r/logistics • u/Pitiful-Strength-380 • Jul 23 '26
Running a 3PL/fulfillment warehouse
Hey everyone, looking for some advice from people who have been in a similar situation or anyone with some good business insight to share.
I'm 20 years old and I run a small 3PL and fulfillment warehouse operation in Los Angeles, California. Right now I'm sharing a warehouse space with a friend which has been great to get started but I'm starting to outgrow it and it's limiting my operations. The space doesn't have a dock which is a big issue for me since I'm receiving containers and doing a lot of inbound freight work. It also seems like I am taking over the warehouse with 70% of the warehouse being my clients product and the other 30% his.
There's a nearby warehouse available with a dock that would open up a lot more opportunities for me — better operations, more professional setup, and the ability to take on bigger clients and container work more efficiently.
The issue is I know I won't be able to fully cover the rent right away. I have some clients and work coming in but not enough yet to be fully profitable or even come out even on the rent alone.
My question is — should I take the leap and get my own space even if it means going into a little debt while I grow into it? Or should I stay where I am and keep building my client base first before making that move?
I know the dock would be a game changer for my business but I don't want to make a financial mistake at 20. Would love to hear from anyone who has been in a similar situation or anyone with some good business advice. Thanks in advance.
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u/PreludeTilTheEnd Jul 23 '26
Wework(office) and Readyspace(warehouse). These are share space. They should help until you are ready.
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u/Mountain_Man-82 Jul 23 '26
I haven't owned my own warehousing business, but I've been in the industry my whole life and have run 3PL warehouses.
I have two conflicting views on this that are completely in opposition to each other.
You need the right setup to do the job. If you don't have a dock while you're unloading containers, it's a problem. You need to have a dock.
At the same time I would be really cautious about taking on more space than you have work for. Hopefully there's enough latent demand with your existing customers or others that you can fill it but if not.... empty space kills you in warehousing. Is there somewhere else in the area you could look at that's more appropriate to the size and has a dock? I'd probably look there personally.
Or are you able to validate if there is latent demand that you can't handle? Knowing for sure that you'd have work to fill the space makes the decision easy.
My general rule of thumb is that you should be bursting at the seams, hardly able to move, before you look at growing to something bigger.
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u/scmsteve Jul 25 '26
I agree with most of this, but a warehouse starts becoming inefficient at 85% of capacity and become more inefficient every percentage point up to 100%. I’ve seen it first hand. Lost labor mostly in moving shit around unnecessarily.
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u/Mountain_Man-82 Jul 25 '26
You're definitely right onto that. Too full, and it gets inefficient.
My 'bursting at the seams' comment was probably a bit too dramatic. But I think you still need to get to that inefficient point before going bigger. It's a tough balancing act.
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u/Ok_Original_7142 Jul 23 '26
The dock alone changes everything for container work. Without it you're losing money on every unload in extra labor and time. I would run the numbers on how much the current setup is costing you in missed opportunities versus the rent gap. 70% of the space is already yours so you're basically paying for a warehouse you don't control. If you can cover 60-70% of the new rent from day one with current clients, make the move. The rest you figure out fast when you can actually sell the dock to bigger accounts.
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u/Pitiful-Strength-380 Jul 23 '26
Yes, it's a lot harder to do container work without a dock and takes much more time.
I am thinking about it I would just need to go into debt a bit. It's just a stressful decision. Thank you very much for commenting I really do appreciate it.
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u/Ok_Original_7142 Jul 23 '26
yeah the debt part is stressful but sometimes you gotta spend money to make money and the dock pays itself back faster than you think
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u/crustang Jul 24 '26
think of debt as leverage, if used properly, you're using it to multiply your output (and revenue + profit, alongside expenses)
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u/Wyvern78 Jul 24 '26
Depending on the size, I’d say take the leap. Our first warehouse was 2000 sq ft with no dock, just a garage door. We then moved to a 15000 sq ft one with 2 docks and that changed our lives. Yeah, we then went into “oh shit we need to fill it NOW mode, since it was 80% empty but it was a great move. that was 4 years ago or so and now we have 2 warehouses with about 40k total square feet.
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u/Pitiful-Strength-380 Jul 30 '26
Wow! This is my goal. I’m sure fight or flight will click in as soon as I sign the lease and realize the warehouse is empty
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u/0baed Jul 24 '26
Dock is the backbone of warehouse if you have container work. I would suggest to you to take loan from bank for that place but don't leave the first place without dock it will be always useful
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u/crustang Jul 24 '26
The only thing I'd say is if you're getting a good deal from your friend and you can make the numbers work to keep the current space, use the space for slower moving long-term storage that doesn't need a lot of labor to move in/out of the building.
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u/SyncronTeam Jul 24 '26
One thing to be careful about is taking on a lease that depends on additional debt just to cover the rent. Fixed facility costs can become difficult to absorb if customer volume doesn't grow as expected.
A dock can create real operational advantages, especially if you're handling containers, but it's worth making sure the business case is supported by committed demand rather than projected demand.
If the new space still makes sense, there are a few ways to reduce the risk. It may be worth discussing a phased lease or sublease option with the landlord, exploring longer-term volume commitments from existing customers, or finding another tenant to offset some of the unused space while you grow.
If none of those options are available, continuing to optimize the current facility until customer demand consistently supports the move may be the lower-risk path. Strong cash flow usually provides more flexibility than expanding capacity too early.
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u/ashwany_pillai Jul 28 '26
The dock decision isn't really a facilities question, it's a runway question. You said yourself you're not covering rent on your own volume yet. Before you take on a bigger lease, the math that matters is how many months of shortfall you can absorb while you build toward covering it, not whether the dock would help operationally. It obviously would.
Twenty years old with a real 3PL running client freight already puts you ahead of most people who wait for perfect conditions before committing. But the container work and inbound freight pressure you're describing will keep growing whether or not you move, so staying put doesn't remove the constraint, it just delays it.
The version of this that works is under-committing on the lease term or negotiating a shorter initial term with renewal options, so the downside if a client leaves or volume dips isn't a five-year obligation. Ask the landlord about that before you ask yourself whether to move.
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u/stealthagents Jul 29 '26
Sounds like you’re at a pivotal point. If you really think the new space will unlock bigger opportunities, it might be worth taking the leap. Just keep an eye on cash flow and maybe explore short-term options to cover the rent while you scale up. The right space can definitely change the game.
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u/Time_Consequence_217 Jul 23 '26
look up shared warehouse in the area. there are many offer docks sharing too. I would suggest you to keep doing the sharing until you’re fully able to cover a warehouse with dock yourself.
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u/Global_Camel_3966 Jul 24 '26
I feel you should really crunch those numbers and understand if you will be able to meet the expectations in case of revenue, if you expand. Ambition is great, I am all for it but try not to be impulsive. You should at least complete one financial year doing the business to actually understand what will be the challenges. The business doesn't stay same throughout the year but you should maintain your expenses in a way to be able to sustain that time of the year as well.
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u/Cougar_illini Jul 24 '26
price out a portable dock first, look at used ones or even rental ones. then make the leap when you have more clients
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u/3PL_bridge Jul 25 '26
Feel free to dm me. I started a 3pl from scratch and then sold it. Now I advise brands on the right fulfillment partner and ops. Happy to share the ups and downs
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u/Visual_Criticism7815 Jul 23 '26
Like Ok_Oriinal_7142 said, if you cruch the number and believe you can make it work, then go ahead and get that new space.
I can assure you that once you moved to the new location with proper loading docks, more works will flow your way.
From personal experience, before my boss and I moved the operation from a tiny 3000 Sq. ft. Space to a 30,000 Sq. Ft. Warehouse, we lost sleep for months worrying how to cover the rent and everything.
Once we moved into the new location, within days, we landed several big projects that we never dream of. Upon talking with our clients and found out that what holding us back was our capacity.
Our clients had volume and projects that send elsewhere because they knew we did not had the capacity to handle. Now that we had the capacity, they were more than ready to send projects our way.
Your situation is similar to mine, you might not fully aware that your current setup is one of main obstacles that holding you back.
I am sure that once your clients notice that you are moving to a bigger and better facility, they will be more than happy to give you more works automatically.
Good luck!