Cold chain logistics management requires seamless coordination to ensure that temperature-sensitive goods receive consistent and appropriate refrigeration during transport and storage. It’s critical for companies with refrigerated or frozen products to partner with a reliable cold chain third-party logistics (3PL) service provider for efficient and detail-oriented supply chain management. Read on to determine if 3PL is right for your business, what fixed and variable costs you should expect to encounter, and additional budgeting information to assist you when selecting a service provider for cold chain logistics.
What Is 3PL Cold Chain Logistics?
Cold chain logistics involves transporting goods like meat, produce, dairy products, medicines, chemicals, and more that require constant temperature control, and managing their transportation and storage through the supply chain. Handling all the routing, docking, warehousing, and additional cold chain details effectively without delays and resulting product loss can be overwhelming on your own. Working with an experienced 3PL partner can help you ensure that your products stay at their necessary temperature from initial loading through final delivery to maintain product quality.
Cold Chain Logistics Expenses
When using cold chain logistics companies, there are two primary categories of expenses for which you should budget: fixed and variable costs.
Also known as capital or standing costs, fixed costs remain the same in the short term, typically for a period of a year, regardless of the output volume, quantity, or transport distance. For example, every cold chain logistics provider will have fixed costs for:
- Employee wages
- Equipment costs
- Truck/vehicle payments
- Warehousing fees
- Insurance fees
Alternatively, variable costs will change depending on volume, quantity, and distance because these costs have to do with the amount of resources the provider must use to make the shipment. Also referred to as recurrent, running, or operational costs, variable costs in cold chain logistics include:
- Supplies necessary for production
- Piece rate labor
- Billable employee wages
- Fuel for trucks (pricing varies by state and distance)
- Credit card company fees
Interplay of Fixed and Variable Costs
While they’re separate concepts and the same logistical factors may affect them differently, fixed and variable costs are each still dependent upon the other. For example, a logistics company can pay a fixed cost for their use of a truck, but the variable cost of fuel consumption will increase or decrease depending on the weight and size of the vehicle, as well as the travel distance and number of stops. You might also have paid for a certain number of trucks at a fixed cost, but end up paying for an additional truck if the original fleet is insufficient for covering a delivery.
Additional Costs and Financial Considerations
Beyond typical fixed and variable costs, there are several additional expenses, or accessorial charges, to consider. To avoid paying higher fees than expected, be sure not to overlook the following potential costs when considering a cold chain logistics company:
- Reconsignment cost: Per-mile fee decided at the time of the initial quote
- Lumper fees: Vary based on third-party unloading provider
- Excess cargo insurance fees: Vary based on freight value, travel distance, etc.
- Over-dimensional (OD) freight fees: Vary based on cargo dimensions, necessary permits, final destination, and more
- Specialty equipment expenses: Dependent upon what pallet jacks, edge protectors, straps, wraps, and other equipment you’ll need
- Truck order not used (TONU) fees: Ranging $200 to $600 (potentially more for specialized trailers)
- Stop charges: Per-stop delivery rate of $50 to $100
- Layover fees: Flat fee ranging from $150 to $750 based on equipment and length of delay
- Driver detention compensation: Also for delays, with a per-hour cost of $50 to $150
- Driver assistance fees: $100 to $250 when drivers help unload
- Tarping charges: $100 to $150 to cover goods on open trailers
- Tanker endorsement fees: Approximately $250 for transporting liquids
- Hazmat fees: $150 to $200 for transporting hazardous materials
It’s important to remember that you can minimize accessorial cold chain supply logistics fees by planning ahead and working with the right logistics partner.
Mulder Brothers’ Cold Chain Logistics Services
Cold chain logistics is a complex process of reliably and efficiently managing product storage and transportation to ensure optimal temperatures and quality. When choosing a 3PL partner for your business, consider your needs, your budget, and the fixed, variable, and potential additional costs involved, as well as the partner’s capabilities and experience.
Mulder Brothers Brokerage has 15 years of experience offering nationwide cold chain coverage and best-in-class, 24/7 support to both customers and carriers. We specialize in frozen less-than-truckload (LTL) shipments, warehousing, cross-docking, and redelivery services to support your supply chain.
For more information on our capabilities and pricing, contact us today.