Selecting the Proper Warehouse for Your Chemical & Gas Storage
White Paper
Introduction
In running a chemical and gas supply chain there will be moments throughout your tenure when you will need to procure warehousing space. As you are fully aware, managing hazardous chemicals and gases in the supply chain presents unique challenges and risks. It is critical to look at the various warehousing options available to understand potential risks and costs with each so you’re able to make an informed decision.
In this White Paper, we look at three different warehousing decisions:
- Insource vs Outsource
- Generalist vs Specialist
- Small Regional Provider vs Global Provider
Each section examines the benefits and risks associated with each warehouse model. The goal of this white paper is to educate, inform, and provide the right questions to ask when determining your next warehousing partner.
Insource vs. Outsource
The first decision is building or retrofitting a warehouse yourself or choosing to outsource. If you have the capital and the experience it may be the way to go. The upside is that you’ll be able to:
- Build to exact required specifications for your business
- Control all warehouse operations
- Integrate with your systems from the start
If you choose to build, be aware of the following considerations:
Understand the regulatory maze and permitting requirements
Building codes, fire codes, environmental regulations, and federal safety requirements varies dramatically by country, state, and city, which is further amplified by the type of materials being stored. If your organization has experience in major building projects involving hazmat and temp control regulatory compliance, the team should be familiar and not be thrown off by the red tape. If you are not confident in your internal team’s ability to address these hurdles, you should find a seasoned third party.Stricter infrastructure and engineering requirements
In addition to permitting, hazardous materials are subject to more rigorous construction and system requirements that you’ll need to know in advance. Make a list of these requirements to use in your insource vs. outsource analysis. Not being prepared for these road blocks could make your original cost estimates balloon.Some of the requirements for a hazmat warehouse that you’ll probably need:
- Fire-rated structures (e.g., 2–4-hour walls, explosion venting)
- Specialized HVAC and ventilation for toxic or flammable fumes
- Explosion-proof electrical and equipment (Class I Div 1/2-rated)
- Secondary containment, sloped drainage, and chemical-resistant flooring
- Backup power, alarms, and fire suppression systems (e.g., foam)
- ADA and other modern building code requirements
Long-term and operational costs
In addition to permitting, hazardous materials are subject to more rigorous construction and system requirements that you’ll need to know in advance. Make a list of these requirements to use in your insource vs. outsource analysis. Not being prepared for these road blocks could make your original cost estimates balloon.Lastly, here are ongoing costs and responsibilities to consider that could impact the bottom line and/or standing up and operating a facility:
- Hiring and training qualified hazmat personnel
- Developing safety programs, SOPs, and completing regulatory certifications
- Handling ongoing inspections, maintenance, and recertifications
- Passing regular audits
- Absorbing higher insurance premiums and risk exposure
- Accepting full liability in a regulatory failure or safety incident
- Waste disposal processes and compliance
It’s not easy to build and operate a hazmat warehouse. They are complex and risk laden. Finishing the project can drag on and devour resources. Once the warehouse is built, they’re even more challenging to run. By contrast, a specialist would:
- Spread heavy infrastructure investments across multiple clients
- Achieve economies of scale
- Offer ready-to-go compliance, systems, and expertise
- Deliver long-term cost efficiency, even if the upfront pricing seems higher
- Allow you to focus on your core competencies
No option is more demanding than building your own, but it probably has the most upside if you can do it well. That’s for you to decide. Anecdotally, a number of clients have turned to Rinchem after discovering the challenges of doing it in-house.
Generalist vs Specialist
Many who work in chemical logistics face another decision: go with a general warehousing 3PL or a 3PL that specializes in chemicals and gases.
Generalist provers offer several advantages, including:- Potentially larger geographic footprint
- Cost efficiency from less investment in infrastructure and compliance
- Flexibility if you have both nonregulated and hazmat materials
If your company manages a significant volume of hazardous materials, there are a few additional factors to consider:
Limited Specialized Infrastructure
A general 3PL typically relies on multipurpose warehouses designed to handle many types of goods. They might dedicate a portion of the space to hazardous materials, but these areas are usually adapted rather than purpose-built for chemical storage.Key Questions
Do they have the space for your materials?
Is the space suitable to maintain the integrity of the materials?
What will be the plan if there are space issues in the future?
When hazmat makes up only a small portion of a warehouse’s operations, there are some potential impacts:
Running out of required space more frequently causing more supply chain hiccups
Capital spending going towards general-use instead of hazmat-specific upgrades.
Threats to product integrity if not in the proper storage requirements
You may be charged a premium for the storage and handling of the more challenging materials but miss out on the premium services specialty warehouses provide
Sometimes your materials require specialized handling and storage, so it’s worth checking if the 3PL provider offers:
Temperature-controlled zones for different temp ranges
On-site cleanrooms for sensitive chemical handling
ISO tank yards
Different rooms for flammables, corrosives, and water reactive
Extensive spill containment and treatment systems
Isolated gas cylinder storage pads
Depth of Expertise and Training
You’re reading this white paper because you are dealing with materials that require special conditions. You understand the extra steps and regulations associated with your products. When considering a general facility, it is important to ensure the people who physically manage your materials are properly trained and experienced.The following table shows some of the gaps that might exist between a general warehouse and specialized:
In a large generalist 3PL:
Only a small portion of the workforce specializes in hazardous materials.
Training often covers just the basics to meet OSHA or DOT minimums.
The core expertise focuses on broad logistics like inventory turns, retail distribution, not chemical management.
A specialized hazmat 3PL:
Employs teams fully dedicated to hazardous materials (certified handlers, safety managers, and compliance officers).
Provides intensive, ongoing training in chemical safety, emergency response, and advanced handling protocols.
Follows rigorous SOPs that go beyond the minimum requirements.
Risk Management and Accountability
Chemicals and gases require more attention and have a higher susceptibility to issues. You don’t want to think about an accident happening, but the truth is they do. In deciding on a warehouse partner, you need to be confident they can properly handle leaks, spills, waste disposal, and other mishaps.Key Questions
What will be the general warehouse’s strategy for handling risk?
Is the warehouse capable of real-time temperature tracking?
Sometimes you need more from a Warehouse Management System (WMS) when dealing with chemicals and gases. It’s important that any provider can meet your specific requirements for tracking, visibility, and regulatory compliance.
Compared to specialized providers, general warehouses may have limitations such as:
- Slower adaptation to new regulations (like updated labeling or tracking)
- Manual workarounds instead of specialized IT systems
- Limited on-site containment or emergency response, with general providers relying on external hazmat cleanup crews during a spill
- No directed put-away that incorporates logic for incompatibility of materials and hazmat classes
Key Questions
What will be the general warehouse’s strategy for handling risk?
Is the warehouse capable of real-time temperature tracking?
There’s a lot to consider in deciding between a general warehouse and specialty. Hopefully we armed you with the tools to ask the right questions and pick the warehouse that works best for your needs.
Small Regional Provider vs Global Provider
When searching for a warehouse facility many times you’ll find that small regional providers tend to have the lowest prices.
If the price seems too good to be true, you need to do your due diligence.
Some small regional warehouses are older and grandfathered under older regulations, have outdated infrastructure, and make minimal safety investments
What does this mean? The warehouse lacks critical infrastructure that modern codes require for hazardous materials. Common infrastructure gaps include:
Segregated storage rooms
Specialized fire compression
Ventilation systems for toxic/flammable vapors
Reinforced fire walls
Gas leak detection systems
Construction materials that can withstand chemical corrosion
High-capacity sprinklers
Secondary containment for spills
Potential Risks
If any of the issues outlined above are true, and your due diligence has revealed that certain compliance measures are absent, it doesn’t mean you can’t store your products with the regional warehouse. In knowing the missing features, you should also understand some of the risks:
Regulatory shutdowns
If a fire marshal, EPA inspector, or local official finds your product stored in a facility that fails to meet current code, operations can be halted immediately. You may be forced to remove your product with no backup plan for where it goes next.
Costly remediation and upgrades
If regulators require the warehouse to upgrade in order to stay operational, you could face significant downtime and may be responsible for securing alternate storage while the facility is retrofitted to meet compliance standards.
Insurance claim denial
If an incident occurs and your product was stored in a facility lacking compliant systems (e.g., fire suppression, containment), your insurer may push back on paying the claim arguing negligence or non-compliance on your part.
Public exposure and reputation damage
If a safety incident becomes public and media coverage reveals your materials were stored in a substandard facility, the reputation fallout could be worse than the physical damage, especially when it comes to regulated industries.
Conclusion
You have a lot of factors to take into consideration when choosing a warehousing partner for your chemical and gas supply chains. Hopefully we were able to provide you with a solid list of questions and considerations to run through during your decision making process.
We’ve walked through three different decisions on storing chemical and gases:
- Insource vs. Outsource
- Generalist vs. Specialist
- Small Regional Provider vs. Global Provider
At the end of the day, it all comes down to balancing cost, risk, and knowledge. It’s now your team’s job to make the most informed decision for the success of your supply chain and company. If you came away feeling like you need a partner that specializes in chemical and gas warehousing and transportation, we’d love to discuss your project.
Rinchem is the specialist you need to manage your chemical and gas warehousing. When you hire Rinchem, you receive our:
- Nearly 50 years of experience in chemical and gas storage
- The ability to navigate and adhere to the more stringent rules and regulations
- Facilities engineered with stringent safety feature and practices
- Highly trained staff at each location
We welcome new partnerships and thrive on being a critical piece in your global supply chain.
How can we help?