The Cost of Warehousing in the UK: An In-Depth Guide

Gain insights and learn how to optimise your warehouse expenses.

April 24, 2023

Cost of Warehousing - worker on a picker

Warehouse magic is the secret sauce that keeps the supply chain running smoothly, letting businesses easily stash, handle, and ship their goodies. But, here’s the catch – warehouse costs can pack a punch, and they dance to the tune of many factors. So, buckle up! We’re about to take a wild ride through the land of warehouse expenses, spill the tea on what makes them tick, and help you nail down the total cost of warehousing.

The Cost of Warehousing in the office

Types of Warehousing Costs

There are several types of costs associated with warehousing, including:

Rent or Lease

Warehouse rent can make or break your budget. In the UK, you’re looking at spending anywhere from £5 to £9 per square foot, and that’s just the average. If you’re eyeing a prime spot like London, be prepared for even higher costs.

Our clients at Clarus have seen it all, and they know that finding the sweet spot between a great location and a wallet-friendly price is the key to success. Picking a warehouse in a high-demand area will cost you more, but it might be worth it. On the other hand, locking down a long-term lease can save you some serious cash compared to short-term ones.

Labour

Warehouse labour costs in the UK can seriously affect your bottom line. With the average hourly wage for a warehouse worker being around £11.48 and supervisors and managers earning even more, it’s crucial to keep an eye on those expenses. Don’t forget to factor in overtime and benefits too!

At Clarus, we’ve seen firsthand how important it is for our clients to optimise their warehouse operations and ensure employees work at their best. One way to achieve this is by using a warehouse management system (WMS) and automated storage and retrieval systems. These tools can help you keep labour costs in check and let your warehouse run like a well-oiled machine.

Equipment

Forklifts, pallet jacks, and other material handling equipment can add up in cost, but they’re super important for your warehouse. Did you know that in 2018, the total value of warehousing equipment in the UK was a whopping £1.1 billion? That’s according to a survey by Statista.

To ensure these costs don’t spiral out of control, you’ll want to put your money into top-notch equipment built to last. And don’t forget to keep that equipment well-maintained so it stays in tip-top shape and serves you well for years.

Utilities

Utilities, such as electricity, water, and heating, are another factor to consider when determining the cost of warehousing. The UK has relatively high utility costs, with electricity prices averaging around 16.04 pence per kWh for non-domestic consumers in 2020.

Be mindful of your energy usage and implement energy-saving strategies to reduce utility costs.

Insurance

Insurance might seem like a small detail, but it’s crucial to remember when crunching the numbers for warehousing costs. You’ll need liability insurance to shield your business from legal battles and property insurance to safeguard your warehouse and everything inside. In the UK, the average annual premium for combined liability insurance hovers around £120 to £300, says NimbleFins. As for property insurance, the cost depends on your warehouse’s size and location. So, don’t forget to factor in insurance when calculating your warehousing expenses!

Maintenance

Maintenance costs aren’t just about routine stuff like cleaning and fixing little things here and there. They also cover those surprise repairs that pop up when you least expect them. Regular maintenance ensures your warehouse runs like a well-oiled machine and keeps those big, budget-busting emergencies at bay.

Determining the Total Cost of Warehousing

When figuring out the overall warehousing expenses for your business, don’t forget to consider all the aspects mentioned earlier and any other costs unique to your operations.

Keep a close eye on your warehousing costs, tweaking them to boost savings and reduce expenses. You can do this by routinely examining your warehouse activities and making updates to enhance efficiency, like adopting new tech or downsizing your warehouse.

Don’t overlook storage and retrieval expenses, which cover storing and fetching items from your warehouse, plus any extra fees for packing and shipping. Slash these costs by fine-tuning storage and retrieval processes with tech like barcoding and scanning systems, and embracing top-notch practices like cross-docking and just-in-time inventory management.

Lastly, be mindful of transportation costs when calculating your total warehousing expenses. This covers the cost of moving goods to and from your warehouse and any extra fees linked to shipping and handling. Smart transportation management can help lower these costs and amp up your warehousing efficiency.

Conclusion

In conclusion, managing warehouse costs in the UK can be challenging, but it’s essential for maintaining profitability and driving business growth. Companies can significantly minimise expenses by investing in high-quality equipment, being mindful of utility costs, finding the best insurance deals, performing regular maintenance, and optimising transportation management. As an affordable and scalable WMS, our solution can support your business in achieving these cost-saving goals. Don’t miss out on the opportunity to streamline your operations and reduce costs – book a demo today to see how our system can transform your warehouse.

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