The Ultimate Guide to Crafting a Warehousing Agreement

Introduction

Most supply chain and logistic companies require storage solutions for their goods or supplies, prompting them to explore various options available, including contract warehousing. For businesses that prefer not to invest in constructing, purchasing, or renting their own warehouse space, contract warehousing presents an attractive alternative.  Through this arrangement, the third-party warehouse provider assumes responsibility for tasks such as storage, shipping, and receiving of merchandise on behalf of their clients.

Moreover, they offer added value by assuming additional logistical responsibilities, including inventory management and adhering to best practices in distribution. By entering into a third-party warehousing agreement with a specialized external provider, companies can leverage dedicated warehousing services tailored to their specific needs. Having a cutting-edge Warehousing Agreement, parties can unlock the power of seamless storage, allowing their businesses to thrive while ensuring their valuable goods are in safe hands.

Types of warehousing services

Various kinds of services form a part of your warehousing procedure. Some of them are as follows:

• Inbounding and Receiving – The first step is getting your inventory from the supplier to the warehouse. This is known as the inbounding process. The faster you complete the inbounding process, the faster you can start shipping and selling your product, giving rise to more revenue for your business. The process begins with an advance shipment notice (ASN), which provides details about the quantities of the incoming shipment to the warehouse. This information is usually sent through the electronic data interchange (EDI), as available in the warehouse management system (WMS). Once the ASN is received, adequate space and appropriate staff scheduling are made in the warehouse.
• Warehousing storage services – Depending on the kind of goods stored in the warehouse, specific arrangements would be required to be made in the warehouse. This can be in temperature controls, humidity controls, cold chain, or serialization. The manner of storing the products directly relates to the productivity generated through the goods.
• Pick, Pack, and Ship Warehousing Services – You pull the inventory from the warehouse shelves and pack it into boxes once an order has been received. After that, you provide the packed product to the carrier according to the delivery schedule obtained.
• Packout Procedures – This procedure ensures that your products are protected during transit. You do not wish to send a damaged or problematic product to your customer since it can result in a negative review and a loss of reputation for your business. Therefore, ensure that the products are correctly packed and that the warehousing facility has a proper pack-out procedure.

Difference between private, public and contract warehousing

Primarily, there exist 3 warehousing options for storage spaces. While there are pros and cons for each of these options, a choice is made based on certain factors, including:

• Amount of time the storage space is needed for.
• Amount of capital you are willing to invest.
• Services required.

Private Warehousing

These are warehouses which are owned and operated by a single company. Their primary purpose is to store goods and provide easy storage and distribution access for company products. However, they require significant capital investment, both for the purchase of the warehouse and for its maintenance (employees, equipment, etc.). Further, companies are required to hire professionals for a high degree of daily involvement in these warehouses.

Therefore, private warehousing is preferred for long-term storage needs or companies with complete control over their goods’ management and distribution.

Public Warehousing

These warehouses are run by third parties and are exclusively rented as storage spaces. The costs incurred depend on the amount of storage space, time, and number of inbound and outbound transactions.

These are best suited for companies that look for short-term or seasonal storage facilities.

Contract Warehousing

These warehouses offer various value-added services and further provide the opportunity to be tailor-made to suit specific supply chain goals of a specific business. Some of the standard services provided for contract warehousing are:

• Pick and Pack Fulfillment
• Knitting services
• Inventory management
• Retail fulfilment
• Reverse logistics

Therefore, the companies can focus their time and money on other business requirements rather than warehousing services. Typically, these contracts are entered for two to five years with a negotiable payment structure.

Definition and purpose of a warehousing agreement

A warehousing agreement is a legally binding contract wherein a warehouse commits to receiving and storing goods on behalf of a client, who compensates them for their services. By opting for contract warehousing, businesses can eliminate the need to handle day-to-day warehousing operations, reduce capital investment by avoiding the purchase of a warehouse, and lower overall operational costs. Here are some of the reasons why you may opt for a warehousing agreement; –

• Reliability: By utilising a contract warehouse, businesses can rely on logistics providers to ensure the timely movement of goods to and from storage.
• Guaranteed Service Period: When selecting a contract warehouse space, you gain the assurance of accessing it for a predetermined duration. Whether your requirement spans a year or a decade, such a contract safeguards your company against unforeseen expenses. The contract explicitly outlines the annual or monthly cost, including potential adjustments during the contract period. Moreover, it includes provisions that detail the procedure for extending the contract duration. This provides your company a locked-in service period, ensuring stability and protecting you from unexpected costs.
• Reduced Expenses and Capital Investments: Establishing proper warehousing space necessitates a significant capital investment for a company. Costs arise from building renovations, equipment purchases, and facility staffing. However, the warehousing agreement offers a cost-effective alternative. The facility is already established and equipped with various zones catering to different types of goods. The logistics company responsible for the space also manages the workforce, equipment, and maintenance expenses.

Importance of warehousing agreements in logistics and supply chain management

Logistics and supply chain activities encompass a range of transportation modes, customs clearance, and warehousing functions across various locations. The primary objective of logistics and supply chain management is to ensure a smooth and uninterrupted flow of goods, starting from raw material collection through manufacturing and concluding with the distribution of the final product. Warehousing and storing goods are critical in the global logistics supply chain.   Beyond providing secure and reliable storage facilities, warehouses offer the convenience of centralised storage, simplifying the planning and organisation of logistics operations. By utilising warehouses, you can effectively streamline your logistical and supply chain processes. In this analysis, we delve into the integral role warehousing agreements play in the logistics and supply chain system and explore the myriad benefits they offer to businesses engaged in local and global goods shipping.

Cost Effectiveness  Establishing and maintaining a dedicated warehouse space for yourself can be quite expensive, particularly when considering the additional costs of hiring staff for logistics organisation and warehouse management. However, a warehousing agreement can help you reduce expenses while gaining valuable time significantly. On the other hand, by storing items for future use when there is high demand, warehouses ensure price stability and mitigate revenue losses, mostly during seasonal demand; warehousing agreements become essential components of logistics and supply chain. Furthermore, these agreements help reduce costs associated with outbound deliveries, transportation, and shipping. Warehousing agreements ensure a balance between supply and demand within the supply chain, ultimately contributing to increased business profits.

Effective and efficient distribution Warehousing agreements form a crucial component in the distribution of products to suppliers and the seamless fulfilment of orders. By prioritising timely supplies, businesses can enhance the efficiency of their supply chains. This streamlined approach ensures that orders are delivered accurately and promptly, improving customer satisfaction. Furthermore, warehouses typically offer comprehensive packaging and labelling supplies, ensuring the safe and secure delivery of your goods.

Inventory accountability and stock control Inventory accountability is a crucial aspect facilitated by warehouses, ensuring effective inventory management and a high level of responsibility. Inventory control is vital in aligning supply with demand in a logistic and supply chain management environment. It contributes to an enhanced client experience by ensuring that all products sourced from the warehouse meet quality standards. Additionally, modern warehouses are equipped with advanced technology, which offers real-time updates on stock levels and replenishment needs. These systems provide accurate information regarding the quantity of stock available, enabling businesses to make informed decisions about inventory management. This information allows you to promptly address stock shortages and offer alternative options to customers, ensuring consistent and reliable delivery of goods.

Security Most warehousing agreements prioritise the safety of goods by considering the cutting-edge security measures in place by the warehouses, such as comprehensive CCTV coverage, advanced systems to detect and prevent smoke and fire incidents and alarm systems. An efficient warehouse plays a critical role in enhancing the security of the supply chain by preventing material spoilage and delays. Moreover, maintaining a secure warehouse environment is equally important as it helps prevent losses due to theft or vandalism.

Parties involved in a warehousing agreement

Warehouse owner/operator: This refers to the entity or individual who owns and operates the warehouse facility. They are responsible for providing the warehouse space and various storage, inventory management, handling and security services. Client/tenant: This party seeks to utilise the warehouse space and services. They agree with the warehouse owner/operator to store their goods and benefit from the services provided.

Key components of a warehousing agreement

Identification and description of the warehouse facility

1. Location and address: This clause specifies the precise location and address of the warehouse facility. This ensures that both parties can easily identify and locate the facility without confusion.
2. Size and capacity: Clearly define the physical dimensions and overall capacity of the warehouse facility. This includes information about the total square footage or area of the warehouse and any relevant measurements or dimensions. It helps both parties understand the size and capacity of the facility for their storage needs.
3. Special features or equipment: If there are any unique or specialised features of the warehouse facility, this clause highlights them. It includes details about specific equipment or infrastructure that make the warehouse stand out, such as temperature-controlled storage areas, specialised handling equipment, advanced security systems, or other important features for storing and handling specific goods.

Services provided by the warehouse

1. Storage of goods: This clause specifies that the warehouse will provide space for storing the client’s goods. It ensures suitable areas within the warehouse to keep the goods safe.
2. Inventory management: This clause states that the warehouse will manage the client’s inventory. It involves maintaining accurate records of the goods stored, tracking their movement within the warehouse, and providing regular updates to the client about the inventory levels.
3. Handling and loading/unloading: This clause explains that the warehouse will handle the physical tasks of loading and unloading the client’s goods. It includes using appropriate equipment to move the goods within the warehouse premises safely.
4. Security measures: This clause emphasises that the warehouse will implement security measures to protect the client’s goods. These measures may include using security cameras and alarm systems to ensure the safety and security of the stored goods.

Term and termination

1. Duration of the agreement: This clause specifies the length or duration of the warehousing agreement, i.e. the period for which the agreement is valid and enforceable, for example, a specific time frame, such as one year, or open-ended with a clause allowing for termination by either party with prior notice.
2. Renewal and termination provisions: This clause addresses the options for renewal or termination of the warehousing agreement by providing the procedures and conditions for extending the agreement beyond its initial duration. In addition, it may specify the notice period required for termination or the circumstances under which either party can terminate the agreement, such as breach of contract or non-payment.

Payment terms and charges

1. Rent or storage fees: This clause outlines the agreed-upon amount of money that the client/tenant must pay for renting the warehouse space, including the rate or fees for storing goods in the warehouse, typically calculated based on square footage or volume of storage.
2. Billing frequency and payment methods: This clause specifies how often the client or tenant will receive invoices or bills for the rent or storage fees, for instance, whether it will be on a monthly, quarterly or annual frequency. On the other hand, the clause should include the payment mode that parties have agreed upon, for instance, whether payment will be via credit cards, electronic payment, bank transfer, etc.
3. Additional charges (e.g., handling, pallet fees): This clause includes any extra charges beyond the basic rent or storage fees. It covers handling fees for loading or unloading goods and pallet fees for using the warehouse’s pallets. These additional charges are outlined in this clause to ensure transparency and clarity in the financial obligations of both parties.

Responsibilities of the parties Warehouse owner/operator’s obligations: This section outlines the duties and responsibilities of the warehouse owner or operator, which may include:

• Providing and maintaining a secure and suitable warehouse facility.
• Ensuring the warehouse meets all relevant safety and regulatory requirements.
•  Implementing proper inventory management systems and procedures.
• Taking measures to prevent damage, loss, or theft of stored goods.
• Providing necessary equipment and resources for loading, unloading, and handling goods.
• Maintaining accurate records of incoming and outgoing goods.
• Adhering to agreed-upon service levels, such as timely delivery or retrieval of goods.
•  Complying with any specific requirements or instructions provided by the client/tenant.

Client/tenant’s obligations: This section outlines the responsibilities of the client/tenant with respect to their goods, whose obligations may include:

• Providing accurate and complete information about the goods to be stored.
• Packaging and labelling the goods according to the agreed-upon standards.
•  Complying with any legal and regulatory requirements related to the stored goods.
•  Paying the agreed-upon fees, charges, or rent for utilising the warehouse services.
•  Insuring the goods against damage, loss, or theft unless otherwise agreed.
•  Providing proper instructions for handling and storing the goods.
•  Complying with any agreed-upon scheduling or notice requirements for accessing or retrieving the goods.
• Not storing any prohibited or hazardous goods without prior approval.

Insurance and liability

• Insurance requirements: Both parties must be protected from potential losses or damages during the warehousing operations. Therefore, specific insurance coverage that the parties involved must maintain during the term of the agreement should be highlighted in this section, i.e. the types of insurance policies required, such as general liability insurance or property insurance.
• Allocation of risk and liability: This clause establishes who is responsible and liable for loss, damage, theft, or other incidents that may occur to the stored goods. It outlines the circumstances in which the warehouse provider takes responsibility and the extent of their liability, such as negligence. Likewise, it specifies the situations in which the client or tenant assumes liability for their goods.

Confidentiality and non-disclosure provisions To protect sensitive information shared during the transaction, it is important to include a clause that emphasises confidentiality. This clause requires the warehouse provider and the client/tenant to maintain strict confidentiality. They should not disclose confidential information to third parties without proper authorisation.

Dispute resolution mechanisms This clause outlines the methods for resolving conflicts between the parties involved in case any dispute arises. Common dispute resolution mechanisms include negotiation, mediation and arbitration. This clause also highlights the laws of the jurisdiction in which dispute resolution will be applicable and the appropriate procedures.

Governing law and jurisdiction This clause establishes the laws that will govern the agreement generally.

Negotiating a warehousing agreement

Preparing for negotiations At this stage, parties need to have a solid understanding of their objectives, assess their needs, gather relevant information about the warehousing agreement, and identify potential negotiation areas. Preparing for negotiations also entails parties reviewing their capabilities and resources and considering any legal or regulatory requirements that may impact the agreement. The ideal timeframe for negotiating the terms of a warehousing agreement can be lengthy; for instance, the initial two to three months can be dedicated to analysing the tenants’ situation and clarifying their specific requirements. During this analysis, various factors are considered, including location and road infrastructure; however, in cases where the tenant has clearly defined needs, this period can be significantly shortened. Following the analysis, an inquiry is prepared and sent to selected developers. The received offers are then compared against the proposed commercial and technical terms. Subsequently, the suggested locations can be examined, and meetings arranged to meet with owners. These meetings allow tenants to familiarise themselves with the offers, seek clarifications, and address any inconsistencies.

Identifying and addressing key issues During negotiations for pricing and payment terms in a warehousing agreement, both parties need to consider various factors. These factors include market rates, the condition of the warehouse, any additional services or utilities provided, and the length of the lease. Each party may present their proposals, and the negotiation process involves finding common ground and reaching an agreement that benefits both sides. For the client or tenant to negotiate pricing and payment terms effectively, it can be helpful for them to conduct thorough research on the local market. This involves comparing similar warehouse spaces and understanding the financial implications involved. Careful consideration, market understanding, and a focus on creating a fair and sustainable arrangement are key in negotiating pricing and payment terms. Both parties must have a constructive dialogue and explore potential compromises that meet their respective needs and interests. Openness and transparency during this process are essential. On the one hand, when negotiating pricing, parties need to determine the rental rate or price per square footage. On the other hand, payment terms can be negotiated based on aspects such as the frequency of payments (monthly, quarterly, annually), the due date for each payment, and any applicable penalties or discounts for early or late payments. Ultimately, negotiating pricing involves finding an amount that is agreeable to both parties and aligns with the value of the warehouse space while fitting within the tenant’s budget. Negotiating payment terms involves striking a balance that accommodates the tenant’s financial capabilities and meets the requirements of the warehouse owner.

Scope of services and performance expectations During the negotiation process, discussing and clarifying the scope of services and performance expectations is important to avoid any misunderstandings or conflicts that may arise later on. For example, the scope of services should entail the specific services or tasks that the parties agree upon for the warehouse space, including the purpose of use, permitted activities, and any additional services or amenities provided.  Parties should also consider performance expectations that are expected from each of them, including; factors such as delivery timelines, order accuracy, inventory management, safety protocols, compliance with regulations etc. parties should negotiate realistic goals, establish measurable criteria, and ensure that both are aligned on their respective roles and responsibilities.

Liability and insurance coverage It is crucial that during the negotiation process, parties should address liability and insurance coverage to ensure clarity and protection for both of them during the warehousing agreement period. This involves discussing and reaching agreements on the allocation of liability and the insurance coverage necessary to mitigate risks and provide financial protection in case of unforeseen events or damages. In terms of liability, parties should agree on the legal responsibility or obligation of each of them in case of damage, loss, or injury that may occur during the warehousing agreement; for instance, how will they determine who to be held accountable for any potential harm or financial losses that arise from the use of the warehouse space. Additionally, negotiating factors such as how to specify the scope of liability and determine which party assumes what level of responsibility and setting limits on liability to protect the interests of both parties. In terms of insurance Coverage, parties should consider negotiating the necessary insurance coverage, including determining the types of insurance required. In this concept, parties must negotiate coverage limits, deductibles, and responsibilities for obtaining and maintaining insurance policies.

Termination and renewal terms Termination terms involve negotiating the circumstances and conditions for ending a warehousing agreement early, including notice periods, termination fees, and obligations upon termination. This negotiation aims to address risks, protect both parties’ interests, and achieve a fair resolution. Renewal terms involve discussing the conditions for extending a warehousing agreement, such as renewal notice periods, rental adjustments, potential lease extensions, and changes in terms. Negotiating renewal terms requires considering ongoing needs, and market conditions and creating a mutually beneficial arrangement for both parties.

Seeking legal advice and assistance Negotiations are vital in entering warehousing agreements and are carried out in stages as part of a strategic approach. However, these stages can undergo rapid changes in terms of their content or urgency, hence the need for an experienced individual who can skillfully manage such situations. The ultimate outcome of the negotiations depends on factors such as; whether leasing the warehouse space will positively impact the client/tenants’ business development, the client’s ability to effectively allocate their planned budget for the project, as well as whether the tenant will be satisfied with the utilisation of the property throughout the agreement. These factors greatly influence the final agreement reached through the negotiation process.  Need help in negotiating warehousing agreements? Meet an expert at Legamart lawyers specialising in warehousing agreement transactions and negotiations and possess years of experience and skills in this field. This expertise will enable you to secure the most favourable terms.

Importance of drafting a warehousing agreement

Forming a clear, legally binding framework that protects both parties, assures compliance with applicable laws and regulations, and tackles potential risks and conflicts is critical when creating a warehousing agreement. It establishes a mutually advantageous and legally binding relationship between the warehouse owner/operator and its client.

Ensuring compliance with applicable rules and regulations Warehousing operations are governed by various laws and regulations governing safety, security, labour, and environmental standards. By establishing a detailed warehousing agreement, both parties can create clear standards and procedures to ensure compliance with these legal duties. This protects the parties from potential legal ramifications, fines, or penalties resulting from noncompliance.

Protecting both parties rights and interests A well-drafted warehousing agreement defines the warehouse owner/operators and the client’s rights, obligations, and responsibilities. It aids in the establishment of a clear understanding of the services to be delivered, pricing, payment terms, liability, insurance coverage, and any liability limitations. By stating these terms in the contract, both parties can defend their interests and assure equitable treatment for the duration of the contract.

Managing potential legal risks and conflicts Warehousing operations involve a variety of risks and potential legal problems. Loss or damage to stored items, delivery delays, breaches of confidentiality or intellectual property, and disagreements over terms and conditions are examples of such difficulties. A well-drafted warehousing agreement anticipates these risks and includes procedures such as arbitration or mediation clauses to address any disagreements. It also creates conflict resolution methods and describes the repercussions of noncompliance or violation of a contract. This reduces the likelihood of legal conflicts and gives a structure for more swiftly addressing them if they do arise.

Advantages and disadvantages of contract warehousing

Advantages

• Lower capital investment – Buying and building a separate warehouse for your business can be financially unsustainable. Therefore, through a warehousing agreement, you can access a fully operational building, which can help cut capital costs for your business.
• Lower operational costs – Warehousing agreements are specially built to provide maximum efficiency through more space and human resources availability. Further, this agreement saves you from paying various other operational costs, including mandatory maintenance, fixes, renovations, etc.
• Access to a range of value-added services – Through a warehousing agreement, you can solve various logistical issues, such as pick up and packaging, order fulfilment, quality control, supply management, shipping, etc. Therefore, the agreement can help in all your phases and procedures, which helps you focus on other essential things considering your business.

Disadvantages

• Less control over processes – If you provide your warehousing services to someone else or some other company, you are giving away your control over the space and procedures to that company.
• Uncertain economic conditions – Due to the dynamic nature of the market, there is always a possibility of heightened demand for a specific product due to specific seasonal reasons or other factors. When you are bound by the warehousing agreement, it becomes difficult to leave the contract in the middle to arrange for specific market demands, especially if you are looking for a larger warehousing capacity.

Warehousing Agreement vs. Third-Party Logistics (3PL) Agreement

A warehousing agreement is a contract between a warehouse owner/operator and a client who uses the warehouse services. It specifies the terms and conditions for product storage, handling, and management within the warehouse facility. In contrast, a third-party logistics (3PL) agreement is a contract between a business and a third-party logistics provider. It includes transportation, warehousing, inventory management, order fulfilment, and other supply chain functions outsourced to the supplier. It specifies the responsibilities, obligations, and pricing structure for the 3PL provider’s services.

Understanding the differences and similarities

Nature of the agreement A warehousing agreement is a contract between the warehouse owner/operator and the client using the services. It is largely concerned with storing and handling items within the warehouse. A 3PL contract is a broader contract that involves outsourcing various logistics services to a third-party provider. Transportation, warehousing, inventory management, order fulfilment, and other supply chain activities are all included.

Services provided A warehousing agreement’s primary focus is storage, inventory control, and handling of items within the warehouse facility. It explains the warehouse owner/operator’s responsibilities regarding warehouse maintenance, assuring adequate storage conditions, and giving access to the stored items. In contrast, a 3PL deal provides a broader range of logistics services than warehousing. Transportation, freight management, inventory tracking, order processing, packing, and even value-added services like customisation or assembly are all part of it. The 3PL supplier manages the complete logistical activities on behalf of the client.

Responsibilities of the party Warehousing Agreement: Under a warehousing agreement, the warehouse owner/operator is responsible for providing and maintaining the warehouse space, ensuring proper security measures, managing inventory, and facilitating goods loading and unloading. 3PL deal: A 3PL deal entails the third-party logistics provider taking on further obligations. This includes coordinating various warehousing sites, managing inventories, installing technological systems, and frequently providing specialised skills in supply chain management.

Choosing the appropriate agreement for specific logistics needs

The following elements should be examined when deciding whether a warehousing arrangement or a 3PL agreement is better suited to specific logistics needs:

Service requirements: Determine the range of logistical services that are required. A warehousing agreement may be sufficient if the primary focus is on warehousing and storage with few extra services. A 3PL deal, on the other hand, would be more appropriate if there is a requirement for full logistics services other than warehousing, such as transportation and order fulfilment.

Expertise and resources: Assess the in-house competencies and resources. A warehousing agreement may be preferred if the company has the appropriate infrastructure, experience, and staff to conduct logistical activities independently. On the other hand, if the organisation lacks the resources or specialised knowledge required to efficiently manage logistics operations, outsourcing to a 3PL provider via a 3PL agreement can be advantageous.

Scalability and flexibility: Take into account the need for scalability and flexibility in logistics operations. A 3PL arrangement may provide more flexibility if the organisation expects changes in warehousing requirements or desires to scale up or down fast. 3PL suppliers frequently have established networks and are better able to respond to shifting demands than in-house warehousing operations.

Conclusion 

Finally, to wrap up, a warehousing agreement is critical in establishing a clear and mutually beneficial relationship between warehouse owners/operators and clients that use warehousing services. A well-drafted warehousing agreement provides a solid legal framework by assuring compliance with relevant laws and regulations, preserving the rights and interests of both parties and managing potential legal risks and conflicts. The warehousing agreement allows both parties to clarify their responsibilities, create price and payment conditions, explain responsibility and insurance coverage, and establish conflict resolution mechanisms. This agreement reduces the danger of noncompliance, legal issues, and financial losses while encouraging transparency and trust among the parties concerned.

With the increasing complexity of logistics operations, a comprehensive warehousing agreement covering all relevant storage, handling, and inventory management aspects is important. This agreement lays the groundwork for efficient and successful warehouse operations, facilitating seamless logistics procedures and protecting valuable items. As a result, warehousing service providers should prioritise creating and implementing a well-structured warehousing agreement. By doing so, they may reduce legal and operational risks, preserve regulatory compliance, and provide the groundwork for a successful and mutually profitable warehousing partnership.

Frequently asked questions (FAQs)

What are the main functions of warehousing?

The main functions aimed to be undertaken through warehousing are to receive and store inventory; pick, pack, and ship orders; send tracking information; and for the maintenance of accurate inventory counts.

What are the general considerations in warehousing?

Some important factors considered by the companies are size, weight, fragility, and time period. Specific products can have specific storage considerations, which are kept in mind while choosing the apt warehousing option.

Which warehouse arrangement has the highest fixed cost?

Preparing a private warehouse has the highest fixed cost for the business, since the business is required to make a significant amount of upfront investment for purchasing and installing the necessary equipment and technology, followed by a continuous cost for the maintenance of the warehousing facility.