3PL - 4PL - Warehousing - Trucking - Cold Storage - Pick Pack Ship - Kitting - Pallets - Accesorial Costs - Appointments - LTL - Driver Fell Off -
3PL - 4PL - Warehousing - Trucking - Cold Storage - Pick Pack Ship - Kitting - Pallets - Accesorial Costs - Appointments - LTL - Driver Fell Off -
3PL Models and Cost Structures Explained
Choosing the right 3PL model is a strategy decision; your cost to serve and customer experience depend on it. This guide maps the common 3PL models, shows what really drives your bill, and converts a rate card into a clean cost per order you can manage.
The core concepts
Temperature profile
Each product requires one of several common temperature categories, and not every partner handles every temperature. Frozen, Chilled, and Ambient are the most common; however, you can have many more like Ice Cream, Bananas, Produce, Chocolate, and more. Many products have unique handling and storage requirements.
Channel mix
B2B, DTC, or true omnichannel. B2B favors pallet and case flow with EDI or API connections. DTC favors each picking, kitting, and parcel fulfillment speeds. If you sell both, you need a warehouse that does both well. Or you need to split your inventory and business into two channels; we do not recommend this approach often.
Geography
Single node near your co-man for simple freight and fast dock-to-stock; multi-node for national DTC speed and zone-skipping. Start simple; add nodes when transit and refunds justify it. The location needs to match the intent: if you want someone for 18 months to support a new market while you build out a customer base then find a partner to match that. The beauty of 3PL partners for CPG brands is the flexibility to turn them on/off or scale as needed. Resist the urge to put it close to you, just so you can see your product when you want.
Match the model to your needs
Tie the model to temperature sensitivity, order volume profile, and growth plan. The right partner today can also be the right partner 2 years from now if you follow the tips here. Almost all 3PL warehousing partners will work with you in a discovery phase to make sure you are a fit for them and they are a fit for you. This is because it can be costly for both parties to get that wrong; and most 3PL warehouses learned this lesson at some point. It isn’t a sales pitch, but a feeling out session. They will want to know your expected volumes by week or month; inbound and outbound. Often we don’t know these numbers, and we do our best to forecast or estimate. Make sure your totals add up correctly.
If you say you expect 3 truckloads a month of inbound product, and 55 pallets a month outbound, plus about 60 units of storage. This may sound like a decent guess at your needs. However, that math looks different.
3 x 24 pallets = 72 pallets inbound each month
60 pallets on hand at the start
55 pallets out per month
In this scenario, you will add 17 pallets a month to your existing safety stock of 60. The warehouse will see this as a red flag that you can’t properly forecast your pallet positions and may decide to up your outbound handling costs or long term storage costs to better balance out the risk profile.
don’t be afraid to tell your prospective 3PL warehousing partners that sometimes you don’t have the answers, but do tell them you’ll try your best to fill in details. They make money when you succeed, move units, and grow; so they’re rooting for you and there to help.
How do I understand warehouse pricing?
Standard line items
Inbound and Outbound receiving and put-away, often called Pallet In/Out of Case In/Out
This is the charge for each pallet or case that they receive and put-away in their storage, plus the cost to send it back out eventually when you ship it to a customer.
Storage; monthly per pallet or cubic footage
Note that every pallet that arrives also gets a half month of storage applied automatically. If you intend to turn things in a day or two, you can ask for cross-docking charges instead.
Pick and pack
This is the cost for picking multiple cases onto a pallet or multiple units into a case and securing it for shipment.
Labels and packaging materials
Your aim should be to rarely use this fee. You will pay this when you need to relabel things or when you are doing activities outside of the expected normal work.
Kitting or light assembly
Returns processing
Monthly admin or account fees
If you don’t have an API but instead email orders to a Customer Service Rep, this covers their time to enter your orders manually.
Common surcharges
Cold storage energy fees; temp monitoring
Peak season multipliers
Non standard pallets and repalletizing
Count requests and special projects
If you are asking for counts, it often indicates a deeper issue. Contact us if this is happening more than once a year.
Hourly labor cost for any out of scope asks
Ask for definitions in writing; ambiguity becomes surprise cost.
One of our preferred methods to approach complex requirements or maybe labor intensive situations is to create a special fee for that upfront so both parties can align expectations.
For example, if you often import a container load of ingredients but they come floor loaded (no pallets, just bags of raw ingredients; common from SE Asia and S America) your warehouse partner might charge you 0.5-2 hours per person unloading it. That could be 5-20 hours of labor; time they didn’t plan for and you paid a 2.5x premium on the hourly rate. instead, you communicate you have this special need, they create a $250 floor loaded container charge, and you know why your bill is higher for that PO. It streamlines invoice approval and allows them to plan better.
The SKU and touch tax
More touches mean more money. Full Stop
Every time someone needs to touch your product or has a chance to, this introduces two things: the possibility to damage/lose the product and the possibility to charge you for that action. More SKUs mean more touches. Many tiny product lines drive walking time; mixed units force more scans; odd packaging slows packout. Three practical levers: rationalize low velocity SKUs; standardize inner packs and ship-ready cases; kit common bundles so your average order has fewer picks. A good 3PL will show you heat maps for slotting and picks per labor hour; that data lowers cost.