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BOX STRATEGIES
What To Consider Before Ordering Containers
By Jennifer LeClaire
Mobile self storage is about strategy. You need a pricing strategy. You need a marketing strategy. And, of course, you need a container strategy. 
As a mobile self storage operator, it is essential to develop a container strategy. This strategy outlines your plan of attack for operating your business. Moreover, it defines the quantity, type, mix, and storage systems that, hopefully, give you an edge against the competition. Although there is no tried and true approach, guidelines are emerging in the industry through trial and error. Hence, there are tactics to consider as you draft your mobile self storage container plans.
“Developing a container strategy is a series of trade-offs. It’s not as simple as saying, ‘This container is $300 and that container is $3,000’ and comparing on price,” says Andrew Friedman, senior vice president of 1-800-PackRat, a Washington, D.C.- based portable storage franchisor. “You have to look at many different aspects of the container, how you are going to use it, where it’s going to be stored, and how much capital you have to get into the business.”
How Many Containers Do I Need?
Determining how many containers you need to get a mobile storage business off the ground—or to keep an established operation growing at a steady pace—is a riddle to which the industry would love to have an answer. Some industry gurus believe an operator needs to carry about 500 containers to be profitable. But that doesn’t necessarily mean you need to open the doors with scores of containers.
“Folks shouldn’t get over-obligated and have large numbers of empty containers sitting around. I am an advocate of buying in smaller quantities. As you fill 20 containers, you can order 20 more,” says Chuck Helms, Kontane, Inc., a developer of the patent-pending HomePak portable storage container system. Kontane has no minimum purchase requirements, but it does offer discounts for large orders. Still, Helms says he can get containers to operators quickly, so he doesn’t recommend tying up capital in empty boxes. The operator, of course, has to balance the cost of multiple shipments to the cost of paying for containers before he or she needs them. From that perspective, there are significant freight savings when you buy in bulk.
David Powell, president of Northwest Containers, a manufacturer based in Toledo, Wash., says mobile self storage operators call him for as few as 60 or as many as 500 containers. He believes the size of the order depends on the operator’s optimism and the depth of his pockets. “The bottom line is that 100 boxes aren’t going to pay the bills,” he says. “And this decision impacts many other decisions, like storage and equipment.” and the depth of his pockets. “The bottom line is that 100 boxes aren’t going to pay the bills,” he says. “And this decision impacts many other decisions, like storage and equipment.”
The best solution for a startup may be to buy a truckload of units, according to Jake Nist, Seattle Tacoma Box Co., a mobile storage container manufacturer based in Seattle. “Depending on your market, you may reorder another truckload within a couple months, or within a couple of quarters,” he says. “But ordering by the truckload maximizes freight costs.”
What Sizes Do I Order?
The industry standard container size is 8-by-5-by-7; nevertheless, there are many sizes available. There are also storage factors you need to consider as you make your selection.
“You need to know the height of the warehouse to determine the actual height of the box you can store,” Powell explains. “If your ceiling is 23 feet high, you would probably want to go with a seven-foot box so you can stack them high and still have room for listing the top box.” Nist recommends using the industry standard 8-by-5-by-7 containers.
That’s because the Mobile Self Storage Association is promoting the concept of operators using a standard size so they can exchange customers. For example, if John’s Mobile Storage in Phoenix has five customers who are relocating to Washington, D.C., he can call up Hal’s Mobile Storage in D.C. Hal will facilitate the delivery, receive the boxes and hold the box as an asset—as long as they are the same size. “Both operators retain the customer,” Nist explains, “and the customer doesn’t absorb the cost of the box in the sale between operators.”
What Container Type Should I Order ?
There are three types of containers: metal, plastic, and wooden. So what kind should you order? Or should you order various types? The answer to those questions depends on the answers to several others, according to Helms.
For example, are you going to store the containers in a warehouse or outside on pavement or gravel? Wooden containers may not fare well in outside storage over the long haul. Metal or plastic may be a better bet. Are you going to stack your containers? Do you need waterproof containers? Do you expect residential or corporate clients? Different containers may fit each of these needs. Therefore, be sure to ask the manufacturer how his products fit your demands.
A mobile self storage operator catering to residential customers may decide on a standard wooden box, whereas a storage operator catering to commercial accounts may offer a 20-foot steel container for longer-term storage. A wooden box wouldn’t stand up to the demands of a construction site, Powell says, but it might be okay for the short-term needs of residential customers. Manufacturers, however, are developing waterproof wooden boxes that can hold up to the rigors of the outdoors all year round.
“All of the different containers types all have advantages. Plywood containers with covers tend to be priced lower. A lot of folks getting in the business like the less expensive container,” Helms says. “You can go all the way up to the 16-foot waterproof containers made from a composite plastic material. But there’s quite a bit of spread in price from wood to that material.”
A Look At Logistics
How to order containers is yet another tactic. Moreover, the cost of transporting the units from the manufacturer to your facility is an important consideration. If, for instance, the container manufacturer is in Bismarck, N.D., and your facility is in Kansas City, the journey is less than 1,000 miles and the shipping costs are pretty well contained; but transport costs rise in a hurry if you order units from a vendor in California. Total cost delivered, then, is the real number to look at. “Our goal is to get equipment to the operator as inexpensively as possible,” explains Henry Cox, president of Box Trotters
International, Inc., a steel container broker in Conway, S.C. For Cox, as a container broker rather than a manufacturer, this strategy relies heavily on tapping into the oversupply of portable storage containers sitting empty at the nation’s ports instead of building new containers.
Storage Strategies
The next step in the container strategy is storage. Self storage is a seasonal business, even on the mobile side. Therefore, some months see more demand than others. For the mobile self storage industry, that translates to empty containers during the lulls and the need for easy access to units during the high times.
Metal containers can come in handy during the lulls. Full-size metal containers are more expensive than wood or plastic, but some can be disassembled and stacked flat when you aren’t using them. That makes inventory easier and makes shipping containers to other locations more convenient.
“If you are planning to stack the containers, you have to make sure you have the equipment to stack them,” Friedman says. If you plan to stack them indoors, you will need a forklift capable of lifting 10,000 pounds 16 feet into the air. The more sophisticated the system, the more expensive the system.
“I haven’t seen one tried and true business plan in this industry yet. People are still trying to figure it out, and it’s not a one size-fits-all approach,” Nist says. “No matter what size or type of container you get, the most important thing is to properly value the service so you can make a profit.” In the end, the answer is to do your research before you actually order or purchase containers. Remember: What works for one mobile self storage business, may not work for another.
Jennifer LeClaire is a freelance writer based in Hallandale Beach, Florida, and a regular contributor to the Mini Storage Messenger and Self Storage Now! Her clients include The Associated Press, The New York Times, and CBS Television/Winstar Communications.
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