SPallet position or square meter, how storage is billed
// hcp LOG · categoryWarehousing Logisticsread6 MIN

Pallet position or square meter, how storage is billed

Leasing area and renting positions are not the same transaction. What each unit measures, when each fits, and how to compare two quotes that look incomparable.

Two storage quotes land on your desk. One bills by square meter, the other by pallet position. They look comparable because both end in a monthly figure. They are not — they measure different things and behave differently when your inventory changes.

What each unit measures

The square meter measures floor area. It is two-dimensional, fixed, indifferent to what you put on top of it.

The pallet position measures storage capacity. It is the slot assigned to hold one pallet within a racking system, identified by its level and location.

The practical difference is height. Two warehouses with identical square footage can differ completely in available positions depending on clear height and racking configuration. When you lease area, you pay for the floor; what you use is the volume.

How each model behaves

Area-based leasePosition-based rental
Billing unitContracted m²Occupied positions
If inventory dropsYou pay the sameYou pay less
If inventory risesYou renegotiateYou take more positions
Typical termLong-term leaseMonth or fraction
Cost natureFixedVariable
Who it suitsHigh, stable volumeVariable occupancy

The deciding factor: the shape of your year

Plot your occupancy month by month over the last twelve months. That chart contains the answer.

If the line is flat, area-based leasing almost always wins on unit cost: you contract exactly what you use all year and the provider can price the commitment better.

If the line has sharp peaks and valleys, area-based leasing forces you to contract for the peak and pay that peak twelve months. There the position model changes the arithmetic: billed by month or fraction, you pay only for what you actually occupy.

The mechanics in an example

An operation occupying the equivalent of 600 positions in November and 180 in February:

  • By area: contracts for 600 and pays for 600 all twelve months. In February it is paying for 420 empty positions.
  • By position: pays 600 in November and 180 in February.

The saving is not in the peak month — both models cost roughly the same there — but in the low months. That is why the right analysis does not compare the rate: it compares the total annual cost under both models using your real occupancy curve.

How to compare two quotes honestly

  1. Estimate real positions, not square meters. Count pallets, not area.
  2. Use two scenarios: average month and peak month.
  3. Calculate annual cost under each model with your twelve-month curve.
  4. Check what each rate includes. Inbound and outbound? Handling? Order preparation? A low storage rate can come with expensive handling.
  5. Check the commitment. A three-year fixed-area lease is a bet that your operation will not change.

When the position model is clearly the answer

  • Your operation has marked seasons — Buen Fin, December, harvest, model changeover
  • You are testing a new market and do not want a long commitment
  • You need temporary relief space after a large import or a promotion
  • Your volume does not yet justify a dedicated building

And when it is not

When your volume is high, constant and predictable. There, a long-term commitment buys a better price, and the flexibility you pay extra for goes unused.

At Hau Can Park

Flexible pallet-position rental is billed by month or fraction and charges only for what you occupy. For stable volume there is 3PL/4PL from 500 m², and for your own operation, dedicated space from 3,000 m². Available at San Luis Potosí and Querétaro.

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#Pallet position#Storage#Costs#Seasonality

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Editorial team

Hau Can Park

Operations team at Hau Can Park, operators of logistics parks in San Luis Potosí and Querétaro, Mexico.

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Does your inventory rise and fall by season?

Tell us how it behaves through the year and we will explain how the position model works.

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