With FedEx and UPS increasing their rates each year, understanding your own shipping contracts is very important. Did the carriers create the complexity in these to increase their own profits, when was the last time you read through your carrier contract?
With most FedEx and UPS contracts there are two main types of discounts: guaranteed and volume based incentive discounts.
The guaranteed discount rates will be applied to each shipment automatically. Volume based discounts are directly tied to your shipping volume.
FedEx calls these earned discounts and UPS uses the term portfolio tier incentives.
FedEx Volume-based incentives are calculated using annualized gross transportation charges. Accessorial and surcharges are usually not included in this average calculation. UPS uses gross transportation charges, residential surcharges, and delivery area/extended area surcharges. Both carriers typically use a rolling 52-week average.
So why is this important? We recently had a client that requested a contract analysis, we found a percentage of their packages had no discount applied at all. He had guaranteed discounts for Ground shipping, however, all Express service discounts were tied to his portfolio tier incentives. The problem was that this client’s shipping volume placed him in the first tier receiving no additional Ground or Express discounts!
It is beneficial for a shipper to understand each type of discount and monitor your gross spend to be sure that you are benefiting from volume discounts. Be sure you are not in a tier that you are seeing zero additional discounts or a tier in which you cannot get any more discounts if your volume keeps increasing. Contact us at Refund Retriever if you have any questions or would like a free contract analysis.
What does Refund Retriever do?
Each Ground and Express package you send is guaranteed to arrive on time or it’s free! FedEx and UPS do not automatically give you these refunds, Refund Retriever monitors your invoices for late deliveries and other billing mistakes. No refunds, no fees. It’s that simple! Gain logistics insight and visibility with our free reports and analytics.
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