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The Secret to 3PL Pricing

When you approach a 3PL for pricing, realize that the first prices you receive will be based on your volume estimates for the year. The 3PL pricing will be based on the estimates you give the 3PL and will probably change when the 3PL sees your actual shipments.

Expect accessorial prices for pallets, wrapping, strapping, et al aside from the prices you receive for volume activity.

If you wish to go into contract negotiations if your account is large enough. you can expect the 3PL to ask for upfront costs to cover managing your account.

The prices based on forecasted volume will probably be higher than the actual pricing for actual volume so the 3PL can cover for actual volume if it is lower than estimated volume.

In a contract price negotiation, your goal should be management fee pricing or cost plus pricing.

If you start as a public account, there are no upfront costs and management fee/cost plus pricing are not available. The best pricing for a public account is unit based or activity based pricing.

No matter what prices you negotiate, insure that your Service Level Agreement (SLA) and Key performance Indicators (KPIs) are negotiated to provide for areas you are interested in: Inventory Accuracy, LTL, Return Materials Authorization (RMA), Customer Service or VOC (Voice of the Customer), Turn Around Times and many more KPIs.

Always have a modification clause in the contract that indicates that you will review pricing and the SLA/KPI statement quarterly with your 3PL.

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Contact Joe Lynch

Please feel free to connect with me on Linkedin.com (I accept all invites) and join my Linkedin group which is called "The Logistics of Logistics".

Thanks and best regards,

Joe Lynch
517.375.0631