Understanding Third Party Logistics Warehouse Services – Part 3

Storage

The 3PL will charge a storage fee for the amount of space that the customer utilizes within the 3PL’s warehouse.

Storage charges are usually calculated on a variable per unit basis but can also be calculated based on the fixed cost of the space that is being assigned for use for the client.

3PL warehouses, like most warehouses, are normally set up with pallet racking. The pallet racking can be configured for bulk storage of products on pallets and can also be configured with shelving to create individual locations that are used to store individual products (SKU’s) in readiness for order fulfillment. These individual product locations are normally referred to as a “pick face”.

Below is an example of pallet racking configured with both bulk storage and pick face locations.

A per unit cost is typically based on the number of pallet spaces and / or inventory locations that the client occupies for the billing period. The space utilization cost is based on the number of square meters of floor space that the client occupies for the billing period. In some cases storage charges (large white goods such as fridges as an example) may be based on the cubic space that the items occupy.

Invoices from the 3PL are typically sent to the client on a monthly basis but storage rates are usually quoted as a weekly charge and calculated based on the number of locations or the amount of space being utilized at the end of each week within the billing period.

Below is an example of a schedule of rates for storage charges.

The order fulfillment function and examples of the associated costs will be discussed in a subsequent post.

To download a FREE copy the 3PL Quick Cost Estimator spreadsheet – CLICK HERE

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5. Understanding Warehouse Services and Costs – Part 2

 

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