Commodity storage warehouses are light utility buildings with lighter construction compared to typical warehouse buildings. However, your products majorly determine the commodity warehouse design you choose. These warehouses are appropriate for storing anything from your bulky baled cotton to bags of grain cereal. The ease with which commodity storage warehouses achieve their objectives makes them a favorite service for the agricultural, manufacturing, petroleum, and other sectors. This article explores some of the advantages of commodity storage warehouses for a business.
Responding to Price volatility
Did you know that you can take advantage of current and future prices simply by storing your commodities and offering them to the market at the right time? The market provides you with the option to transact on the spot or use future contracts. You may agree with your buyer to lock the price for future delivery. For example, you can pick the price for oil in January and delivery it in April. However, you cannot engage in such a transaction without adequate storage. Commodity storage warehouses provide you with ample space to store goods and get profits from the volatile commodities market.
Different commodities have unique storage requirements. Some commodities require expensive equipment, labor, and adjustments of current storage areas. Commodities that do not easily fit in your current storage provisions are inflexible and require professional warehousing services. Therefore, your business may consider an expansion of your storage areas uneconomical. Such inflexible commodities prevent your business from increasing production capacity in anticipation of price increment in the future. Commodity storage warehouses are designed to meet a wide array of products. This flexibility makes it easy for your business to store commodities without incurring additional costs.
Some commodities appreciate while in storage. Commodity storage warehouses accommodate goods such as alcoholic beverages that add value with time. Other products such as grains maintain their nutritional value when kept under the right conditions. Commodities kept in a warehouse maintain their quality and are free from the influence of the market. If your farm overproduced cereal grains with no demand, you can store the commodities and resell them when demand increases. Therefore, commodity storage warehouses help your business remain independent from the pressure presented by market forces.
Today, most businesses favor just-in-time production. The high efficiency of this method increases the profitability of the business under regular market cycles. However, what will happen when demand increases? Most firms with lean operations disappoint customers during the peak season, yet the goal of warehousing is to solve such an issue. For example, most firms cut down on their production capacities in response to the coronavirus pandemic. After the world seemed to have the whole issue under control and demand rose, the struggle to step up production was significant for many businesses. The market struggled with severe shortages which were otherwise avoidable through commodity storage warehouses.
Commodity storage warehouses enable you to respond to price volatility in the market. These warehouses also have flexible storage regardless of your commodities. The commodity storage warehouse helps your goods increase in value and ensures that you always have a consistent flow of commodities.Share