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Subject: Re: Speaking of Hostage Fees........will this come to Court???
From: Patrick Cunningham <[log in to unmask]>
Reply-To:[log in to unmask]
Date:Thu, 9 Oct 2003 15:24:54 -0700

text/plain (56 lines)

There are a variety of ways that these fees appear in contracts. In
general, they are over and above the normal retrieval charges, which
are reasonable to expect to pay when you get your boxes back. In
addition, for large volumes of records, you may also need to pay for
pallets and shrinkwrap because these will amount to unusual expenses
for the vendor. With the pallets, you can usually recoup at least some
of the charge by selling the pallets if you organization doesn't need

I've seen termination fees described as such and also as:

Permanent withdrawal.
Account closing.

In my experience, these terms are usually not well-defined in the
contract and the accompanying activity charges are also often not
well-defined. So in a typical situation, you would have a $2.00 charge
for retrieval of the carton, then a $5.00 "delocation fee", then a $.75
charge for removal of the record from the computer system. You might
also pay excess labor charges (generally justified as quality control);
you may pay a fee for renting floorspace if you aren't removing the
boxes quickly enough; you may pay the afore-mentioned pallet and
shrinkwrap charges; and you'll continue to pay for storage for the
boxes until they are out of the building. Also keep in mind that many
of those fees are charges per cubic foot or equivalent, so companies
that have high volumes of Bankers Boxes are really going to catch it.

In terms of justifying the cost based upon labor expense, I would argue
that you'd have to have a very bad worker being paid an awful lot in
order to justify $5.00 per unit over the normal fee. Your typical
worker in a warehouse is probably making $10 - $20 per hour, plus
benefits. So just for grins, double the base cost of the employee. $40
an hour is pulling 8 boxes per hour. I can do that. I have always
figured that each man-day of work generates about 200 pulled boxes, as
a minimum. Do the math. If someone is being paid $1000 per day to pull
boxes, I think I want that job. So is the $2 per box enough? Again, do
the math. A lot has to do with the facility and the relative density of
the boxes to be pulled. If you generally send out large volumes of
records, it is likely that many of them are very close to each other.
That is optimal for productivity in a perm out situation. If your
workers are pulling an entire shelf at a time, productivity skyrockets.
And keep in mind that a perm out means that the boxes will go on
pallets and processed out 40 or so at a time. Regular pulls are for a
couple randomly scattered boxes which are then often pushed back to a
central collection point. Some do it better, some worse. In any event,
bulk pulls are more efficient than single pulls.

Patrick Cunningham, CRM

If you have access to the 1994 or 1999 ARMA International Conference
books, I have presented on this topic in both years.

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