Packaging affects 3PL cost in four places: the pick and pack rate you are quoted (driven by pack time), the carriage you are billed (driven by pack dimensions), the storage charged for the packaging itself, and the cost of damage and re-despatch. A low headline rate with a poor packaging specification is not cheap.
- Comparing 3PL quotes on the rate alone is a trap
- Where packaging shows up in a 3PL bill
- Pack time is in the rate whether you see it or not
- Carriage is usually the biggest number
- Storage of packaging: ask before you sign
- Damage costs twice in a 3PL model
- How to compare providers properly
- The short version
- Frequently asked questions
Comparing 3PL quotes on the rate alone is a trap
3PL quotes are usually compared on the pick and pack rate and the storage rate. Both are visible, both are easy to tabulate, and together they are an incomplete picture of what the operation will cost you.
Packaging sits underneath several of the other lines, and because it is specified rather than priced, it rarely appears in the comparison at all.
Where packaging shows up in a 3PL bill
| Charge | How packaging drives it |
|---|---|
| Pick and pack rate | Pack time is mostly components, decisions and reaching |
| Carriage | Pack dimensions decide the size band on every order |
| Storage | Packaging occupies pallet positions you pay for |
| Damage and re-despatch | A second pick, pack and carriage for every failure |
The four channels.
Only the first is normally in the quote. The other three arrive later.
Pack time is in the rate whether you see it or not
A provider quoting a pick and pack rate has made an assumption about how long a pack takes. If your specification is slower than that assumption - lots of components, a format decision per order, materials stored away from the bench - the cost surfaces somewhere: a surcharge, a rate review, or a conversation about 'complexity'.
Specifying for throughput therefore protects your rate as well as the provider's margin. See packaging for fulfilment and pick and pack services.
Carriage is usually the biggest number
For most ecommerce operations carriage exceeds pick and pack by some distance, and it is driven by the dimensions of the packs you specify.
A box ladder designed against carrier bands rather than simply against product sizes changes the carriage line on every order. It is the highest-leverage packaging decision in a 3PL relationship and it is almost never part of the tender. See postal and parcel packaging.
Storage of packaging: ask before you sign
Packaging is bulky and low value per cubic metre. Holding your run quantities in a 3PL's racking at product storage rates is an expensive way to store board.
Either agree a specific arrangement or hold the packaging separately and call it off - see packaging stockholding. Either way, establish it before it becomes an invoice line.
Damage costs twice in a 3PL model
A damaged delivery means a second pick, a second pack, a second carriage and usually a returns handling charge. In an outsourced model all of those are billable events.
Specifying protection against the real failure mode - restraint rather than padding for movement damage - reduces both the damage rate and the component count. See protective packaging.
How to compare providers properly
- Issue the same written packaging specification to each.
- Ask for pick and pack rates against that specification, not in the abstract.
- Ask explicitly how packaging storage is charged.
- Model carriage using your own pack dimensions against each provider's carrier bands.
- Ask how damage is measured, reported and charged.
- Compare total cost per order, not the headline rate.
See contract logistics and fulfilment services.
The short version
- Packaging shows up in the rate, the carriage, the storage and the damage.
- Only the rate is normally in the quote.
- A low rate against a slow specification tends to get revisited.
- Carriage usually exceeds pick and pack, and is driven by your pack dimensions.
- Issue the same written specification to every provider you compare.
Frequently asked questions
Is a lower pick and pack rate always better?
No. A low rate against a slow packaging specification tends to be revisited, and it says nothing about carriage, which is usually the larger number.
Should packaging be inside or outside the fulfilment rate?
Either works if it is explicit. What causes problems is packaging being assumed into a rate without a written specification behind it.
How do we stop packaging storage charges creeping up?
Agree the arrangement before go-live, and consider holding run quantities separately on call-off - see packaging stockholding.
Who should pay for damage in an outsourced model?
It depends on cause, which is why a written standard matters - it distinguishes a packing error from a specification that was never adequate.
Can changing packaging reduce our 3PL bill?
Frequently, via carriage and pack time. A review looks at both alongside materials and damage.