Making sure your small parcel rates are competitive is a never-ending battle. While the parcel carriers had all the negotiating leverage with customers during the pandemic, things have changed since. Today, parcel volume is scarce, and the carriers are finding it harder to create the efficiencies of scale in their networks that they need to manage their operating costs effectively.
The result? They need your parcels, and it’s become a tremendous buyer’s market for small package shippers. Oddly, however, many companies are not taking advantage of the opportunity. Chances are it’s because they believe one of the many common but misguided myths that hold businesses back from paying the lower shipping rates they could be.
Parcel carriers thrive in chaos when it comes to their rates and contracts. However, shippers need to recognize that they continue to be in a position of strength. Seeing through the haze of messy rates and surcharges and ignoring the misconceptions can unlock big savings for any parcel shipper who has not renegotiated their carrier contracts in even just the past few months.
Like you, the carriers are interested in protecting their bottom line, and they’re happy to let the status quo continue. It’s time to break that pattern and dispel some myths about small parcel contract negotiations.
Myth #1: Carrier Contracts Are Set in Stone
Many companies believe that their carrier contracts can’t be altered — they have to wait until the agreement expires before renegotiating. This is almost always a costly mistake. Nearly everything within the industry is dynamic, with fuel prices, fees and surcharges, general rate increases, market demand, and carrier capacity constantly fluctuating. So, the great rates you negotiated even less than a year ago could quickly become above-market.
The key to optimizing your shipping costs is maintaining up-to-date contracts that reflect current market conditions. So, regularly review your contracts, and always be prepared to renegotiate, perhaps following the 6-to-12-month cycle many companies use when reassessing their contracts. This proactive approach will ensure your small parcel rates remain competitive.
Myth #2: You Can’t Use a Third Party
It’s not uncommon for carriers to imply that shippers should handle their negotiations independently. It’s a tactic that benefits them while weakening your position. Remember, they’re skilled negotiators whose primary interest is maximizing their profits. They’ll have a dedicated team of analysts meticulously pore over your shipping and spending patterns, looking for ways to put you at a disadvantage during negotiations.
To level the playing field, consider partnering with an expert in parcel contract negotiation, such as TransImpact, which specializes in optimizing, identifying, and securing market-appropriate rates for shippers like you. With a deep understanding of the industry, carrier cost models, and current market trends, TransImpact can help you identify areas for cost reduction within your contract and guide you to confidently approach the negotiation. Most importantly, we know what a company like yours should be paying. All the while, we operate behind the scenes, giving you a strategic advantage and better leverage in the negotiations.
Myth #3: You Can’t Share Your Shipping Data
Another myth that needs to be busted has to do with all the valuable parcel data you already have. Unfortunately, some carriers try to discourage shippers from using and sharing data with experts who can help, suggesting that it’s proprietary information. False. It’s your data, and you can use it as you see fit.
Read about the power of using your parcel data to drive operating efficiency, here.
The problem is that companies that don’t have their own tools to analyze their data are at a severe disadvantage when entering negotiations.
Don’t let the carriers claim this advantage — assert your rights and extract the full value from your data. It can create a clear picture of your shipping patterns and volumes, help to identify areas for consolidation or route optimization, and allow you to demonstrate your value as a customer and negotiate from a position of strength.
The truth is it’s always a good time to renegotiate your parcel contracts. The carriers are constantly changing the rules, and renegotiating is the only way to reset the playing field and take back control, bringing order to the frequent new fees, surcharges, and GRIs that there seems to be no break from these days.
Pro tip: A partner like TransImpact can assist you with data collection and analysis, benchmarking, continuous monitoring and optimization, and developing a customized negotiation strategy based on your specific shipping characteristics.
Email info@transimpact.com to learn more.