The pace of parcel is fast and furious with the fine-print details of carrier contracts often changing just as quickly. Keeping this in mind, how can businesses keep up with the rapid speed of parcel changes that directly impact their businesses? Shipping contract negotiation.
In order to best support shipping efficiency and expenses, regularly reviewing carrier contracts from UPS and FedEx are a must. Shipping contract negotiation is huge. This is particularly important when you factor in the reality that carriers announce rate increases annually – with UPS and FedEx both having an average rate increase for ground delivery of 4.9% in 2017 among various 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 5 tips can help.
Without reflecting on your shipping history and parcel expenses, it’s impossible to truly identify where you may be able to save money or strengthen operations. To avoid this potential setback, review data from your shipping past that will deliver insight on your most frequent zones shipped, the weight of packages sent and all other factors that influence your shipping spend. Collectively, this data can offer clarity to your shipping habits while also helping to identify what factors and rates are important to you from your carrier or carriers of choice.
Tip #2: Identify Frequently Used Accessorial Fees
When it comes to saving money, there is no better way to do this then to eliminate or reduce extra expenses. For carriers such as UPS and FedEx, these extra fees are known as accessorial fees and can add up quickly. As a result, it’s important you understand where, when and why you are spending dollars on these extra charges – then aim to negotiate savings on these in your contract negotiation. Among the accessorial fees, you should review include charges for residential deliveries, additional handling, signature requirements and more. For a more comprehensive view of accessorial fees you may be billed for, click here.
Tip #3: Benchmark Competitor Rates and Services
Preparation does not go unnoticed during carrier contract negotiations and conversations are no exception. Have an understanding of what competitors offer so that you can confidently identify both where and why you deserve a negotiated rate. Your understanding of these details will not be overlooked by your carrier representative and as a result, 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 that you can re-negotiate a carrier contract at any time versus having 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 the control of what you want from them and instead, set your own expectations – including timeline – when it comes to negotiating your carrier contracts. And on that note, don’t get locked into a contract that sets you into a timeline that prohibits you from making changes or charges you should you exit a contract early. The details of a contract are complex, but make sure these details are not among them by before you sign anything.
Tip #5: Keep the Money-Back Service Guarantee & UPS GSR
The same way you don’t want to sign away you’re right to negotiate a contract at any time or exit a carrier agreement. Never to sign a contract that eliminates you from capturing refunds or gaining money back when deserved. When it comes to carrier contract negotiations, the details matter. And the details of capturing dollars is something you want to ensure your company gets through parcel auditing – an easy way to reduce your shipping overhead while also strengthening your shipping efficiency. Make no mistake, however… carriers don’t like it when companies identify when they are due money that has already been spent with the carrier. This really shouldn’t impact your contracts, however. Explore more about parcel auditing here.
Finally, remember that while shipping contract Negotiation is an important piece to a carrier contract puzzle it’s ultimately the review of their proposal that will make or break your negotiation success. Fine print details can be confusing – not to mention boring – for many folks to review, so consider how an expert can help bring clarity to this complicated process. The end result can save you not only time… but headaches and dollars, as well. Gain expert insight here.