If your peak invoice for warehousing and logistics surprised you last January, the cause was likely something that could have been controlled.
It is a direct assessment, but an important one.
Brands often reach January with fulfillment invoices that look very different from what they expected. Accessorial charges appeared and labor costs climbed. Orders required expensive expedites and parcel costs came in above forecast. These charges may feel unpredictable, yet generally, they are tied to decisions made, or not made, before peak began.
A successful peak means three things at once: high revenue, satisfied customers, and stable margins. Miss any one badly, and peak was not a complete success. Controlling 3PL costs requires brands and fulfillment providers to reduce operational variance before volume arrives.
The 3PL owns execution. The brand owns the inputs. Peak tends to go poorly when either side fails to own its piece and then blames the other for unplanned costs.
With this year’s holiday spending expected to reach $1 trillion USD for the first time, brands will need to navigate demand and inventory planning with their partners now to ensure a smooth season.
9 areas to address with your partner before peak
Start with where 3PL costs actually go
A typical 3PL invoice has two parts.
First, freight and parcel, handling, and storage are quoted. Brands negotiate these rates, and they are relatively predictable. Second are accessorials and exceptions. These charges aren’t always quoted or easy to predict, and they are often where surprises show up.
Accessorials can include parcel surcharges, unexpected labor, expedited processing, rework, and other costs that arise when an operation moves outside the original plan. They are also where brands have some of the greatest opportunities to control 3PL costs.
For example, a well-defined carton spec avoids carrier surcharges, and solid forecasting helps your 3PL plan labor and avoid upcharges and expedite fees.
One question every brand should be able to answer is: What percentage of last year’s peak invoice came from accessorials and exceptions? That is often the most volatile part of peak logistics spend. If the answer is not readily available, start there.
Understand how operational variance becomes additional cost
The 3PL cost model is structured to respond to variance. When actual operations differ substantially from planned operations, additional costs follow.
This can happen in several ways.
- An oversized carton can trigger handling surcharges and increase packaging spend.
- Hourly tasks without engineered standards may leave the brand paying for inefficient processes.
- Undefined flex-labor charges make expenses difficult to anticipate.
- Loose cutoff rules turn expediting into a routine event.
- Poor cost-to-serve visibility allows these problems to continue.
The best way to proactively manage peak cost is daily visibility. If cost is trending upward, the driver should be obvious and can usually be addressed immediately. The answer is not always negotiating another few cents off the handling rate. In many cases, the fastest route to lower 3PL costs is making the operation more predictable.
Give the 3PL the inputs it needs
Late inputs are the most expensive thing you will send. By peak, fulfillment providers need more than a top-line estimate of total unit volume. Units alone make the labor plan guesswork.
Brands should provide their logistcs partners:
- A forward-looking weekly forecast covering orders, lines, and units
- An order profile that includes expected channel and SKU distribution
- A firm promotional calendar with dates that will not move
- Approved carton specifications and packaging rules
- Disposition decisions for aged inventory
- Named escalation authority with clear spending limits
A forecast of 100,000 units means little without knowing how those units will translate into orders, lines, SKUs, channels, and days.
Promotional dates will need the same discipline. A provisional calendar can be worse than no calendar because the operation plans against it and then has to replan at a premium when dates change.
Aged inventory matters as well. Removing dead stock from the pick path creates capacity and reduces congestion when the warehouse is at its busiest. It all comes back to the provider’s plan being only as good as the inputs the brand gives them.
Prioritize changes that can still lower costs
A major technology implementation or facility redesign may create long-term value, but the weeks before peak are not the time to add unnecessary complexity.
Brands that are behind should focus on the decisions most likely to affect near-term costs. In other words, focus on changes with a short path from decision to savings.
Start by reviewing the contract with the 3PL. Pay particular attention to accessorials, surcharges, and any charge that may be applied subjectively. Both parties should agree on the conditions that trigger each fee.
The existing agreement may not be open for renegotiation. However, the variance that triggers additional charges may still be avoidable.
Next, address packaging. The brand controls how it packages products for shipping. It does not require a provider negotiation, a carrier concession, or a major capital investment. It is a large spending category with a short path from decision to savings.
Then, finally, confirm the order profile, promotional calendar, and disposition plan for aged inventory.
Audit packaging before peak volume arrives
Packaging offers one of the most direct solutions for managing peak season shipping surcharges.
Carriers charge partly based on the space a parcel occupies, not just its weight. Cubic and dimensional volume can quickly increase parcel costs when cartons are larger than the products and orders require.
Audit the box. Right-size it. Eliminate air. Cut the void fill. Then measure cost per parcel before and after so you can prove the savings.
Before peak, compare the carton set with the expected order profile. A product-volume-versus-box-volume report can reveal where excess space is creating avoidable costs. Pay particular attention to the tail of the report, where the least efficient carton selections tend to sit.
Kase used this approach with Dropps, an eco-friendly laundry and detergent brand whose products are small and dense enough to benefit from cubic carrier pricing.
After reviewing order profiles and product sizes, the teams reworked the packaging to stay below key cubic-pricing thresholds. The changes also reduced void fill and transit damage.
The result was a 12.8% reduction in shipping costs, with no capital investment required.
Ask the 3PL to slot for peak demand
Warehouse slotting should reflect upcoming demand, not only demand that has already occurred. A warehouse arranged around normal order volume may not be ready for peak. SKU velocity changes, promotional products move faster, and bundles become more common. Shifts in order mix change where employees spend their time.
Industry estimates vary, but poor slotting can increase warehouse travel time by 30% to 40%. Travel is not value-added work, yet brands still pay for it through their handling rates.
Re-slotting allows the provider to redeploy labor it already has. No capital investment or rate change is required, and the efficiency gain compounds across every pick throughout the season.
Brands should ask: When was the inventory last re-slotted, and what data did you use?
If the answer relies entirely on historical activity without considering the peak forecast and promotional calendar, the operation may be optimized for the wrong demand.
This is also the time to confirm expected kitting and pre-build volumes. Promotional kits assembled before peak can be completed at standard rates without competing for labor during the busiest weeks.
Make scalability measurable
Treat scalability as a test, not a buzzword. A scalable operation keeps cost per order relatively stable as volume climbs. If that cost rises substantially with volume, the workflow is not scalable, regardless of how much capacity the provider adds.
Brands should ask their 3PL to model cost per order at baseline volume, two times baseline, and three times baseline.
A provider with defined standards can produce that quickly and predict how peak will affect cost. A provider without those standards gives you a narrative.
The next question is not simply how many people the provider plans to add. Ask what gets simplified as volume increases. A workforce that includes 30% new hires doesn’t necessarily need more training. Training is lost when employees leave. Task simplification remains.
Rule-based carton selection, system-driven packing instructions, segmented workflows, and cross-trained employees reduce the number of decisions required for each task. They also make it easier for the operation to move labor when constraints develop.
Kase follows this model with Boll & Branch. Peak planning includes regular resets against planned promotions, documented labor commitments, rule-based packaging selection, and system-driven packing instructions. These workflows reduce training requirements while maintaining the brand’s premium unboxing experience.
The key is alignment. Both teams plan labor together, stay disciplined to the plan, and collaborate when conditions change.
Review costs and performance daily
A monthly report tells you what happened. A daily one lets you stop it. Month-end reporting is too late to control 3PL costs during peak. Brands need daily visibility into six measures:
- Cost per order shows whether actual spending is moving away from the planned cost.
- On-time ship and fill rate reveal whether service is deteriorating as volume increases.
- Accessorial spend identifies whether exceptions are becoming more frequent or expensive.
- Rework and short shipments show where quality issues are adding labor and customer service costs.
- Expedite spend indicates how often the operation is paying to recover service.
- Dock-to-stock time confirms whether inbound inventory is becoming available quickly enough to meet outbound demand.
If a provider cannot produce this information daily, that limitation says something about its ability to identify and control peak-season problems.
Agree on thresholds before problems begin
Peak operations often have plenty of visibility and very little control. Both sides can explain exactly how poorly yesterday went, but nobody has agreed on what to do today.
Decisions made under pressure tend to default to the most expensive option available.
Before peak, the brand and 3PL should document operating thresholds and the actions those thresholds trigger. If fill rate drops below an agreed percentage, what happens next? If the backlog reaches a certain number of orders, which lever gets pulled first?
Recovery options should be ranked by their fully loaded cost. The plan should also identify who can authorize additional spending and the maximum amount that person can approve.
At some point, the brand may need to adjust the customer delivery promise instead of continuing to buy its way back to the original one. That conversation can be uncomfortable but repeated expedite spending creates a permanent cost each time fulfillment falls behind.
An undocumented threshold is only an intention.
Ask six questions before peak
A useful peak-readiness conversation does not need to be complicated. Brands should ask:
- Do you have our expected weekly volume and complete order profile?
- What percentage of your staff is cross-trained in at least two functions?
- Have you audited our carton set against the expected peak order mix?
- Is our peak addendum documented with clear volume bands and charges?
- Have you slotted our inventory against the promotional calendar?
- What are your labor tiers, and when does each one apply?
Know the answers before peak begins. That documentation gives both sides a shared operating plan and clarifies responsibility if a dispute arises over cause or cost allocation.
Turn peak cost planning into an operating plan
Controlling 3PL costs during peak does not usually require a major capital project. It requires accurate inputs, disciplined planning, daily visibility, and decisions made before the pressure builds.
Peak rewards brands and operations that collaborate early with purpose and formalize these decisions.
Kase’s Peak Season Cost Worksheet turns these recommendations into a two-page working document for brands and their fulfillment partners. It covers the six numbers to monitor, the six questions to ask, the inputs the operation still needs, and the order in which to address remaining cost controls.
The objective is straightforward: drive peak revenue, maintain the customer experience, and protect margins without opening a January invoice full of surprises.
Download the worksheet. Any questions? Reach out to one of our fulfillment experts today.
