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5 Ways to Prepare for a Small Parcel Rate Negotiation

By Last updated on: April 24, 2020
Parcel Rate Negotiation

A successful FedEx or UPS parcel rate negotiation is essential to substantially lower your shipping costs. Preparation is key to how well a company can negotiate lower small parcel rate agreements. Therefore, let us look at a few key points that all businesses, big and small, need to follow. 

1. Get all shipping data 

Include all FedEx, UPS, USPS, DHL, LTL, or any other sources of shipping costs. The more encompassing information and data you can provide about shipping history, the better. This is where having a partner like Refund Retriever will benefit you greatly in a parcel rate negotiation. All of our late delivery audit customers have access to reports and analytics. Technology has made shipping data more accessible than ever.

In summary, when you present generalizations about shipping patterns, volumes, or accessorial fees, it forces the carrier to do the same with proposed pricing. And when carriers have to do this, they assume the worst. When you lack proper data, carriers will automatically default to offering you a higher rate. This is simply because they have no idea what to expect.

2. Present your case professionally

A request for proposal (RFP) is a document that provides details about a project, as well as solicits bids from the carriers who will help complete the project. A well prepared RFP confirms you are serious about the parcel rate negotiation. In addition, this will let the carriers know you’ll be in a position to assess their pricing thoroughly. 

Part of the carriers’ tactics is making it challenging to assess discount rates and quantify their pricing. However, having a method to gather and analyze the proposals from each carrier keeps you in control.

3. Include all carriers in the competition

They are competing for your business; remember that point. FedEx and UPS are both large companies so it can be a mistake to assume you cannot use both for all types of service levels. Use each carrier’s proposal as leverage points. Every part of an agreement is negotiable, from the grace incentive discount periods to pricing or definitions of accessorial fees.  

4. Think Long Term

Identifying your current transportation patterns is essential, but also convey how your business will change in the next year. Many companies add product lines or open new distribution hubs. If this is the case, it should be planned for in the new carrier agreement. Adding new products can change weights, packaging dimensions, and other fundamental volume data. 

Even small changes can directly impact your bottom line. Be sure these forecasted changes are reflected in your new parcel rate negotiations. Get the best pricing for where your business is going, not where it’s been.

5. Find a partner

Small parcel rate negotiations are often something that’s better left to the specialists. A specialist could include an expert at your company or a third party that knows the ins and outs of FedEx and UPS agreements. Carriers are experts at knowing their costs and potential profits, but so is a company like Refund Retriever. The right knowledge gives shippers the ability to know what discounts or terms are obtainable. 

Anytime you start negotiating small parcel agreements, proper preparation makes all the difference. Taking the time to plan correctly will guarantee your company secures the best possible FedEx or UPS rates. But remember, FedEx and UPS have a team of expert data analysts operating behind the scenes finding potential profit centers. Therefore, it is worth considering the assistance of a company like Refund Retriever. We can advise you what your rates should be and ensure savings before ever signing a FedEx or UPS agreement. Contact us to learn how.

Brian Gibbs

Author Brian Gibbs

More posts by Brian Gibbs

Brian Gibbs | President of Refund Retriever

Brian Gibbs founded Refund Retriever in 2006 while running his first eBay based business and seeing the shortcomings of other shipment auditing companies. Refund Retriever's primary focus is FedEx and UPS parcel invoice auditing. After graduating from Texas A&M University in 2001, he then graduated from the University of Houston in 2004 with a JD and MBA. Gibbs has been featured in Forbes, Entrepreneur and other publications discussing parcel auditing, shipping, e-commerce and more. Learn more at www.refundretriever.com or call (800) 441-8085 for more information.

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