What Is a Putaway Fee? How Warehouses Charge for Store Location Labor

Putaway Fee A charge for moving received inventory into its assigned warehouse storage location.

The Putaway Fee compensates a warehouse for labor, equipment, and procedure used to move goods from the receiving area to their storage positions. It is one of the discrete line-item charges a fulfillment or warehouse operator applies during inbound processing; unlike receiving inspection or reconciliation, putaway covers the physical relocation and proper placement of units into racks, bins, or floor positions so inventory becomes available for picking and other downstream operations.

Why Warehouses Charge It

Putaway is a non-trivial activity: it requires staff time, material handling equipment (pallet jacks, forklifts, conveyors), and accurate record updates in a Warehouse Management System (WMS). Charging a putaway fee lets operators recover direct labor costs, allocate equipment usage, and encourage customers to consolidate or pre-label shipments. It also helps cover the management overhead of assigning storage locations and updating inventory records so the stock is visible and ready for fulfillment.

What The Fee Typically Covers

• Labor: Time for staff to move, stage, and place palletized or loose inventory into assigned locations.
• Equipment: Usage of forklifts, pallet jacks, conveyors, and stretch-wrap or scanning devices during putaway.
• WMS Transactions: Cost to perform location assignments, barcode scans, and inventory updates in the WMS.
• Materials Handling Supplies: Temporary staging, labeling, or repalletizing required to make goods storage-ready.

How It Varies

Putaway fees can vary widely by facility and contract. Key variables include the SKU complexity, receipt unit type (pallet, case, or each), the need to break down or repalletize shipments, whether the putaway requires two-person handling, and whether specialized equipment (e.g., reach trucks for high racks) is needed. Location assignment strategy—random vs. dedicated slotting—and the WMS sophistication also influence cost because higher-touch operations need more labor and control.

Who Pays / Applies

Typically, the party who owns the goods at the time of arrival pays the putaway fee. In third-party logistics (3PL) contracts, merchants (shippers) pay inbound charges, including putaway. For in-house warehouses, putaway is an internal operating cost allocated to goods handling. Contracts sometimes bundle putaway into a single inbound processing fee or separate it as a distinct line item to give visibility into inbound labor costs.

Practical Example

A 3PL receives an inbound consisting of 10 mixed pallets. The warehouse charges a putaway fee of $12 per pallet to move the shipment from receiving docks to assigned pallet positions. If 3 of those pallets require break-down into cases and re-racking, the provider may add a higher per-pallet or per-case putaway charge for those extra handling steps. The merchant receives an invoice that separates receiving inspection, putaway, and storage fees so they can reconcile charges against expected labor and handling.

Tips For Merchants To Reduce Putaway Costs

• Consolidate Shipments: Combine small inbound orders into full pallets where possible to lower per-unit putaway cost.
• Pre-Label And Pre-Stage: Ensure cartons and pallets are labeled with SKU and UCC/EAN barcodes so warehouses can scan and assign locations faster.
• Standardize Packaging: Uniform pallet sizes and case dimensions reduce handling time and reduce special equipment needs.
• Negotiate Contract Terms: Define thresholds for minimum charges, include volume discounts, or agree to bundled inbound pricing to simplify billing.

In short, the Putaway Fee is a focused inbound charge that recovers the labor, equipment, and WMS transaction costs needed to place received inventory into storage. Understanding its components and drivers helps merchants negotiate better terms and warehouses price services consistently.