Why a procurement success can turn into a business nightmare.

The Hidden Trap of Long-Term 3PL Relationships

We’ve all been there. Your logistics operations have been handled by the same 3PL (third-party logistics provider) for years. Over time, layers of workarounds and exceptions have built up as unofficial ways of working. And, of course, no one has documented these processes.

It’s not the 3PL’s role to document your internal operations in the first place, and frankly, it’s not in their economic interest either. Why formalise and expose a process to price negotiation when they can invoice for the “value-added services” performed under a blanket “cost per hour” agreement?

Then Comes the RFP… and the Illusion of Clean Operations

When the time comes to launch a new RFP or move to another warehouse, these undocumented processes are a complete blind spot: Potential new 3PL suppliers price their services based on what looks like a clean and standard operation, while your incumbent—fully aware of the complex reality—is forced to quote higher.

The result? You receive a compelling offer from a new 3PL seemingly promising massive savings. But the truth is, you might have just initiated a costly warehouse move based on incomplete or misleading assumptions.

What you thought would be a straightforward “like-for-like lift and shift” turns into a lengthy uphill battle—or even a full-on nightmare.

The Real Costs Behind a “Cheaper” Offer

We see it time and time again: companies switch providers for perceived savings, only to end up with higher total costs once everything is up and running. Here’s why:

• Unaccounted project costs—Switching 3PLs involves costs: relocation, building/testing new interfaces, business disruption, onboarding, training, etc.
• Loss of knowledge—Most businesses have handed over so much control to their 3PL that they no longer understand the actual processes involved. Their RFPs are flawed or incomplete from the start.
• Rate card mismatches—Poor assumptions and a lack of understanding of the actual business lead to poor pricing structures. The result is a rate card that doesn’t align with your operational reality, triggering penalties, hidden charges, and service disruptions.

Very often, we see that new 3PLs compensate for the lack of information with vague assumptions, e.g. how many mixed pallets you have or how many products are on a mixed pallet. Rarely will they visit the incumbent’s warehouse—often seen as a no-no because they’re competitors—so both parties go in blind.

Everyone Loses

The result: a Lose-Lose situation.

You, the client, incur project overruns, delays, and hidden costs.

The new 3PL often suffers losses due to misquoted services, strained capacity and unanticipated start-up problems.

Relationships are tense from the outset, and what should have been a strategic improvement turns into operational firefighting for many months.

How to Get It Right

Here’s what we recommend to avoid these costly traps…

1. Map Your Real Processes – Not the Ideal Ones

Start by documenting the actual processes and exceptions in your current warehouse in detail—not just what’s in the 10- or 20-year-old SOPs but what actually happens on the ground.

2. Revisit and Enrich Your Operating Model

Use the findings and this exercise as a catalyst to enrich your policies and revisit your logistics needs. This will ensure that you are buying the “right” logistics services that fit your business.

3. Build Your RFP on This Solid Foundation

Base your RFP on your enriched operating model. Don’t assume a new 3PL will figure it out or magically have a best practice process that matches your exact customer needs – give them a realistic, accurate starting point.

This will not only avoid extra costs later but also business disruption and dissatisfied customers.

4. Be Directive on Processes and Needs

A typical urban myth is that “the 3PL is the specialist” and “will know better how to execute your logistics processes”.

A wise man once told me, “We should be telling the 3PL what to do; they shouldn’t be telling us how warehousing is done.” It might have been a black-and-white statement that goes against common opinion in Supply Chain, but it was bang on when we reflect on the many logistics turnaround projects we’ve been involved in.

The fact is, every company has (often very) different requirements—driven by customer agreements, product specificity, or practices in the upstream or downstream supply chain—creating the need to define your own put-away and picking logic and your own way of working.

Too often, we see companies initially rely on (or hope that) the 3PL will just “get” these requirements and build a suitable operation straight out of the box.

The reality will turn out to be a long series of improvement projects, more IT changes, and learning curves. All the while, you will be battling customer complaints, supply chain disruption, and costly rework.

Don’t get us wrong. 3PLs absolutely have their strengths. They’re experts in warehouse set-up, staffing, integrating IT systems, and executing at scale. They can onboard new processes, handle volume spikes, or integrate a new transport partner quickly and efficiently.

They’re just not magicians or mind readers. Go to them for execution and reactivity. For miracles, we recommend Lourdes or Santiago de Compostela.

5. Structure Your Rate Card Wisely

Avoid generic all-in rates. They work in the 3PL’s favour, never yours.

For example, instead of negotiating a flat fee per order, consider a fixed order handling or pallet fee + a variable element such as a fee per product or per unit.

With a flat fee per order, when your sales team succeeds in increasing order size, you don’t benefit. Your average logistics cost stays the same. By splitting it in the rate card, larger orders will reduce your cost per unit shipped and, thus, overall logistics cost.

One could argue that a fixed fee per order is advantageous if the complexity increases. Don’t worry – your 3PL will have that. They’re experts in the business. If order complexity rises, the fine print in the contract usually allows them to adjust pricing accordingly.

6. Choose the Right 3PLs to Invite

Think strategically. Too often, we see midsize companies invite only the global logistics giants – often simply due to a lack of knowledge of the regional logistics market and its players.

This creates two common pitfalls:

1. Lack of strategic fit – you’ll get more attention as a big customer of a smaller, focused regional player than as client number 1334 of a multinational.
2. Misaligned capabilities – it’s not guaranteed that the big-name 3PL has the right expertise or presence in your actual market. A local player might be more relevant and a better operational partner.

7. Vet the Actual Warehouse and Team

Don’t just buy the brand, assuming you’ll automatically benefit from their experience.

Ask the right questions: Will they staff your account with staff who gained experience in their other warehouses? Is the warehouse layout made specific for your business? Or are you being slotted into leftover space in an under-utilised site, and will your operation be staffed by a newly recruited team?

You might think these large players have all the experience available in-house to easily create a new warehouse. In reality, the logistics industry is low-margin and competitive – these companies cannot keep excess resources or expert teams on standby just in case a new client shows up.

8. Consider Renegotiating with Your Current 3PL

Before switching, ask yourself: could your incumbent 3PL serve you better under a new agreement that eliminates legacy issues?

The annual cost might not go down- or might even be slightly higher than if you select a new provider’s offer. But you’ll avoid the cost of project management, IT integration, warehouse relocation, and the inevitable business disruption that often comes with switching.

9. Don’t Focus Only on Price

Price is important—but don’t just compare the cost per unit.

Look at the full package:

• Are there clear service guarantees?
• Is there scalability—especially in warehouse space?
• Can issues be escalated quickly?
• Will they support your growth, not just today, but over the next three to five years?

And crucially: make sure that you have pricing for as many activities as possible. Avoid having essential processes swept into the vague “hourly charge” bucket. These are notoriously difficult to track and often lead to unpredictable invoices. The more specific and transparent the rate card, the easier it is to manage and control your costs.

Why You Might Actually Need Help – And It Might Be Simpler Than You Think

This is the point where you expect the classic consulting pitch: “Hire us for three months, and we’ll run your RFP.” Indeed, since traditional firms aren’t designed for flexibility, they push full-time consultants – often juniors – and offer to do tasks your internal team can handle.

The problem is: by doing it alone, you risk missing out on the 20% of expert input that can make or break the project.

At AB Advisors, we work differently.

We only support you where you need it – and only for the days or hours that matter:

• You can write your own RFP? Great – we’ll guide you with templates and reviews.
• You want to handle the analysis in-house? We’ll coach you on what to look for and review your analysis.
• You’re about to meet a 3PL? We can be your strategic second voice in the room—our experts know how logistics providers think and negotiate.

Also, we visit your existing warehouse operations, review the actual processes, and turn those observations into structured input for your RFP, so your future supplier prices are against reality, not guesswork.

New 3PL suppliers often can’t visit your incumbent’s warehouse due to competitive sensitivities – so they quote based on assumptions – and most client companies lack internal logistics experts who can walk through a warehouse and rapidly assess what’s really happening. That’s where we step in.

Minimal Consulting, Maximum Value

This approach keeps costs low while helping you avoid the costly mistakes that come with rushed transitions and misaligned logistics models. You maintain control, avoid service disruption, and secure the right long-term outcome for your business.

Interested in Our Fixed-Price Support Package?

Whether you’re launching an RFP or planning a warehouse move, we can help you do it right—on your terms.