The pace of parcel costs is fast, and the fine-print details of carrier contracts often change just as quickly. Keeping this in mind, how can businesses keep up with the rapid speed of parcel changes directly impacting their businesses? Shipping contract negotiation.
Regularly reviewing carrier contracts from UPS and FedEx is necessary to support shipping efficiency and expenses best. Shipping contract negotiation is enormous. Contract negotiation is critical when you consider that carriers announce rate increases annually. UPS and FedEx experienced an average rate increase for ground delivery of 5.9% in 2022, among other increased rates. Because of this, it’s critical to consider how these changes impact your business – as well as identify what you can do to help combat increased shipping spend.
To help navigate the often challenging and always complex realities of carrier contracts, consider how the below five tips can help.
Tip #1: Review Past Data & Shipping Contract Negotiations
It’s impossible to identify where you can save money or strengthen operations without reflecting on your shipping history and parcel expenses. To avoid this potential setback, review data from your shipping past to deliver insight into your most frequent zones shipped, the weight of packages sent, and all other factors that influence shipping spend. Collectively, this data can clarify your shipping habits while also helping to identify characteristics and rates that are important to you from your carrier or carriers of choice.
Tip #2: Identify Frequently Used Accessorial Fees
Eliminating or reducing extra expenses is a great starting point for saving money. These additional fees are accessorial fees for carriers such as UPS and FedEx and can add up quickly. As a result, you must understand where, when, and why you spend dollars on these extra charges. Then, aim to negotiate savings on these in your contract negotiation. You should review the accessorial fees, including charges for residential deliveries, additional handling, signature requirements, and more. For a more comprehensive view of your accessorial costs, click here.
Tip #3: Benchmark Competitor Rates and Services
Preparation does not go unnoticed during carrier shipping contract negotiations. Understand what competitors offer so that you can confidently identify where and why you deserve a negotiated rate. Your carrier representative will not overlook your knowledge of these details. As a result, it should help you secure better rates within your carrier contracts. After all, your carriers know that if you don’t give your business to them… you absolutely will to someone else.
Tip #4: Ask for Negotiations on Your Terms… Not Carrier Terms
Did you know you can start a shipping contract negotiation anytime? No need to wait until it’s expired or approaching expiration. This perk is a benefit to shippers – yet too often is not taken advantage of. Don’t let carriers have control of what you want from them. Set your expectations, including a timeline, when negotiating your carrier contracts. And on that note, don’t get locked into a contract that puts you into a timeline that prohibits changes or charges if you terminate an agreement early. The details of a contract are complex, but make sure these details are not among them before you sign anything.
Tip #5: Keep the Money-Back Service Guarantee & UPS GSR
Never sign away your right to negotiate a contract at any time or exit a carrier agreement. Also, never sign a contract that prevents you from receiving refunds or gaining money back when deserved. When it comes to carrier shipping contract negotiations, the details matter. The details of capturing dollars are something you want to ensure your company gets through parcel auditing. Late package refund auditing is an easy way to reduce shipping overhead while strengthening shipping efficiency. However… carriers don’t like it when companies identify when they are due money that has already been spent with the carrier. Carrier incompetency shouldn’t impact your contracts. Explore more about parcel auditing here.
Finally, shipping contract negotiation is essential to a carrier contract puzzle. But it’s ultimately the review of the proposed agreement will make or break your negotiation success. Fine print details can be confusing – not to mention boring. Consider how an expert can help bring clarity to this complicated process. The result can save you time… but also headaches and dollars. Reveal shipping intelligence and expert insight here.