3PL Rate Negotiation

When Your Logistics Bill Starts Growing Faster Than Your Sales

At some point in the ecommerce journey, brands realize something uncomfortable. Their 3PL bill is rising more quickly than revenue, and nobody can clearly explain why. Storage creeps upward. Pick fees wobble. Packaging charges multiply. Shipping invoices feel like weather reports. That is when 3PL rate negotiation becomes more than an annual chore. It becomes a strategic exercise in protecting margin, stabilizing cost, and making sure you are not paying for inefficiencies that have nothing to do with your business.

Rate negotiation is not about beating your 3PL into submission. It is about aligning incentives, clarifying expectations, and making sure both sides understand the true cost drivers. Good negotiation requires clean data, operational transparency, and a shared language for discussing capacity, accuracy, and service levels.

Why Negotiations Go Bad

Negotiations usually fall apart when one side walks in blind. Some brands ask for lower rates without understanding their own operational footprint. Others accept cost increases because they lack the data to challenge assumptions. On the 3PL side, confusing invoices and unclear processes create frustration. Neither side wins when the conversation is built on guesswork.

Maureen Milligan, Director of Operations and Projects at G10, often hears from brands switching providers that "most of the customers who come to us from another 3PL, their challenges have always been access to their data, order accuracy and efficiency, and meeting the committed requirements." These are the same ingredients needed for a productive rate conversation.

Understanding Your True Operational Profile

Before negotiating rates, brands need a clear picture of their actual behavior inside the warehouse. How many touches does a typical order require? How many SKUs are slow movers occupying valuable space? How often do orders include oversized or HAZMAT items? What percentage of orders require special projects like kitting or relabeling?

Connor Perkins, Director of Fulfillment at G10, emphasizes the importance of scanning discipline. "You want everything to be scanned in the warehouse, nothing done on paper." That data reveals the real cost of handling your products. Without it, you cannot argue effectively for or against a proposed rate structure.

Rate Structures That Make Sense

3PLs charge in different ways: pick fees, pack fees, storage by pallet or cubic foot, receiving charges, special project fees, and value-added services. Good negotiation is about aligning the structure with the brand’s reality. For high-velocity brands, lower pick fees and efficient automation matter. For brands with bulky items, storage optimization matters more. For subscription box models, kitting rates matter most.

Automation changes the equation too. Holly Woods, Director of Operations at G10, notes that "the Zebra robots are allowing efficiency with pick paths. They are lowering fatigue on employees." Automated pick paths reduce labor cost, which can influence the underlying economics of rates when the 3PL reinvests those efficiencies.

Shipping Rates as Part of the Conversation

Many brands forget to include carrier performance and shipping rates in their negotiation strategy. A 3PL with strong relationships across carriers can help improve lane performance, reduce surcharges, and optimize service selection. Because shipping is often the largest cost component, ignoring it is an expensive mistake.

G10’s multi-node network in South Carolina, Wisconsin, Nevada, Arizona, and Texas also reduces distance-to-customer, which lowers shipping cost structurally. Rate negotiation should consider how fulfillment geography impacts the landed cost of each order, not just the warehouse fees.

Special Requirements That Need Their Own Line Items

Some brands need more than standard pick-and-pack. HAZMAT SKUs require specialized storage and handling. Climate-sensitive goods need temperature control. Marketplace orders require specific labels. Retail orders require routing guide compliance. These complexities do not fit neatly into generic rate cards.

Joel Malmquist, VP of Customer Experience at G10, explains that G10’s backbone supports "B2B shipping into places like Target and Walmart" while also integrating directly with Shopify. Rate negotiation should reflect which channels you use and how those flows shape the 3PL’s workload.

Building a Data-Driven Negotiation

The strongest negotiation starts with transparency. Brands should understand their order profiles, SKU mix, storage footprint, return rates, and special handling needs. 3PLs should present clear cost breakdowns and explain how labor, automation, and capacity shape pricing. When both sides share data, the negotiation stops feeling like a tug-of-war and starts feeling like a joint planning session.

Connor notes that G10 clients "can see their daily orders, they can see KPIs, and they can see historical transactions." Those dashboards create a common reference point for discussing trends, spikes, and operational patterns that influence cost.

Planning for Growth Instead of Fighting It

Rate negotiation should not be an annual boxing match. It should be a strategic checkpoint. As brands grow, their operational patterns change. A launch into retail changes storage needs. A viral moment changes order velocity. A regional expansion changes shipping geography. Rates should evolve with that reality instead of lagging behind it.

Mark Becker, CEO and founder of G10, frames it like this: "we are going to grow with them." Growth is easiest when rates and operations grow in a coordinated way. When the 3PL understands where your brand is headed, they can structure fees and capacity to support that future instead of reacting to it.

Rate Negotiation as Relationship Management

Ultimately, 3PL rate negotiation succeeds when both sides view the conversation as a long-term alignment exercise. It is less about winning a point today and more about creating a predictable economic foundation for future growth. When the 3PL has the data and operational discipline to explain its costs, and the brand has clear visibility into its own impact on the warehouse, pricing becomes part of a broader partnership instead of a recurring argument.