How do you choose a 3PL?
Choosing a 3PL comes down to five questions, roughly in the order they rule providers out:
- Location. Is the building in the right place for where your freight arrives and where your customers are?
- Fit. Does it handle your kind of product and your order profile, and connect to your store?
- The quote. Is every charge on a written quote, on lines you can compare?
- The contract. Have you read the liability cap, the lien clause, the termination notice and the claim deadlines?
- Measurement. Which metrics will the 3PL report, and how are they defined?
Most relationships work. In the 2026 Annual Third-Party Logistics Study, the 30th edition, 88% of shippers and 100% of 3PLs called their relationships successful. The checks below are meant to help you end up among them, written from the side of the warehouse that answers them.
A 3PL checklist: questions to ask and good answers
| Question to ask | Why it matters | A good answer |
|---|---|---|
| Where is the building, and how far is it from your port or suppliers? | Inbound container trucking is a separate cost, often quoted per trip, before any warehouse rate | A distance in road miles and an estimate for your inbound trucking |
| What products do you not take? | Hazmat, refrigerated goods and goods held under customs bond need buildings set up for them | A written “not for” list |
| Can I see a month of my own orders priced? | Pick and pack depends on units, inserts and packaging per order | A quote built from your sample orders |
| What is on the quote, and what is not? | Fees missed at signing are the usual surprise | Storage, receiving, order handling, labor, projects and postage on separate lines |
| Is there a setup fee or a monthly minimum? | A minimum spread over few orders raises the cost of each one | The amount in writing, or none |
| What is the liability cap, and can I declare a higher value? | California lets a warehouse cap what it pays for loss or damage | The cap stated in the agreement, and a written way to raise it |
| What does the lien clause cover? | A lien that also secures charges on your other goods goes beyond the statute’s default | A lien limited to charges on the goods held |
| How much notice ends the contract, on each side? | When no storage period is fixed, the warehouse’s floor is 30 days | Enough notice for you to move your stock |
| How and by when do I file a claim? | The agreement can set reasonable time limits for presenting claims and starting a lawsuit | A deadline and a process in writing |
| How do I see stock and orders? | Inventory you cannot see is inventory you cannot plan | A client portal connected to your store |
| Which metrics do you report, and how are they defined? | “On time” means little until the window is written down | Order accuracy, on-time shipping and dock-to-stock, defined in the service-level agreement |
| Can I visit? | A walk-through shows housekeeping, racking and how inbound freight is staged | Yes, during business hours |
Where should your 3PL be?
Start with where your freight comes from. In 2025 the Port of Los Angeles moved 10,239,318 TEU and the Port of Long Beach 9,881,595, about 20.1 million between them by our sum. The Port of Los Angeles says the two San Pedro Bay ports handled about 31% of all U.S. containerized international waterborne trade. If your containers land there, the first leg of an inbound container is usually trucking from the port to the warehouse, often quoted per trip, so add it to each 3PL’s quote before you compare monthly rates.
Then look at where your customers are. Our building in Valencia is about 60 to 65 road miles from the ports and about 40 from downtown Los Angeles, and ground parcels from our dock reach most of California, Nevada and Arizona in 1 to 2 days. A warehouse near the ports shortens the inbound leg but sits in a different rent and labor market, which the 3PL pricing guide puts in numbers. If most of your customers are on the East Coast, a multi-node network or a second warehouse there may serve you better. The 3PL in Los Angeles and 3PL in California pages cover lanes and coverage from Valencia.
Does the 3PL fit your products and orders?
- Product limits. Ask for the written “not for” list. Ours: hazmat and dangerous goods, refrigerated or frozen goods (the building is ambient and dry, with no climate-controlled storage), goods held under customs bond (this is not a bonded warehouse), and brands under a few hundred orders a month, where packing in-house is usually cheaper.
- Order profile. Units per order, inserts, gift notes and custom packaging change the pick and pack price, so the quote should be built from a month of your real orders. See pick and pack fulfillment.
- Wholesale. Retail orders come with routing guides. Ask whether the 3PL ships to them with GS1-128 labels, advance ship notices and EDI. We do, from the same building: see B2B and wholesale fulfillment.
- Systems. You should see stock and orders without asking. Our clients use the Logiwa client portal, which connects to stores and sales channels such as Shopify.
- Volume. We work with brands shipping a few hundred to several thousand orders a month, or wholesale volume that moves by the pallet.
What should a 3PL quote include?
Every quote, ours included, is built from the same lines: storage, receiving, order processing, pick and pack labor, projects such as kitting or relabeling, and postage or freight. 3PLs bill them in different units (per pallet, per square foot, per bin, per order, per item), so compare quotes on one sample month of your own pallets and orders. Our starting rates are in the table above, and the 3PL pricing guide works through a full month line by line. If you are weighing a 3PL against a building of your own, see 3PL vs renting warehouse space.
Which contract terms does California law let a 3PL set?
A 3PL that stores your goods is a warehouse under Division 7 of the California Commercial Code. Five sections decide most of what happens when something goes wrong:
| Section | What it says | What to check in your contract |
|---|---|---|
| Section 7204: care and liability limits | The warehouse is liable for loss or damage caused by failing to use the care a reasonably careful person would use and, unless otherwise agreed, is not liable for damage that care could not have avoided. The agreement can limit the amount of liability, but a limit is not effective against a warehouse that converts goods to its own use. If you ask in a record when you sign, or within a reasonable time after you receive the warehouse receipt, the warehouse’s liability can be increased on part or all of the goods, and it may charge more based on the higher valuation. The agreement may include reasonable provisions on the time and manner of presenting claims and starting lawsuits. | The cap, how to declare a higher value, the claim deadline |
| Section 7209: the warehouse lien | The warehouse has a lien on your goods for charges for storage or transportation, insurance, labor and other charges in relation to them, present or future, and for the cost of preserving and selling them. Those goods can also secure charges on your other goods, whenever deposited, only if the receipt or storage agreement says a lien is claimed for those. The warehouse loses its lien on any goods it voluntarily delivers or unjustifiably refuses to deliver. | Whether the lien is limited to charges on the goods held |
| Section 7210: enforcing the lien | After notifying everyone known to claim an interest in the goods, the warehouse may sell goods a business stores in the course of its business, publicly or privately, on commercially reasonable terms. Before the sale, anyone claiming a right in the goods can pay the amount needed to satisfy the lien and the reasonable expenses of complying with the section; the goods are then not sold but stay in storage under the receipt. The warehouse takes what it is owed from the proceeds and holds the balance for the person entitled to the goods. | How billing disputes are handled before the lien is used |
| Section 7206: ending storage | With no fixed storage period, the warehouse can, by notice, require payment and removal within a stated period of not less than 30 days after the notice; if the goods are not removed, it may sell them under section 7210. If it believes in good faith that the goods are about to deteriorate or fall in value below the amount of its lien, it can set any reasonable shorter time. Goods that are a hazard because of a condition the warehouse did not know of at deposit can be sold on reasonable notice without advertisement. | The termination notice on both sides |
| Section 7202: the warehouse receipt | A receipt need not take any set form, but unless it provides for each item the statute lists, the warehouse is liable for damages caused to a person injured by the omission. The list includes the warehouse location, date of issue, a unique identification code, the storage and handling rates, a description of the goods, the signature of the warehouse or its agent and a statement of the advances and liabilities for which it claims a lien or security interest, among others. A receipt term that impairs the warehouse’s duty of care or its obligation to deliver the goods is ineffective. | The receipt (if one is issued) and the storage agreement, before you sign |
These are the statute’s general rules, not legal advice. Have your counsel read the agreement itself.
Who pays when inventory is lost or damaged?
Under section 7204, unless the contract says otherwise, the warehouse pays only when it failed to use reasonable care, and no more than the cap in the agreement if there is one (a cap does not protect a warehouse that converts goods to its own use). A cap written per pound can be far below what the goods are worth. Take an invented example, not a figure from any contract: at 50 cents a pound, a 1,000 lb pallet of cosmetics worth $30,000 would recover $500 from a warehouse that was at fault, and nothing from one that was not. So:
- Read the cap first, and work it out for your most valuable pallet.
- If your goods are worth more, ask in writing for a higher valuation, at signing or within a reasonable time after you receive the warehouse receipt, as section 7204(b) allows, and expect a higher rate for it.
- Carry your own inventory insurance. Unlike the warehouse’s liability, a property policy can pay whether or not the warehouse is at fault, within its own covered perils and exclusions, so read what it covers.
Do you have to register for California sales tax if your inventory is in a California 3PL?
If you are based outside California, yes. The California Department of Tax and Fee Administration says a seller located outside California that stores inventory in a California fulfillment center is considered to be engaged in business in California, and retailers engaged in business in California must register with it, file sales and use tax returns and pay tax on sales to California consumers. The law that defines the term, Revenue and Taxation Code section 6203, lists a retailer using a “warehouse or storage place” in California, directly or indirectly or through an agent. A seller with no inventory here is also engaged in business if, in the current or preceding calendar year, its total sales of tangible personal property for delivery in California, combined with those of all related persons, exceed $500,000.
CDTFA says an out-of-state seller with a location in California needs a seller’s permit, and one without a location needs a Certificate of Registration, Use Tax. Its online registration asks whether you have a “retail location, stock of goods, or warehouse in California”; CDTFA says that if your inventory is at a fulfillment center with other inventory not owned by you, you answer “No” and the system registers you for the Certificate of Registration, Use Tax. This is what the state’s tax agency says, not tax advice: confirm your registration with a tax adviser before your first pallet arrives.
How do you measure a 3PL?
Agree the metrics and their definitions before the first order ships. A widely used supply chain standard is the ASCM SCOR model; the first three metrics below come from it:
- Perfect order. SCOR RL.1.1 counts an order as perfect when it meets delivery expectations with complete and accurate documentation and no delivery damage, and an order is perfect only if every line is.
- Delivered in full. SCOR RL.2.1: the share of orders where every item reaches the right customer in the quantity committed.
- On time. SCOR RL.2.2: the share of orders fulfilled to the customer’s originally committed date, with the on-time window defined in the service-level agreement.
- Dock-to-stock (not a SCOR metric). The hours from a trailer or container arriving at the dock to the goods being received and available to sell. The start and end points belong in the agreement.
The Warehousing Education and Research Council (WERC) 2026 DC Measures report tracks 36 operational metrics; the five most popular are on-time shipments, dock-to-stock cycle time in hours, average and peak warehouse capacity used, and backorders as a percentage of total lines. Ask each 3PL for its own figures over recent months, measured the way you will measure them.
Red flags when you compare 3PLs
- One blended price per order, with storage and handling folded in where you cannot see them.
- A liability cap left blank, or “per our standard terms” with no figure you can read.
- A lien clause that reaches your other goods or charges unrelated to the goods held, or a security interest with no maximum amount stated.
- No written definition of on time or order accuracy.
- A termination clause that gives the warehouse short notice and you a long one.
- No written “not for” list, or a yes to every product you name.
- No visit before you sign.
Where Alvy Logistics fits
We run one 57,000 sq ft ambient building in Valencia, off the I-5 in north Los Angeles County, for brands shipping a few hundred to several thousand orders a month and wholesale accounts that move by the pallet. Every line is on a written quote, terms are not annual-only, and you can walk the building before you sign. Local courier and box truck runs leave from the same building, and LTL and truckload move through Accurate Freight Systems LLC, the licensed property broker in our group (MC-572734). Read what our 3PL services include, see how pallet storage is set up, or request a quote with a month of orders and your pallet count.
