Preparation plays a key role in how well a company is able to negotiate its small parcel rate agreements. It’s important to know there is a big range in the rates carriers are able to offer their customers, but it’s up to you to go and get the best rates you can. Having a plan and being prepared are the first steps to getting the best possible rates and service-level agreement for your company.
Here are 6 ideas to help you get the best rates from your next small parcel contract negotiation. Remember, it’s important to do these things before your first conversation with any carrier sales reps.
Gather your data
The more specific information and data you can provide about your shipping history, the better. When you generalize key details like shipping patterns, volumes, or accessorials, it forces the carrier to do the same with the pricing. And when carriers have to generalize, they assume the worst and you end up with higher rates.
Present it professionally
A well-prepared RFP shows you are serious about your parcel contract negotiation and lets the carriers know you’ll be in a position to thoroughly evaluate their pricing. One of the carriers’ tactics is making it hard to compare rates and clearly analyze their pricing in a way that lets you be confident in your decision. Having a process to analyze and compare the bids from the carriers keeps you in control.
Let the carriers compete for your business
FedEx® and UPS® are both great companies from a service standpoint, so it can be a mistake to assume you cannot use both for all types of service levels. This point is to be ready to play them off each other and not let either one convince you its services are better or different.
Think about the future
Understanding your current shipping patterns is important, but also make sure the carriers understand how your business will change in the next 12–36 months as well. For example, if you are opening new facilities it will affect your lanes and volumes. Or, adding new products can change weights, package dimensions, and other key volume data — all of which directly impact your rates and accessorials.
Find a partner
Parcel contract negotiation is often something that’s better left to the experts, so working with a third party who will be on your side is a guaranteed way to improve the agreement you end up with. Carriers are experts at knowing their costs, but so are companies like TransImpact. Having an expert on your side enables you to know how far you can push in negotiating every part of your small parcel spend and get the best rates.
The work is not done once the agreement is signed. If you are not already, look into working with a parcel audit provider to make sure the carrier is charging you the rates and fees you agreed on. Carrier billing errors and service failures can result in your paying as much as 30% more than you
should. Partnering with a company to monitor your carrier invoices is a simple
way to get that money back.
Your approach is everything when it comes to small parcel contract
negotiation. Taking the time to prepare properly will help make sure you get
the best rates possible for your business.