When Your 3PL Goes Dark: Monthly Inventory Exports, the Shrink Clause and UCC 7-403
Florida's UCC 7-403 makes a warehouse deliver, but on losses over $10,000 you prove negligence. The shrink clause, monthly export and plan if your 3PL closes.
By Bernardo Campelo, Forbes Business Council E-Commerce Leader, Amazon SPN Certified provider, Amazon SP-API authorized partner, and Founder of PrepVia.
As of October 29, 2026, Florida's version of UCC section 7-403 still puts the delivery duty on the warehouse: a bailee "shall deliver the goods to a person entitled under a document of title" unless it establishes one of a short list of excuses, according to section 677.403 of the 2026 Florida Statutes. Florida also adds a line the model code does not have. When the value of the loss, damage or delay exceeds $10,000, the burden of establishing the warehouse's negligence is on the person claiming the goods.
Read those two rules together and the question for a brand with millions of dollars of stock in a 3PL changes. The law says the warehouse has to hand your goods back. On a large loss in Florida, though, you carry the burden of proving the warehouse was negligent. Any claim like that starts with records you hold yourself, not records that live only in the 3PL's software.
That software can go dark. In April 2026, Business of Home reported that a Las Vegas 3PL had cut off its clients in early March and that its management software was shut off when at least one brand arrived to collect its stock. This post covers Florida's delivery, care and lien rules, the shrink clause, the monthly export, a 3PL bankruptcy and the second destination.
The 60-second version
Under Florida's version of UCC 7-403, where your agreement counts as a document of title, a warehouse must deliver your goods unless it proves an excuse, but on a loss above $10,000 the burden of proving its negligence is on you. A monthly inventory export by SKU and location, kept outside the 3PL's system, shows what was there and when, which is where any claim starts; proving negligence takes more, and that is work for your lawyer. Florida lets the storage agreement cap the warehouse's liability and set claim deadlines, which is where a shrink clause lives, and no public primary source sets a "normal" shrink rate. The warehouse holds a lien for its charges and can generally end storage on at least 30 days' notice when no period is fixed. In a 3PL bankruptcy, an automatic stay covers acts to obtain possession of estate property, so plan to go through the case. Keep a second destination ready, and take every clause to your lawyer.
Every statute and report below was checked on October 29, 2026 against the 2026 Florida Statutes on leg.state.fl.us, the U.S. Code on govinfo.gov, Business of Home and Supply Chain Dive, linked where they first appear. Article 7 is adopted state by state with local changes, so read the version that governs your agreement. This is not legal advice: your lawyer writes and reads the final clause.
What Florida's Article 7 Requires of the Warehouse
Florida enacted UCC Article 7, on documents of title, as chapter 677. The rules below are Florida's text, with the model code noted where it differs.
The duty to deliver and its excuses
Section 677.403(1) lists what a warehouse can raise when it does not deliver: delivery to someone whose receipt was rightful against you, loss it is not liable for, a previous sale "in lawful enforcement of a lien or on a warehouse's lawful termination of storage," a seller's stop-delivery right, a diversion, a personal defense such as a release, and "any other lawful excuse." The wording places the burden on the warehouse: the duty holds "unless and to the extent that the bailee establishes" one of them.
The Florida difference sits in paragraph (b). The model text of 7-403 lists loss "for which the bailee is not liable" and stops there. Florida keeps that excuse and adds that "the burden of establishing negligence in such cases when value of such damage, delay, loss, or destruction exceeds $10,000 is on the person entitled under the document." For an enterprise account, almost every loss worth fighting over is above that line.
You pay the lien first, if asked
Under section 677.403(2), a person claiming the goods "shall satisfy the bailee's lien if the bailee so requests." In practice, the day you arrive to collect your inventory is the day the 3PL can ask you to pay the charges its lien covers. Disputed invoices and billing questions are the ones to settle in writing well before that day.
Whether your agreement is covered at all
Florida defines a bailee, in section 677.102, as "a person that by a warehouse receipt, bill of lading, or other document of title acknowledges possession of goods and contracts to deliver them." A warehouse is "a person engaged in the business of storing goods for hire." The general definitions in section 671.201 describe a document of title as a record that, in the regular course of business or financing, "is treated as adequately evidencing" that its holder is entitled to receive and dispose of the goods, and that "purports to be issued by or addressed to a bailee and to cover goods in the bailee's possession." Many 3PL relationships run on a services agreement, an online portal and receiving reports rather than a formal warehouse receipt. Whether those records amount to a document of title is a question for your lawyer, and the answer decides how directly 677.403 applies.
Terms that cannot remove the core duties
Section 677.202(3) lets a warehouse put terms in its receipt that "do not impair its obligation of delivery under s. 677.403 or its duty of care under s. 677.204." It ends: "Any contrary provision is ineffective." A clause can shape how delivery and care work. It cannot erase them.
Separate goods, identifiable at all times
Section 677.207(1) says that unless the receipt provides otherwise, a warehouse "shall keep separate the goods covered by each receipt so as to permit at all times identification and delivery of those goods." Different lots of fungible goods may be commingled, and then the owners hold them in common. The statute does not require any report. It does describe the state an export should capture: your goods, identifiable, where the warehouse says they are.
Two claimants freeze the dock
Under section 677.603, when more than one person claims the goods, the warehouse "is excused from delivery until the bailee has a reasonable time to ascertain the validity of the adverse claims or to commence an action for interpleader." When a 3PL fails, several claimants can show up at once, and clean ownership records shorten that pause. The lender's side of this, including bailee letters and lien waivers, is covered in our post on inventory-backed credit and warehouse liens.
What Two 2026 Closures Show
Two 3PL closures were reported in the first half of 2026, and they unfolded in very different ways.
An abrupt cutoff
Business of Home reported on April 9, 2026 that HVN, a Las Vegas 3PL serving design brands, told several clients in early March that it was discontinuing their service "due to an unexpected system shutdown impacting our fulfillment platform, combined with a strategic operational realignment of our service model." According to the report, "The cutoff was effective immediately."
The report describes brands traveling to Las Vegas to retrieve their own stock. One lighting brand owner found that "the warehouse was disorganized and the management software was shut off," and still located and shipped out all of his inventory. Another found a new 3PL only after an exhaustive search, then hired a local moving company to get its goods out. A third went back to the warehouse it had used before. The report describes an "apparent closure"; it does not report a bankruptcy filing.
The same report describes warning signs in the months before. Clients saw additional charges added to invoices without much explanation and slower email replies after a change of ownership. One founder said the 3PL explained a poor peak season by saying "there were some layoffs right before peak, and so they were understaffed."
"A company can perform well on Monday and break on Tuesday just because two people called out."
Bernardo Campelo, in a Forbes Business Council article, January 9, 2026
Staffing trouble, unexplained charges and slow answers are not proof that a 3PL is failing. They are the moment to pull a fresh export and check that your second destination can take the volume.
An announced wind-down
Supply Chain Dive reported on January 26, 2026 that American Eagle Outfitters was shutting its Quiet Logistics 3PL business. The report said services for Quiet's third-party customers would discontinue over the following months and that the Boston and Dallas fulfillment centers were expected to cease operations in the first half of 2026. An update on February 4 reported that Stord would take over the Dallas center.
A wind-down with notice gives clients months to move. An immediate cutoff gives them days, possibly without the 3PL's software. Plan for the second case, and the first is covered.
The Monthly Export: What to Ask For and Where to Keep It
No statute requires a 3PL to send you a monthly inventory file. You get one by asking for it in the agreement. The goal is simple: if the 3PL's system disappears tomorrow, you can still show what you own, how many units, and where they sat at the last cutoff.
"Ask your 3PL for a full inventory export by SKU and location every month, and keep a copy outside their system. If their software goes dark, that file is the first thing your lawyer will ask for."
Bernardo Campelo, Founder of PrepVia
The fields
| Field | Why it matters if the 3PL goes dark |
|---|---|
| Your SKU, the 3PL's item ID and any marketplace ID (FNSKU, UPC) | Lets a stranger match a carton on a shelf to your catalog without the 3PL's database. |
| Location: building, aisle, rack, bin or pallet ID | Turns a search of a dark warehouse into a pick list. |
| Units on hand, by condition (sellable, damaged, on hold) | Separates what you can ship from what you will claim. |
| Cartons and pallets, with units per carton | Movers and the next warehouse quote by pallet and carton, not by unit. |
| Received date and inbound reference (PO or BOL) | Ties each unit to a receipt you can show, which matters when someone else claims the same goods. |
| Cutoff date and time, with time zone | Makes the file a dated record you can compare month to month. |
| Open charges at the cutoff | Tells you what the warehouse can ask you to pay before release under 677.403(2), and whether the agreement extends the lien to charges on other goods. |
Where to keep it
Keep the file in a system you control: your ERP, your own cloud storage, or both. A login to the 3PL's portal is not a copy. Save each month's file unchanged, with the date in the name, so you have a history and not just a snapshot.
Tie it to the numbers you already close
Reconcile it each month against your own records and, for stock that moves to Amazon, against the Amazon Inventory Ledger. The routine, with tolerance rules, is in our three-way inventory reconciliation post. The export adds a copy the 3PL cannot switch off.
Monthly files are also the start of any claim: a count that drops with no outbound shipment to explain it now has a dated before and after.
The Shrink Clause: Writing the Number You Will Live With
A shrink clause sets how much unexplained loss counts as normal, which the brand absorbs, before the 3PL starts to pay. No public primary source sets a market figure. Treat any "normal" rate you hear as a negotiating position, and write your own number into the agreement with your controller.
Where the law leaves room
Section 677.204(1) sets the standard: a warehouse is liable for loss "caused by its failure to exercise care with regard to the goods that a reasonably careful person would exercise under similar circumstances." It adds: "Unless otherwise agreed, the warehouse is not liable for damages that could not have been avoided by the exercise of that care."
Section 677.204(2) lets the agreement cap damages with "a specific liability per article or item, value per unit of weight, or any other negotiated limitation of damages as agreed upon between the parties." The model text lacks that last phrase. The cap "is not effective with respect to the warehouse's liability for conversion to its own use," and the bailor can ask in a record, at signing or within a reasonable time after receiving the warehouse receipt, for higher liability, with "increased rates" possible on the higher valuation. Section 677.204(3) allows "reasonable provisions as to the time and manner of presenting claims and commencing actions."
So the shrink clause sits inside three levers: what counts as a loss the warehouse could have avoided, how much it pays per unit when it is liable, and how fast you must claim.
The parts of a clause
| Element | The question to settle |
|---|---|
| Definition of loss | Does shrink mean unexplained count variance only, or does it also include damage, mis-ships and returns lost in processing? |
| Measurement base | Percent of units received, units shipped or average units on hand, and over which period? |
| Count of record | Which count settles the number: a cycle count, a full physical count or the reconciled marketplace receipt? |
| Valuation | At your landed cost, a declared value per SKU or the cap per unit or per pound in the agreement? |
| Above the allowance | Does the 3PL pay every unit above the line, or only after an investigation? |
| Claim window | How many days after the count or the monthly export you have to file, as 677.204(3) permits. |
| Interaction with the cap | Whether the liability cap applies to shrink, and whether the conversion carve-out is stated. |
The liability side, and the coverage behind it, is in our prep center agreement checklist and our post on bailee coverage and stock throughput insurance.
The Lien, the 30 Days and a Sale
The warehouse's lien and the lender's priority are covered in depth in our post on bailee letters and warehouse liens. Three points matter when a 3PL is closing.
- The lien follows the goods it holds. Under section 677.209(5), "A warehouse loses its lien on any goods that it voluntarily delivers or unjustifiably refuses to deliver."
- Storage can end on notice. Under section 677.206(1), when the document fixes no period, the warehouse can require payment and removal "within a stated period not less than 30 days after the warehouse gives notice," and then sell. Until a sale, section 677.206(4) says it "shall deliver the goods to any person entitled to them under this chapter upon due demand." Shorter periods apply to goods about to lose value below the lien or that turn out to be hazardous, under 677.206(2) and (3). The statute speaks of storage; fulfillment service can stop sooner, so the agreement should cover both.
- For a merchant's goods, the lighter sale rule is allowed. Section 677.210(1) allows a commercially reasonable public or private sale "after notifying all persons known to claim an interest in the goods." The stricter steps in 677.210(2), with notice in person or by registered or certified letter and newspaper advertisements, apply to goods "other than goods stored by a merchant in the course of its business." Under 677.210(8), a lien on a merchant's goods may be enforced under either subsection. A brand storing inventory for sale should assume the lighter rule can apply to it. Under 677.210(3), anyone claiming the goods can stop a sale by paying the lien and the reasonable expenses first.
The practical point: keep the account current, and dispute charges in writing as they arrive. Notice of a lien sale goes to persons known to claim an interest, so make sure your notice address in the agreement is one somebody reads.
If the 3PL Files for Bankruptcy
A bankruptcy filing changes who decides, and how fast. Two sections of the Bankruptcy Code set the frame. How they apply to your goods is a question for a bankruptcy lawyer, ideally before the filing.
11 U.S.C. 541(a)(1) says the estate includes "all legal or equitable interests of the debtor in property as of the commencement of the case." A 3PL holding your goods for storage has possession of them; it does not own them. That is the argument your records support, and why a dated export, receiving records and invoices from your suppliers matter on day one.
11 U.S.C. 362(a) makes the petition operate as a stay of, among other things, "any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate." Even when the goods are yours, expect to go through the case and the trustee or the court, not around them. Showing up with a truck is not a plan once a petition is filed.
A Second Destination, Ready Before You Need It
In the Business of Home report, one brand went back to a warehouse it had used before. You do not need two active 3PLs. You need one that already knows your goods and can quote the move in days.
- Know who would take the volume. Keep a short list of warehouses that handle your product type and order profile, with a contact and a recent quote.
- Keep the onboarding file ready. Item master with dimensions and weights, carton and pallet configurations, labeling requirements and the latest export.
- Know the move. Pallet count from the export, a freight quote basis and who signs the bill of lading at the old dock.
- Know the release terms. What the agreement says about notice, release days and freight out. Our post on exit terms covers what those clauses should say.
Say your 3PL agreement renews in January. The weeks before renewal are when you have the most room to ask for the monthly export, a defined shrink clause and a release window in business days. After renewal, the same requests become favors. The planned move is in our 3PL switching playbook.
What to Ask Your 3PL
A prep center or 3PL stores and handles goods it does not own, so it sits on the warehouse side of every rule above. These questions work for any provider, including PrepVia on the quote call:
- Export. Can you send a full inventory export by SKU and location on a fixed day each month, and what fields does it include?
- Receiving. How do you record what arrives, and how fast do you report discrepancies?
- Shrink. How does the agreement define loss, measure it and value it, and what is the claim window?
- Liability. What is the cap, does it apply to shrink, and what does a higher declared value cost?
- Lien and release. What lien does the agreement claim, and how many business days after notice is inventory released?
- Continuity. If your system is down, how does a client get a current count and access to its goods?
At PrepVia, receiving and inspection are included, and discrepancies are reported within 24 hours of arrival, with photos. Our app tracks expected versus received units in real time. We are Amazon SPN Certified, at 8507 NW 72nd St, Miami, FL 33166. Pricing is quoted per account on a free 15-minute call.
Frequently Asked Questions
What does UCC 7-403 require of a 3PL?
In Florida's version, section 677.403, a bailee must deliver the goods to the person entitled under a document of title unless it establishes an excuse, such as loss it is not liable for or a lawful lien sale. Whether a given 3PL agreement counts as a document of title is a question for your lawyer.
Who has to prove negligence when a 3PL loses inventory in Florida?
Florida's section 677.403(1)(b) says that when the value of the loss, damage or delay exceeds $10,000, the burden of establishing negligence is on the person entitled under the document. The model code has no such sentence, and whether the rule reaches your agreement depends on whether it is a document of title, a question for your lawyer.
What is a normal 3PL shrinkage allowance?
No public primary source sets one. Florida's section 677.204 lets the agreement limit liability and set claim deadlines, so the allowance is largely a matter of negotiation, within limits: claim deadlines must be reasonable, and a term cannot remove the duty of care. Set the definitions and numbers with your controller and your lawyer.
Does the law require a 3PL to send a monthly inventory export?
No. Section 677.207 requires a warehouse to keep goods separate so they can be identified and delivered, but no statute requires a monthly file. You get the export by writing it into the agreement, with the fields and the delivery day.
Can a 3PL hold my inventory until I pay?
Under section 677.403(2), a person claiming the goods must satisfy the warehouse's lien if the warehouse requests it. Under 677.209(5), the warehouse loses the lien on goods it voluntarily delivers or unjustifiably refuses to deliver. Our bailee letter post covers the lien in detail.
What happens to my inventory if my 3PL files for bankruptcy?
The estate includes the debtor's legal or equitable interests in property under 11 U.S.C. 541(a)(1), and the filing triggers an automatic stay under section 362(a), including acts to obtain possession of estate property. Expect to recover goods through the case, and bring your export and receiving records to a bankruptcy lawyer.
Final Take
Florida's Article 7 gives you a duty to deliver, a duty of care and a rule that the warehouse proves its excuses. It also gives the agreement room to cap liability and set claim windows, and on a loss above $10,000 it puts the negligence burden on you. The monthly export, kept outside the 3PL's system, is the inexpensive part of a plan that works in either case.
Write the shrink clause with your own definitions and numbers, keep the account current, and keep a second destination ready. Then take the agreement to your lawyer before it renews, not after the software goes dark.
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