3pl Storage Costs

At first glance self fulfilling orders or using a budget 3pl may seem like the most cost savvy option but there are expenses both direct and indirect that you can t afford not to factor into your budget.

3pl storage costs. Generally the more products you store the cheaper the price per cubic foot is. The third party fulfillment industry has been riding the wave of significant growth in e commerce sales impacting 3pl fulfillment prices. Third party logistics providers typically specialize in integrated operations of warehousing and transportation services that can be scaled and customized to customers. For example 2 per cubic foot of storage.

When the amount of inventory doesn t reach the base storage pricing level some 3pl providers will charge a minimum storage fee. Third party logistics abbreviated as 3pl or tpl in logistics and supply chain management is an organization s use of third party businesses to outsource elements of its distribution warehousing and fulfillment services. Department of commerce total e commerce sales for 2018 were estimated at 513 6 billion an increase of 14 2 from 2017. Whether you choose to fulfill orders in house or work with a traditional 3pl there are a variety of considerations that can end up hurting your bottom.

When your logistics partner calculates the cost for storage of your inventory to determine that cost the 3pl must first know how much space is needed. In 2017 the average cost per square foot of storage space dropped quite a bit from the previous year to 6 53. This is a result of a much larger sample size that we collected in 2017 versus 2016. Like with amazon your highest cost will likely be storage fees which are typically based on bin pallet or size and which can add up significantly if products remain in warehouse for a long time.

In 2018 2019 costs climbed to 7 79 per square foot largely as a result of the hot commercial real estate market due to e commerce fulfillment growth. Your 3pl costs will vary a great deal depending on the service provider their billing system and their rates. Warehousing costs rise as a result of explosive growth. The global 3pl market.

Fulfillment fees are incurred when warehouse workers physically go out and pick and package your orders for shipment to your end customers. According to the u s. A 3pl third party logistics provider is defined as any company that offers outsourced logistics services. 3pl providers can have different prices based on the item quantity you store.

The services offered from a 3pl may include procurement production warehousing distribution transportation asset management or any combination of those and other logistics related services. Likewise third party logistics 3pl providers are also being negatively impacted by the pandemic due to social distancing uncertain lockdowns and closed borders. If not the 3pl must calculate the amount of space required to run the operation.