Contract Logistics vs 3PL: Terms, Pricing and Who Each Suits
Quick answer: Contract logistics is a long-term agreement, usually running for several years, in which a provider sets up a dedicated operation for one client: reserved space, its own team and sometimes a whole building, often priced on an open-book, cost-plus basis. A typical ecommerce 3PL serves many clients from shared space and systems, charges per activity (per order packed, per unit stored) and asks for little or no fixed commitment. Both do the same kind of work. The difference is the deal. Contract logistics suits large, steady volumes that justify dedicated resources; most online stores are better off with a shared 3PL until their volume is both high and predictable.
Same work, different deal
Contract logistics is usually described as a form of third-party logistics, not its opposite. The warehouse still receives, stores, picks, packs and ships. What changes is how much of the operation is reserved for you, how long you commit and how the price is built.
| Contract logistics | Shared ecommerce 3PL | |
|---|---|---|
| Space | Dedicated zone or building | Shared with other clients |
| Staff | A team assigned to your account | Shared teams, scheduled by volume |
| Term | Multi-year; three to five years is common | Short notice or no fixed term |
| Setup time | Months: site, equipment, systems, hiring | Days to weeks: connect your store, send stock |
| Pricing | Open book (costs plus a fee) or fixed rates tied to committed volume | Published rate card per activity |
| Minimums | Volume or spend commitments | Often none |
| Processes | Designed around your products | Standard processes with options per SKU |
| Leaving | Notice period plus the cost of unwinding dedicated assets | Settle the bill, collect or forward your stock |
How each one is priced
Open book (cost-plus)
The provider passes through what the operation actually costs, such as rent, labor and equipment, and adds an agreed management fee. You see every line and can audit it. The weakness is incentive: if costs rise, the fee rides on top. Good contracts add productivity targets or share the savings when the provider finds them.
Closed book
Fixed rates per pallet, case or order, with the provider's margin built in and not shown. Easier to budget, but only fair when your volumes are stable enough for the provider to price the risk.
Shared 3PL rate card
You pay for what you use. Here's how that looks with PackQuay's published pick and pack tiers, where the rate drops as the day's paid orders pass each tier:
- A 40-order day: 19 × $2.00 + 21 × $1.70 = $73.70, about $1.84 per order.
- A 10-order day: 10 × $2.00 = $20.00.
Your cost falls with your sales. Under a dedicated contract, the space and the team cost the same in a slow week as in a busy one. That is the real trade: a shared 3PL turns logistics into a variable cost, and contract logistics turns it into a mostly fixed one, in exchange for an operation built around you. For every fee line a 3PL can charge, see our 3PL pricing breakdown.
Why contract logistics needs steady volume
A dedicated operation only pays off when it stays busy. Online stores rarely look like that. Sales jump with a viral video, dip after a campaign ends and spike again in the fourth quarter. In a shared warehouse those swings are absorbed across many clients. In a dedicated one, quiet weeks are paid for in full, and peak weeks can run out of reserved capacity.
Product testing makes it worse. A store that drops half its products every quarter would be paying for racking and processes designed around SKUs it no longer sells.
There are middle options. Some providers offer a dedicated zone inside a shared building, or a fixed fee plus variable rates, or lower per-order rates in return for a volume commitment. Each one moves part of the risk of a slow month from the provider to you, so price that risk before you accept the discount.
Which one fits your situation
| Your situation | Better fit | Why |
|---|---|---|
| Testing products; volume swings week to week | Shared 3PL | No fixed cost while you find out what sells |
| Strong seasonal peaks | Shared 3PL | Peaks are absorbed across many clients |
| Selling in several countries | Shared 3PL network | Stock can sit near buyers without a contract per market |
| Special handling: temperature control, hazardous or very heavy goods | Contract logistics | Needs equipment and processes built for you |
| Stable retail or wholesale replenishment with years of sales history | Contract logistics | Predictable volume justifies dedicated resources |
| Several providers you struggle to coordinate | Look at a lead provider or 4PL | The problem is management, not warehousing |
The last row is a different question altogether; our guide to 3PL, 4PL and 5PL covers it.
Clauses to read before you outsource
Whichever model you choose, these are the terms that decide how hard it is to change course later:
- Term and renewal. How long, and does it renew automatically unless you give notice?
- Minimums. Is there a minimum volume or monthly spend, and what is charged if you fall short?
- Exclusivity. Can you use another provider for some products or some countries?
- Price reviews. When can rates change, and on what basis?
- Dedicated assets. Who owns equipment bought for your account, and who pays for it if you leave early?
- Peak capacity. Is extra capacity for your busiest weeks committed in writing?
- Liability. What the provider pays for stock lost or damaged in its care, and up to what cap.
- Exit. How fast your stock and your data are released, and in what condition.
For the full selection process, use our 3PL scorecard; for the service levels to write down once you've signed, see setting up a 3PL partnership.
How PackQuay works
We run the shared model from our own warehouse in Xinxiang, Henan. There's no subscription and no fixed-term contract: you pay per order, with pick and pack from $2.00 down to $1.00 as your daily volume grows. Storage is free for your first 2 months and while you have orders to process; long-term storage is priced per cubic meter. Stores whose volume becomes large and steady can ask for custom rates instead of signing a multi-year contract. Details are on our pricing page, and an account manager on WhatsApp can price your last month of orders.
FAQ
What is contract logistics?
A long-term agreement in which a provider runs a dedicated logistics operation for one client, such as reserved warehouse space and an assigned team, usually for several years and often priced on an open-book basis.
Is contract logistics the same as a 3PL?
It's usually treated as a form of third-party logistics. The work is similar; the difference is that contract logistics dedicates resources to one client under a long commitment, while a shared 3PL serves many clients on flexible terms.
How long do contract logistics agreements last?
Several years is normal, and three to five years is common, because the provider needs time to recover the cost of setting up space, equipment and staff for you.
What is open-book pricing in logistics?
The provider bills its actual operating costs, such as rent, labor and equipment, plus an agreed management fee, and lets you audit those costs.
Can I use a 3PL without a long-term contract?
Yes. Many ecommerce 3PLs charge per order and per unit stored with no fixed term. PackQuay has no subscription and no fixed-term contract.