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08/27/2026

What is a 3PL? Services, setup times, and what drives your costs

Choosing the right 3PL means handing part of your business operations to a provider that you can only understand from the outside. This guide covers what a 3PL actually does, how long setup really takes, and the main factors that affect 3PL pricing and quotes.

When many people think about logistics, they’re probably picturing huge warehouses that fulfill orders for customers. It’s interesting, then, that warehousing and distribution only makes up about a quarter of the $323 billion that U.S. businesses spend on third-party logistics (3PL) in a year. Two-thirds of the spending on 3PLs goes towards domestic and international transportation.

 

The split between warehousing and transportation matters when you’re choosing a provider. The part of a logistics operation that you can walk around and look at isn't the part where most of the money goes. This reframe helps us to put 3PL into perspective, where the majority of the money spent on third-party logistics is in moving products from A to B. 

Key takeaways

 

  • A 3PL runs warehousing, domestic and international transportation, and order fulfillment on your behalf.
  • Transportation management is the largest part of the US 3PL market, with $129 billion spent on domestic transport and $86 billion spent on international transport in a year.
  • Moving your operations to a 3PL can often take months, especially for complex migrations. 15 to 20 weeks is typical for getting set up in an existing facility, while a new build could be 30 to 40 weeks or more.
  • The amount you pay for a 3PL is determined by your order profile and products, together with the amount of labor, space, and automation you need.

What is a 3PL?

A third-party logistics provider (3PL) is a company that runs warehousing, transportation, or order fulfillment for another business. 3PLs have multi-year contracts in place with their clients that define the services they will provide.

 

Typical services offered by a 3PL include:

 

  • Warehousing - intake, storage, management, and distribution of products.
  • Value-added services - services that can be applied to products like relabeling, personalization, specialized packaging, etc.
  • Order management - receiving orders, picking and packing products, and dispatching them to retail stores, customers, and others.
  • Fulfillment and omnichannel logistics - similar to order management, but with a focus on combining eCommerce, retail, and other channels.
  • Domestic transportation - moving products from A to B in a country, typically between ports, warehouses, distribution centers, and customers.
  • International transportation - shipping products overseas and across borders via air or ocean, including freight forwarding and associated services such as customs brokerage and trade services.

 

A 3PL runs these functions themselves, on behalf of your business. A provider will staff the building, manage all of the processes, move inventory, and be responsible for your logistics operations. This is different from a consultant, who will advise, or from a broker who arranges transportation, rather than operating it.

 

Some providers can run all of the services listed above. Other 3PLs might specialize in particular areas, such as warehousing for growing businesses, or reverse logistics. 

GEODIS provides omnichannel and fulfillment services to brands and can meet all of your 3PL needs. Find out more.

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What does a 3PL operation look like?

A 3PL operation is a physical undertaking: buildings, people, vehicles, and systems. A service list doesn’t become real until you understand the scale of logistics in the U.S.

 

A warehouse is a labor operation: U.S. warehousing and storage employs more than 1.8 million people across more than 23,000 private establishments. Almost everything that happens to your products happens because a person did it, although robotics and automation are becoming an increasingly important part of warehouse logistics.

 

What actually happens to a product: Your goods arrive on a truck and are counted against the paperwork, before products are put away into specific warehouse locations. When an order arrives, someone goes to that location, picks the product, packs it, and gets it ready for a carrier. 

 

This is all measured against service-level agreements for speed and accuracy. For example, GEODIS states that inventory will be sellable within 24 business hours of arrival, and that inventory accuracy will be above 99 percent. They also promise that most eCommerce orders will be fulfilled within one business day. 

 

Peak season is what really tests a retail or eCommerce operation: For retail and consumer brands, the time between Thanksgiving and New Year in the U.S. is when 3PLs are most heavily tested. Order volumes can increase extremely quickly for those few weeks, so 3PLs need to expand capabilities and labor quickly to manage the increased throughput of products. GEODIS reports handling more than 2 million orders across peak's five heaviest shipping days.

 

3PLs often run large networks of warehouses, campuses, and transportation providers: A 3PL working across the U.S. might run over a hundred facilities and work with thousands of transportation providers and trucking companies. Many of those warehouses handle multiple clients, allowing a client to take advantage of shared space. 

 

GEODIS operates more than 150 US facilities across over 50 million square feet, including more than 20 shared campuses. Logistics networks also matter when it comes to reaching people across the U.S. A large provider will be able to reach the vast majority of the U.S. population within a couple of days. 

 

Most of a 3PL's transportation work is buying, not driving: Transportation management is a large part of what 3PLs sell, and in the U.S. the majority of that doesn’t involve the provider owning a truck. Instead, a 3PL will select carriers that cover their network, negotiate rates against volume, book freight, track it, and audit the invoice afterwards.

 

This means that a 3PL’s transportation strength comes from the size of its carrier network and how much freight it manages. For example, GEODIS works with more than 30,000 carriers and manages more than 40 million shipments a year, covering over $2.5 billion of freight.

 

The question becomes “who is accountable for any issues?” When a delivery is late, whose problem is it? A 3PL managing transportation on your behalf should provide that answer rather than pass it to the carrier.
 

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What changes when one 3PL provider handles all of your logistics?

Some businesses choose to split their freight forwarding, warehousing, and transportation across different 3PLs, and that does work. But, getting one 3PL to manage every part of your supply chain has several advantages:

 

  • One inventory record: Every handoff between providers means that the numbers need to be reconciled on both sides. This creates some administration overhead, but inside one operation, there’s just one set of numbers to track.

  • One line of accountability: When a delivery is late across two providers, it can be a picking delay or a carrier delay, and each provider has a reason to believe it was the other. With one provider, that argument has nowhere to go.

  • One integration with your systems: Connecting your business systems to a provider can be a major project. If you have a separate 3PL for different parts of your supply chain, that’s a lot of technical overhead. 

  • One provider for your freight and inventory at scale: A provider that holds and moves your inventory can combine your shipments with other clients out of the same building. That consolidation can often result in cost savings.

     

Downsides of having one provider for your supply chain

Concentrating all of your logistics services under one provider does have some risks:

 

  • A 3PL that fails will impact more of your operations at once
  • If they offer a “bundled” rate you might not be able to get the pricing clarity you need
  • If you decide to change providers, it’s a much bigger task than replacing a 3PL that just offers a single service

What’s the difference between a 3PL, 4PL, freight broker, and a fulfillment center?

3PLs, 4PLs, freight brokers, and fulfillment centers each do different things:

 

  • A 3PL runs logistics operations for your business. Some 3PLs specialize in one particular service (e.g. transportation management) while others provide a complete selection of end-to-end services.
  • A 4PL coordinates other logistics providers on your behalf. So they might work with a freight forwarding specialist for your international trade, a warehousing company for storage, and several trucking providers for distribution.
  • A freight broker negotiates and arranges international and domestic transport on behalf of your business and the various air, ocean, and ground transportation carriers.
  • A fulfillment center is a location where orders are picked, packed, and shipped to other businesses, retailers, or individual customers. 
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How long does it take to get started with a 3PL?

Going live with a 3PL takes months, not weeks. How long it takes depends less on the specific provider you choose, and more on the complexity of your operations and the services that you’re asking them to provide.

 

Moving into a provider's existing eCommerce fulfillment operations is quickest: the warehouse is up and running, it follows standard processes, and you’re mostly connecting your systems and shipping inventory. Setting up a more complex contract logistics operation is slower, because the processes get built around your business, the space may be dedicated to you, and there’s more integration needed. 

 

If you’re moving into a building that a provider already runs, and you don’t need new racking, equipment, or automation, then it can take roughly 15 to 20 weeks (4 to 5 months) to launch.

 

If you need a new warehouse or facility, it can take from 30 to 40 weeks (8 to 10 months) to get everything ready. 

 

What’s involved in launching my logistics operations?

There are typically four stages involved in providing third-party logistics.

 

  • Initiation: Understand what you need, define the scope of services, and get the right team in place.
  • Planning: Design what the future state looks like for your logistics services, together with data gathering, approval, and project management.
  • Execution: Build out your logistics services and manage the physical and data structures needed, together with testing it works and providing training to team members.
  • Closing: Convert the project into a live environment and hand it off to the people who will run it day to day.

 

What can make a launch take longer?

There are several factors that increase the time it takes to launch with a 3PL:

 

  • Temperature and humidity control is a major contributor, because controlled space is harder to find and set up than dry space.
  • Hazardous goods demand special handling requirements and permitting.
  • Regulated products mean that your provider needs additional licensing and validation.
  • Automation of any type adds lead times on top of everything else.
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Fast-launch 3PL fulfillment

GEODIS provides a faster option for growing consumer brands. If you need a standard warehouse setup, use a storefront like Shopify, WooCommerce, Amazon, or Magento, and need parcel distribution then you can get a pricing quote within five days and go live in two months. Fast-launch fulfillment is aimed at brands with between $30 million and $100 million in revenue who fulfill up to five million units a year. GEODIS can also expand your services as you expand into wholesale, retail, and other marketplaces.

Find out more about GEODIS fast-launch fulfillment.

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How much do 3PL services cost?

Hardly any 3PL openly publishes their rates, and that’s because they can be so variable from client to client. When you do see published rate ranges, they tend to come from providers running standardized eCommerce fulfillment, where the operation is similar for every client. A rate card works there because there’s a standard product behind it.

 

Otherwise, 3PLs quote your prices based on several factors.

 

The services you actually need. A 3PL’s services are not one-size-fits-all, they’re customized to your specific requirements. If you need storage and nothing else, that’s much simpler and cheaper than if you need storage, pick and pack, domestic transportation, customs clearance and returns processing. Every service that you add is another set of people, systems, and handoffs, which increases the price.

 

What it costs the 3PL to provide the services. The three main costs that drive prices are labor, space, and time. Labor is the cost to hire a team for your logistics operations, including floor workers, transportation providers, administration, and others. Space is the amount of physical space that your operations take up. Time is the total time it takes to run your operations.

 

What you sell: This is based on how many unique products you carry (SKUs), how many units are in a typical order, how quickly your inventory turns over, and what your peak season looks like. Slow-moving stock occupies warehouse space for longer, which is why a rate that looked competitive can behave badly once real inventory sits there.

 

How complicated your goods are. Different products require different handling, and this can increase the price. Temperature and humidity sensitive products need controlled environments. Hazmat goods require special handling and transport. Regulated products need lot capture, provider certifications, expiry rules and sometimes licensed facilities. 

 

What you’re able to commit to. A provider might price differently for dedicated space than for shared space, because dedicated space can’t be sold to anyone else. Longer contractual commitments might price better because the provider can plan ahead on labor and capacity. 

 

How much automation you need. Investment in automation is rising across the industry. MHI and Deloitte found that more than half of organizations expect to increase their supply chain innovation spending. Automation trades a variable cost, labor, for a fixed one, equipment. But, automation is expensive, and those costs need volume and time to earn back. Heavily automated proposals tend to have longer terms and firmer minimums attached. Whether that’s a better deal depends on how confident you are about your volumes three years out.

 

What this doesn’t tell you. Because of all these factors, there’s no easy, independent way to understand what a logistics provider will charge. What it does do is tell you the most important factors when it comes to your pricing, so you can understand what moves the needle.

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What to ask before you sign

A proposal from a provider tells you what they want you to know. If you want to dig deeper, it’s worth asking the following questions. 

 

Performance. Request their accuracy and on-time figures from last December rather than their annual average, because that average can hide their peak-season performance. Ask what went wrong in their most recent launch and what they changed afterwards. Ask them which of their current clients most resembles you in order profile, and whether you can speak to them.

 

On the timeline. Ask if there’s anything specific about your operation that would push it past their standard launch timeline. Ask about what they need from you, because a launch often slips on the client's side at least as often as the provider's.

 

On cost. Ask about the areas that move the price when your order profile changes, and by how much. Ask what happens during peak season, and whether that capacity is already included in the rate or billed on top. 

 

On the relationship. Ask about how many clients renewed last year. Ask which of their certifications are relevant to your products. And ask what leaving looks like: how much notice, how long a transition takes, and who owns the inventory data on the way out.

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Where this leaves you

The pattern running through everything is that most of what decides your logistics outcomes is a fact about your business rather than a fact about your provider. Your order profile sets your labor cost. Your product complexity sets your timeline. Your channel mix sets what kind of operation you need. Providers differ, and those differences do matter, but they operate on the facts you hand them.

 

That’s why so much of the useful work happens before you sign. Know your own numbers first: how many SKUs, how many lines in an average order, how sharp your peak is, how fast your inventory turns. That sharpens your questions and conversations, and helps you find the best 3PL for your needs. 

GEODIS gives you everything you need from a logistics provider. Get in touch and find out how.

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FAQs about third-party logistics

A warehouse run by a third-party logistics provider on behalf of its clients, rather than by the business that owns the goods. For you, that means no lease, no hiring, and no equipment to buy. 

A longer-term arrangement where a provider runs a dedicated or shared operation for you under contract, rather than you buying transportation or storage transactionally. The practical difference is what you are buying: a transaction gets you a service, a contract gets you capacity that is held for you. 

Selecting individual items from storage to fill a customer order, then packing them for shipment. It’s the single most labor-intensive thing that happens to your products, which is why the number of lines in a typical order matters to your costs. 

Assembling separate items into a single unit before it’s sold or shipped. Subscription boxes, gift sets, bundles and retail display units are all kitting. It’s worth asking about early if you run promotions or seasonal bundles.

Everything that happens to a product after a customer sends it back: receipt, inspection, a decision about its condition, then restocking, refurbishment or disposal. If your category runs high return rates, ask how returns are priced before you compare quotes.

There is no standard list price, because a quote is built from your business rather than from a rate card. What you can work out in advance is what moves it: how many services you need, how much labor and space your volume consumes, how complicated your goods are, and what you can commit to. Two providers looking at the same volumes will price them differently, and the reasons are usually visible in the questions they ask you.

Judge them on what you can verify rather than what you are told. That means the certifications relevant to your products, their performance figures from your peak rather than their annual average, how many clients renewed last year, and whether they will tell you plainly what they cannot do. A provider that publishes the conditions on its own service levels is handing you something checkable.

Through an integration between your order system and their warehouse system, usually built during the implementation. Most providers connect either by EDI, which is the long-established standard in retail, or by API for newer ecommerce platforms. The question worth asking is not whether they can integrate, but what they already connect to, because an integration that exists is faster and cheaper than one that has to be built.

More than you might expect, which is why it is worth asking about before you start rather than when you want to leave. A transition involves moving physical inventory, rebuilding the systems integration, and reconciling stock records between two operations. Ask about notice periods, how long a transition takes, and who owns your data at the end of it.

Outsourcing makes sense when your volume outgrows the space, labor or systems you can run yourself, and when the capital you would spend on a building is better spent on the business. It makes less sense when volumes are small enough to handle in-house, when your handling is unusual enough that no standard operation fits, or when logistics is close enough to your product that you would rather own it. Plenty of businesses run their own fulfillment for years.

Paul Maplesden

Paul Maplesden

Lead Content Strategist

Paul deeply researches logistics and supply chain topics to create helpful, informative content for our US audience. Read Paul's work in the GEODIS blog, our in-depth GEODIS Insights reports, and our case studies and white papers.
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About GEODIS

GEODIS is a global third-party logistics provider with more than 100 years of experience and operations in 120+ countries. From freight forwarding and customs services to warehousing, transportation management, and final-mile delivery, GEODIS helps businesses solve complex supply chain challenges at every scale. In the United States, GEODIS operates more than 50 million square feet of warehousing space alongside a nationwide transportation network.

The guide offered on this site is for general informational purposes only, and does not constitute, and should not be considered, to be legal advice or other advice specific to your company's circumstances. The information herein is presented without any representation or warranty, including as to the accuracy or completeness of the information presented.