In the logistics industry, the cost of services can often seem like a complex puzzle. With various factors influencing the final price, it's essential to understand how 3PLs calculate their fees and rates.

This knowledge can empower businesses to make informed decisions and optimize their supply chain costs. As a leading provider in the logistics, freight forwarding, and 3PL industry, SEKO is committed to transparency and value for money.

This article aims to shed light on how 3PLs, like SEKO Logistics, calculate fees and rates, and the factors that impact your shipping costs.

 

WHAT ARE ORDER FULFILMENT FEES?

Order fulfilment fees refer to the fees you would pay your 3PL partner for the services they provide. This covers a range of services, such as receiving and storing goods, managing inventory, picking and packing orders, shipping orders, and processing returns. 

Your order fulfilment fee will vary due to different factors and will also depend on the pricing model that your 3PL provider chooses to use. 

 

TYPES OF 3PL PRICING MODELS

Different 3PL providers use different pricing models. We have outlined the common pricing models used by 3PLs below.

 

Flat-rate pricing

Flat-rate pricing is when your 3PL provider charges you per order, shipment, or month. The price you pay will depend on the costs for the services you use, such as storage, fulfilment, and shipping costs. 

 

Pricing by kit

Some 3PLs price by kit for items that are stored in separate parts but assembled once an order has been placed by a customer. Costs for this can vary depending on the complexity of the assembly required. 

 

Pricing by pallet

Pricing by pallet is typically the most cost-effective pricing option. This is when your 3PL will charge you a set fee per pallet, shelf, or bin of inventory that they help process.

 

Pricing by project

A 3PL might choose to charge for services provided for a specific project, rather than as an ongoing deal. This might apply if you are an organisation carrying our crowdfunding campaigns, for example.

 

Pass-through pricing

Pass-though pricing is when your 3PL provider directly bills you for all the costs it has incurred on your behalf. This is often done without any markup as there is no intention to generate a profit.

 

WHAT 3PL FEES IMPACT YOUR ORDER FULFILMENT COSTS?

When you partner with a 3PL provider like SEKO, you're investing in a comprehensive suite of logistics services. These services, which form the basis of 3PL fees and rates, span across various aspects of your supply chain operations. Let's delve deeper into what these costs entail.

Transportation: This is a fundamental cost and involves moving your goods from one location to another. It can include domestic and international freight charges, customs duties, and taxes.

Warehousing: Warehousing costs cover the storage of your goods in a 3PL's facility. These costs can vary based on the amount of space your inventory occupies and the duration of storage.

Picking and Packing: This involves retrieving items from inventory (picking) and preparing them for shipment (packing). The complexity and volume of orders can influence these costs.

Inventory Management: This includes the tracking and management of your inventory levels. Advanced inventory management systems can help reduce stockouts and overstock situations, optimizing costs.

Value-Added Services: These are additional services that a 3PL might offer, such as kitting, product assembly, labelling, and returns management. The costs for these services are typically based on the specific requirements of your operations.

The calculation of these fees is not a one-size-fits-all approach. It's a nuanced process that takes into account several factors, including the nature of the goods, the required services, and the complexity of the operations. For instance, fragile or hazardous goods might require special handling or storage conditions, thereby increasing costs.

 

KEY FACTORS THAT AFFECT 3PL SHIPPING COSTS

Several key factors can impact the cost of shipping. Understanding these can help businesses anticipate costs and make strategic decisions.

 

Weight and Dimensions of the Package:

The weight and size of the package significantly influence the shipping cost. heavier and larger packages typically cost more to ship due to the space they occupy and the effort required to handle them.

Distance or Shipping Destination: 

The further the shipping destination, the higher the cost. This is due to the increased fuel consumption, time, and potential tolls or fees associated with longer routes.

Shipping methods and speed 

The method of shipping chosen also impacts the cost. Air freight is typically the most expensive due to its speed and efficiency, followed by sea freight and then ground transportation.

Furthermore, different rates will be charged for different shipping speeds. For example, shipping costs will be higher for items sent with next-day delivery compared to standard 5-day delivery. 

Different 3PLs will also utilise different carriers for transporting goods, and each carrier will have their own fee that 3PLs consider when coming up with their pricing structure. Therefore, the carrier being used by your 3PL will impact shipping costs.  

Product packaging

Costs will differ depending on the type of packaging you are using. Standard, branded, custom, and eco-friendly packaging will all have different costs associated with them.  

Technology and automation

If your 3PL utilises more sophisticated technologies and more automated systems, your order fulfilment cost will likely be higher. However, you will be able to reap the benefits of a more efficient and streamlined process.

Volume of sales

If you have a high volume of sales, you will likely require more 3PL services to effectively fulfill your orders. The more services you need to use, the higher your costs are likely to be. 

SKU count

An SKU is a code used by retailers to identify the different items they sell and manage their inventory. 

The more SKUs you have, the more complex it will be for a 3PL to deal with. This might increase your costs as a result. 

Seasonality

Seasonality can have an impact on 3PL shipping costs. In busier seasons, you might experience higher costs, whereas in slower seasons you might be charged less.

 

HOW SEKO CALCULATES RATES & FEES

Understanding how 3PLs calculate their fees and rates is crucial for businesses looking to optimize their supply chain costs. By considering the weight and dimensions of the package, the shipping destination, and the chosen shipping method, businesses can anticipate their shipping costs and make informed decisions.

At SEKO, we believe in transparency and value for money. Our approach to calculating fees and rates is based on a thorough understanding of our clients' needs and the specific requirements of their goods. 

We consider all the factors mentioned above and strive to provide the most cost-effective and efficient solutions. Our innovative and configurable IT solutions also provide a seamless flow of information, giving our clients true supply chain visibility.

 

SEKO LOGISTICS: SPEAK TO A LOGISTICS EXPERT TODAY

With over 40 years of experience in ecommerce logistics and an extensive global network, SEKO are committed to providing our clients with transparent, competitive pricing and value for money. If you want to learn more about our services or request a quote, don't hesitate to reach out to us. 

We are dedicated to providing hands-on service and support, building personal relationships, and offering creative, configured solutions. We provide responsive, reliable, flexible, and consistent services.

Let us help you optimize your supply chain costs. Contact us today.

 

3PL FEES & RATES FAQS

How do 3PLs calculate fees and rates for shipping services? 

3PLs calculate fees and rates based on several factors, including the weight and dimensions of the package, the distance to the shipping destination, and the chosen shipping method. Additional services, such as warehousing or inventory management, are also factored into the total cost.

How does the weight and dimensions of the package affect shipping fees? 

Heavier and larger packages typically cost more to ship due to the space they occupy and the effort required to handle them.

What role does distance or shipping destination play in calculating shipping costs? 

The further the shipping destination, the higher the cost. This is due to the increased fuel consumption, time, and potential tolls or fees associated with longer routes.

How do different shipping methods (ground, air, sea) impact pricing? 

Air freight is typically the most expensive due to its speed and efficiency, followed by sea freight and then ground transportation.

Is a 3PL worth it?

There are many benefits to using a 3PL to handle your logistics. For example, 3PLs can help you scale and expand your business while saving you time and costs.

It is important to remember that every business is different and it might not always be suitable to invest in 3PL services. Before you decide, ask yourself:

  • Do we have the finances to make it happen?

  • Do we have our own resources we can use instead?

  • Will using a 3PL make our processes more efficient?

Answering these questions can help you decide whether 3PLs are right for you and your business.