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.
Tip #1: Review Past Shipping Data
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, eliminating or reducing extra expenses is a great starting point. These additional fees are known as 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 are spending 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 accessorial costs you are incurring, 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. 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? 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 own expectations including a 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 changes or charges if terminate 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
Never sign away your right to negotiate a contract at any time or exit a carrier agreement. Additionally, 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. Late package refund auditing is an easy way to reduce your shipping overhead while also strengthening your 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 an important piece to a carrier contract puzzle. But it’s ultimately the review of the proposed agreement that 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 end result can save you not only time… but headaches and dollars, as well. Gain expert insight here.