3PL storage rates explained by volume & service

Third-party logistics (3PLs) provide warehousing services that can save mid-sized and larger businesses business money in both labor, material investments and via reductions in returns. The storage rates they provide, however, vary based on the volume of space the inventory occupies as well as the type of storage required.

The following table provides a high-level breakdown of how 3PL storage rates work: 

The following sections dive deeper into 3PL storage rates, discussing factors that might affect the rate you get as well as what to look out for as you begin your search. 

Factors affecting 3PL storage3PL fulfillment pricing by order volume

How much you actually pay for a 3PL in the real world can vary from the figures in the table above. When choosing your provider and setting your budget for storage costs, consider the following: 

• Inventory & turnover: The amount of space your products occupy is the baseline for cost - the more pallets you have, the higher the fees will be. Equally important, however, is how quickly inventory moves through the space. For example, slow-moving items that sit in the warehouse for long periods of time will result in a higher overall cost for the provider since it’s effectively taking up space that could be used for new inventory.
• Storage model: 3PLs generally use either on-demand (variable cost based on volume used) or dedicated space (fixed cost). On-demand typically works best for small and mid-size businesses due to its inherent scalability, while dedicated space tends to be better for larger businesses with a steady supply and demand.
• Geography: The physical location of the warehouse can also play a role in determining your storage rate, since facilities near major urban centers or ports have higher real estate and labor costs, resulting in higher fees per pallet. Take the table below, for example: 

• Special storage requirements: If your products need specialized handling or storage environments (e.g., refrigerated, HAZMAT) they are likely to result in additional costs. 

Understanding these factors allows businesses to better estimate 3PL storage costs and choose a provider that fits your business needs. 

Common hidden fees in 3PL storage

When budgeting for 3PL warehousing, it’s critical to look beyond the base storage rate. Many additional fees can appear on your invoice if you're not aware of them. Here are some common hidden fees related to storage and fulfillment to watch out for:

Regardless of who you choose to work with, it’s important to get a detailed breakdown of all potential fees from your 3PL upfront, as most of these fees are not discussed in the advertised storage amounts.

How to lower your storage costs

Even with a good 3PL, warehousing fees can cut into your margins if not managed well. The good news is that there are several strategies you can use internally to optimize your operations and reduce storage costs. Here are some actionable ways a small or mid-sized business can lower their 3PL storage rates:

• Optimize inventory and turnover
• Remove or liquidate dead stock
• Consolidate and right-size your storage units
• Use cross-decking or direct fulfillment for fast-moving items
• Improve packaging and product dimensions
• Negotiate and review rates periodically

Implementing these strategies can meaningfully lower your 3PL storage expenses for a mid-sized and even large business; even a few hundred dollars saved per month can be reallocated to marketing or new product development. By reducing excess inventory and using space smartly, you'll ensure that you're not paying more than necessary for warehousing.

Optimize your 3PL storage rates with Cart.com

No matter what the exact rates are, partnering with a 3pl for warehousing is typically far more cost-effective and efficient for a smaller midsize business than managing your own storage facility. Maintaining a private Warehouse comes with heavy fixed costs and those costs don't scale down if your volume is low.

When determining the best choice for you, we recommend looking at reputable 3PLs with an established reputation of excellence. At Cart.com, for example, provide transparent pricing to optimize your storage costs. In addition, we pair omnichannel fulfillment with a nationwide network of fulfillment centers to keep your inventory moving. Reach out to our team today to discuss your options.