are seamless, efficient, and cost-effective.