Carrier contracts

Carrier contracts: negotiate effectively for better savings

Is tracking individual contracts with multiple carriers proving to be tedious? Are you aware of the latest shipping rates that may affect your business? A carrier contract management system can give answers to these questions. Further, accessorial charges are a part of carrier contract negotiations.

Here, we will explore carrier contracts and their significance in reducing shipping costs for companies.

Carrier contracts and their significance on businesses

Shippers work with carrier companies to move goods between locations under agreed contracts. The carrier contracts work for specific customers and not the public. They are ideal for high-volume shipping operations. Further, carrier contracts give greater visibility regarding the timeline for invoice payments, shipping rate confirmation, and more. Businesses improve their bottom line regardless of dynamic markets with carrier contracts.

Examples of contract carriers are DHL, FedEx, UPS, Penske Logistics, and other large shipping carriers. These contract carriers offer specialized services to companies or organizations based on contracts. They offer customized services for a company’s specific needs. For instance, for the transport of refrigerated goods, they provide refrigerated trucks. Having a contract with the shipping carriers helps shippers reduce shipping costs and improve the visibility of the shipments.

Manage carrier contracts and increase operational efficiency

Businesses need to identify shipping data in their efforts to manage carrier contracts. Shippers can analyze their shipping data by service, weight, zone, and accessorial charges and assess contract deviations. In addition, carrier contracts are subject to changes, and updating carrier contract agreements is essential. A centralized monitoring system allows for better carrier contract management. A quick reference to multiple contracts improves the entire operational efficiency of the shipping company. Further, carrier contract negotiations are a part of good contract management.

Why do businesses require negotiations on carrier contracts?

The negotiations on the rates, services, and accessorials with the carriers are carrier contract negotiations. We have discussed carrier contract negotiations in detail in our previous blogs.

However, given the current global scenario, it is time to revisit contract negotiations with the shipping carriers.

Did you know new carrier rates affect carrier contracts?

In the latest news, FedEx has announced FedEx Express and Ground list rates and surcharges from Jan 2, 2023. You can check here for list rates. You can check here for the FedEx surcharges and fees.

These surcharges will affect the shipping rates. Added fuel costs and labor shortages are having an impact on the freight shipping rates. Further, ground transport is affected by trucking delays, labor disputes, and rising oil prices. As a result, intelligent negotiations with shipping carriers are the need of the hour. Multi-year contracts with carriers help in reducing annual rate increases. Get assistance from Audintel for negotiating with shipping carriers and saving shipping expenses.

Why is it essential to have accessorial charges as a part of carrier contracts?

Accessorial charges are fees levied by shipping carriers for any additional service provided during the transit of goods. Accessorials can impact a company’s bottom line and affect the quality of service. The most common accessorial charges for freight are

  • Detention: a fee charged by a carrier for additional time spent getting loaded or offloaded at a shipper or receiver
  • Demurrage: daily rate charge for cargo left at the terminal beyond the allotted free time
  • Storage: charges for holding containers at the intermodal terminal beyond the free time allotted
  • Per diem: a fee that a carrier charges against another shipping carrier or customer for using its trailers, containers
  • Residential delivery: surcharges for delivery of parcels in residential areas

Skilled negotiations help to avoid or eliminate accessorial charges. Shippers can schedule the docking to avoid detention charges. Similarly, keeping track of the arrival/ departure of containers and pre-clearing the cargo will eliminate the demurrage charges. Shipping carriers agree to lower prices during negotiations, provided shippers avoid accessorials.

Carrier contract agreement

An agreement between shipping carriers and companies for delivering goods, services, and fees is a carrier contract agreement. For instance, the UPS carrier contract agreement contains incentives and minimum rates as decided by UPS and the shipper. Further, it covers accessorial fee reductions and DIM weight reductions on invoices. With the correct shipping data, shippers can benefit from carrier contracts.

Audintel and carrier contracts

Carrier contract management is hard to decipher for clients having multiple contracts with multiple shipping carriers. Audintel not only manages carrier contracts for its clients but also helps in negotiating for a better price. We help in carrier contract negotiations by providing insightful data. Further, Audintel tracks shipping invoices for clients. We investigate the shipping carrier’s performance and aid clients in reworking contracts. Our experts are well-versed in negotiations and monitor the dynamic shipping rates of different shipping carriers. So, Audintel protects its clients from unwanted expenses by re-negotiating contracts with shipping carriers.

Final thoughts

Technology can optimize the shipping operations of businesses and reduce shipping costs. However, understanding the complexities of shipping rates and accessorials may confuse shippers. Audintel with its unique software tools, can help negotiate contracts with shipping carriers. We offer services that will save money and improve your overall service. Let Audintel guide you through the complex maze of carrier contracts. Contact us for any information on carrier contracts and our services at +1 (619) 354 8539 or visit our Audintel website.

UPS Peak Surcharges

Know all about the latest updates on UPS Peak Surcharges

E-commerce orders increase in the holiday season due to high demand from customers. Ideally, the peak season for shipping is the holiday season beginning in early November each year. However, UPS has decided to continue its Peak or Demand Surcharges on packages “till further notice” in 2022. The increase in surcharges may be due to rising inflation and gas prices.

However, UPS has not cited a particular reason for the rise but mentioned increased demand for shipping services on its website. This article explores the UPS Peak or Demand surcharges with new changes in 2022. In addition, we will discuss how UPS surcharges affect businesses.

What is UPS Peak Surcharge?

The holiday season in the United States typically starts in early November and ends in January. Many customers do their holiday shopping late, resulting in high demand for shipping packages at the last minute. Shipping carriers consider the holiday season as the peak season. They charge extra fees along with the base cost of shipping. UPS names these surcharges as UPS Peak or Demand surcharges. So, UPS charges more for the additional handling of packages and oversize packages. Further, UPS levies a delivery surcharge for international or remote area shipments.

UPS Peak Surcharges-what’s new in 2022

Since 2020, UPS has had peak or demand surcharge fees throughout the year rather than just during the traditional holiday season. But, from May 2022, the peak surcharges have risen sharply for shipments from and to the United States. The calculation of the shipping rates is per pound based on the billable weight of the shipment. The surcharges are subject to dynamic changes. As of September 9, 2022, update on the UPS website, we have observed the following surcharge fluctuation. These surcharges are:

  • Set at $3.50 per package for additional handling and $40 per package for Large parcels. This fees will apply till October 1, 2022. Further, expenses are increasing to $6.50 per package for additional handling, $70 per package for Large parcels, and $400 per package for Over Maximum Limit packages after October 2, 2022, until January 14, 2023.
  • Set at thirty cents per package for domestic UPS Ground Residential and UPS SurePost packages (valid till October 29, 2022). In addition, these peak surcharges is applicable to shippers who have shipped more than 25,000 packages in any week after February 2020. The fees are regardless of the shippers’ shipment volumes for any services.

From October 30, 2022, to January 14, 2023, businesses can expect a significant UPS peak surcharge in the following services: UPS Sure Post, UPS Ground Residential, UPS Next Day Air Residential, and other UPS Air Residential. The fees are applied weekly to each package. It applies to packages exceeding 105% of a shipper’s average weekly volume (“Baseline” volume) within each service level. (Click here for more details).

UPS Peak Surcharges (applicable from January 16, 2022, till further notice) for UPS Standard shipments from Canada to the U.S. is $0.30 per package and UPS Trade Direct® shipments from the U.S. to Canada are $0.42 Canadian Dollars (CAD) per package.

UPS Peak or Demand Surcharges for various Worldwide services

UPS has levied UPS Peak or Demand surcharges for other services too. These services are for international shipments to and from the United States with different delivery times. There is an increase in fees from May 22, 2022, by UPS with no definite end date. The international services include:

UPS Worldwide Express and UPS Worldwide Express Plus: These services involve delivering packages to destinations worldwide in 2-5 days. Shippers get guaranteed on-time delivery of their packages with in-house customs clearance.

UPS Worldwide Saver: This service uses air transport and guarantees delivery by the end of a business day. Shippers choose UPS Worldwide Saver for fast deliveries and last-minute delivery of goods.

UPS Worldwide Expedited: Small and lightweight parcels are delivered internationally within 2-5 business days. It is a guaranteed service by UPS that sends packages to destinations worldwide at a lower shipping rate.

UPS Worldwide Express Freight: This service provides guaranteed, faster, palletized shipments in more shipping lanes. It is in use when shippers want to send products in an emergency. It takes 1-2 business days for package delivery. In 2022, UPS peak surcharges are increased two-fold for shipments using this service based on the weight of the shipment.

UPS SurePost: It is an economical service of UPS, wherein the last-mile delivery is by the U.S. Postal service (USPS). Shippers use this service for non-urgent, business-to-customer needs of low value. It is ideal for packages less than 10 lbs.

Note: please see the details on the UPS official U.S. website for the precise calculation of UPS peak surcharges.

Suggestions to minimise UPS Peak Surcharges

Shippers can follow some parameters like keeping the weight of packages less than 70 lbs to cut down on shipping expenses. In addition, companies can maintain the dimensions of parcels to acceptable levels. Further, using the United States Postal Service (USPS) helps to reduce peak prices and get assurance of pick of packages. On the other hand, shippers can minimize UPS Peak Surcharges with cost-saving advice from partners such as Audintel. We help shippers get discounted shipping rates and negotiate surcharges with shipping carriers. Our team analyses shippers’ data and provides insights into saving money for businesses. UPS Peak or Demand surcharges are dealt with by the team of Audintel effectively.

Final thoughts

Rising shipping costs due to surcharges levied by shipping carriers are changing the way you ship today. Keeping track of Peak surcharges, shipping rates of shipping carriers and on-time delivery of packages seems overwhelming for shippers. Audintel helps companies understand the complexity of the shipping carriers’  fees and surcharges. We simplify the shipping process for your company. If you have questions regarding our services, contact us on +1 (619) 354 8539 or visit our Audintel website.