3rd Party Warehouse or Your Own? A UK 3PL Guide

OpsMavix diagram comparing a 3rd party warehouse (3PL) with running your own warehouse site

A 3rd party warehouse (a 3PL, or third-party logistics provider) stores your stock and picks, packs and ships your orders for a fee. Running your own warehouse means you take on the building, the people and the systems yourself. Neither is better in general. The right answer depends on your order volume, how predictable it is, how much control you need over the work, and whether your stock and order data can stay accurate when someone else holds the goods.

This guide sets out what a 3rd party warehouse does, how 3PL pricing is usually structured, the UK rules worth knowing on both sides, and a worked GBP comparison you can rerun with your own figures. It is general information, not legal or tax advice.

What a 3rd party warehouse actually does

A 3PL runs the physical side of fulfilment on your behalf. The usual service list covers:

Goods in: receiving pallets or cartons from your suppliers, checking them and putting them away.
Storage: holding your stock in racking, shelving or bulk floor space.
Pick, pack and dispatch: picking orders from your stock, packing them and handing them to carriers.
Returns: receiving returned goods, inspecting them and restocking or quarantining them.
Value-added services: kitting, labelling, relabelling or gift-wrapping, usually priced separately.

Many UK warehouse operators trade on the UK Warehousing Association (UKWA) Conditions of Contract. The 2024 edition sets a default limit of liability of £100 per tonne unless the customer pays to raise it, and gives the warehouse a lien, meaning it can hold goods until unpaid charges are settled (Warehouse News, April 2024). Read the liability clause before you sign, and check your own stock insurance covers the gap between that limit and the value of what you store.

How 3PL pricing is usually structured

3PL quotes vary, but most combine a handful of charge types. Ask for every line in writing so you can compare like for like.

Charge type	What it usually covers	What to ask
Storage	Per pallet, per shelf or per cubic metre, often weekly	How are part-pallets and slow movers charged?
Inbound handling	Per pallet or carton received and put away	Is there a surcharge for loose-loaded containers?
Pick and pack	Per order plus per extra item or line	What counts as an order line? Are packaging materials extra?
Outbound carriage	Carrier rates, sometimes with a margin	Can you use your own carrier accounts?
Returns	Per return processed	Who decides whether a return is resaleable?
Account or minimum fee	A monthly fee or minimum spend	What happens in a quiet month?
Set-up and exit	Onboarding, integration, final stock transfer	What notice period applies, and what are exit charges?

The point to notice is the shape. A 3PL turns most of your warehouse cost into a variable cost that rises and falls with orders and pallets. Your own warehouse is mostly fixed cost: rent, business rates, core staff and equipment are paid whether you ship 2,000 orders or 20,000.

3rd party warehouse vs your own: the comparison

Factor	3rd party warehouse	Your own warehouse
Cost shape	Mostly variable per pallet and per order	Mostly fixed: lease, rates, staff, equipment
Commitment	Contract term and notice period	Lease term, often several years
Peak capacity	Shared labour and space, if agreed in advance	You must hire, rent extra space or turn orders away
Control of the work	Through the contract and service levels	Direct, day to day
Specialist handling	Possible, but priced and sometimes refused	Whatever you set up
Stock data	Held in the 3PL’s system, shared with you	Held in your own system
Health and safety	The 3PL as employer manages its site	Your duty as employer (see below)
Location	Wherever the 3PL’s sites are	Wherever you lease

UK obligations that sit with an in-house warehouse

Running your own site brings duties that a 3PL would otherwise carry:

Business rates. GOV.UK says business rates are “charged on most non-domestic properties”, and lists warehouses among them (GOV.UK).
Health and safety. HSE states that “an employer has a legal duty to make sure that people are safe in the workplace they control” and highlights manual handling and workplace transport (people being struck by moving vehicles) among the key warehouse risks. Its full guide is HSG76, Warehousing and storage (HSE warehousing).

A UK rule for overseas brands using a 3PL

If your business is established outside the UK (a US brand selling into the UK, for example), the 3PL storing your imported goods may need approval under HMRC’s Fulfilment House Due Diligence Scheme (FHDDS). GOV.UK says a business must apply if it stores goods that “were imported from a country outside the UK”, “are owned by, or stored on behalf of, someone established outside the UK” and “are being offered for sale and have not been sold in the UK before”. Trading without approval risks “a £10,000 penalty and a criminal conviction” (GOV.UK). HMRC publishes a list of registered businesses, so check your 3PL is on it.

A worked example: where the costs cross

Hypothetical example, GBP. Every rate below is an illustrative assumption, not a market price or a quote. Replace each one with your own figures.

A UK ecommerce and trade business holds an average of 400 pallets and receives 1,200 inbound pallets a year.

3PL assumptions: storage £3.50 per pallet per week, inbound handling £5 per pallet, pick and pack £2.20 per order, account fee £500 a month. Carriage is excluded because it is paid either way.

In-house assumptions: 10,000 sq ft at £9 per sq ft (£90,000 a year), business rates £35,000, equipment £20,000, software, utilities and insurance £25,000, and warehouse staff at £30,000 each fully loaded, with headcount rising with volume.

Orders per month	3PL annual cost	In-house staff	In-house annual cost	Difference
3,000	£164,000	3	£260,000	3PL £96,000 cheaper
6,000	£243,200	5	£320,000	3PL £76,800 cheaper
12,000	£401,600	8	£410,000	3PL £8,400 cheaper
15,000	£480,800	9	£440,000	In-house £40,800 cheaper

How the 6,000-order line is built: storage 400 × £3.50 × 52 = £72,800; inbound 1,200 × £5 = £6,000; picks 6,000 × 12 × £2.20 = £158,400; account fee £6,000. Total £243,200. In-house: £90,000 + £35,000 + (5 × £30,000) + £20,000 + £25,000 = £320,000.

In this example the 3PL wins comfortably at lower volumes because you are not paying for empty space and idle hours. The lines cross somewhere between 12,000 and 15,000 orders a month, once the fixed building costs are spread over enough orders. Your crossover will be different. Lease length, set-up costs, carriage and the cost of a missed peak can move it a long way, so model it before you sign either a lease or a 3PL contract.

When a 3rd party warehouse is the better choice

Volume is low or uncertain. You pay for what you use instead of a building sized for next year.
Demand is seasonal. A 3PL can often add labour and space for peak, provided you forecast it and agree it in advance.
You are entering a new market. A UK 3PL lets an overseas brand, or a UK brand heading abroad, test demand without a lease.
Your products are standard. Boxed goods with simple pick-and-pack are what 3PL pricing is built for.

When running your own warehouse makes sense

Volume is high and steady. As the worked example shows, fixed costs get cheaper per order as volume grows.
The handling is specialist. Made-to-order work, complex kitting, light assembly or a trade counter are hard to specify in a 3PL contract.
Speed of change matters. Re-slotting fast movers, holding a customer’s order back or reworking a batch is a conversation on your own floor, and a ticket at a 3PL. Our guide to warehouse automation covers what to invest in once you run the site.
Stock is your product. Wholesalers who promise stock to trade customers by the hour often want their own warehouse management and direct control of every bin.

Some businesses do both: their own warehouse for trade and wholesale orders, and a 3PL for ecommerce parcels or overflow at peak. That only works if both sites feed one live picture of stock, as covered in our guide to multi-location inventory management.

Moving to a 3PL does not hand over responsibility for knowing what you have. The goods are yours, and so are the consequences when the 3PL’s stock figure and your sales channels disagree. Three controls matter:

Receipts matched to purchase orders. Every inbound delivery booked by the 3PL should be checked against what you ordered, with shortages raised quickly. The same discipline applies in-house, as covered in our goods receiving process guide.
Adjustments with reasons. Damages, write-offs and recounts at the 3PL should arrive with a reason code you can review, not as a silent change in stock.
Daily reconciliation. Compare your record against the 3PL’s figure every day, line by line. Our 3PL inventory reconciliation guide walks through the routine.

If you stay in-house, the same record has to drive picking and dispatch directly. If your bottleneck is the physical flow rather than the record, our comparison of a warehouse control system vs WMS explains which layer does what.

FAQ

What is a 3rd party warehouse?

A warehouse run by a third-party logistics provider (3PL) that stores other businesses’ stock and fulfils their orders for a fee. You keep ownership of the goods; the 3PL provides the space, labour and handling.

Is a 3PL cheaper than running my own warehouse?

At low or unpredictable volume, usually, because you avoid fixed costs such as rent, business rates and core staff. At high, steady volume, your own site can become cheaper per order. Model both with your own rates, as in the worked example above.

What contract terms should I check with a UK 3PL?

The liability limit (UKWA’s 2024 Conditions of Contract default to £100 per tonne unless you pay to raise it), the lien clause, minimum monthly charges, notice periods and exit fees, and the service levels for receiving, dispatch and accuracy.

Does a UK 3PL need to be registered with HMRC?

If it stores imported goods owned by or held for someone established outside the UK, which have not yet been sold in the UK, it must be approved under the Fulfilment House Due Diligence Scheme. GOV.UK publishes a list of registered businesses you can check.

Can I use a 3PL and my own warehouse at the same time?

Yes. A common split is trade orders from your own site and ecommerce parcels or seasonal overflow from a 3PL. It works when both locations feed one stock record, so sales channels never promise the same unit twice.

How OpsMavix Can Help

OpsMavix builds owned, fixed-price stock and order systems for UK and US wholesalers, distributors and ecommerce brands that have outgrown spreadsheets but do not need a full ERP. Whether your stock sits with a 3PL, in your own warehouse or across both, we build the single record that receipts, adjustments and orders run through, with daily reconciliation against the warehouse’s figures and no per-seat fees.

See our inventory automation system, ecommerce inventory automation and wholesale order management system, or tell us how your warehouse runs today.

Sources

All reviewed 27 October 2026.

All rates, volumes and costs in the worked example are hypothetical. The cover is an OpsMavix diagram.

#UK#3PL#Warehouse#Warehouse Management#Fulfilment#Inventory Management#Ecommerce Operations#Wholesale

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