Dim factors importance

DIM factor: its importance in carrier contract negotiations

Did you ever pay more for a lightweight package than a heavy one?

One of the reasons for the hike in shipping prices is the DIM factor. The size and shape of packages occupy space in a shipping carrier’s vehicle. Many shipping carriers calculate the shipping rates based on the dimensional weight due to scarce spaces on their trucks. Thus, the dimensions of a package are essential during shipments. So, what are dimensional weight and DIM factor- these phrases are explained in this article. Also, we discuss the implication of the DIM factor in carrier contract negotiations.

DIM factor

It is a number set by shipping carriers for the shipment volume per unit of weight. It is the DIM divisor. The calculation of the DIM factor is on the maximum cubic inches per pound of a parcel. It is a factor in calculating the shipping price. Every shipping carrier has its DIM factor, which can change annually.

The DIM factor varies depending on the service offered by the shipping carriers. In addition, the mode of transportation affects the DIM factor value. Further, for some shipping carriers, international shipments have a different DIM factor from domestic shipments. For instance, UPS DIM factor for UPS® Air Freight Premium Direct is 139, and UPS Air Freight Direct is 166. When negotiating a contract with shipping carriers, businesses negotiate for a lower (its higher) DIM factor to reduce shipping costs.

What is Dimensional weight?

The dimensional weight of packages is vital for calculating shipping costs. The dimensions of a package occupy space when compared to its actual weight. For example, a lightweight clothes box may occupy more space than a compact steel box. A mathematical formula helps in calculating the dimensional weight.

Dimensional weight = length x width x height of the box/ DIM factor

If the DIM factor is high, the dimensional weight is low. Dimensional weight depends on the weight and size of the package. Hence, businesses must optimize their packaging options during shipping. If the dimensional weight exceeds the actual weight, shipping carriers may charge based on the dimensional weight. Further, to make better decisions, shippers should also know the difference between the Actual and billable weight to save money.

Actual Weight and Billable Weight

Actual weight is the package weight on a weighing scale. Irrespective of the size and volume, actual weight is the physical weight used by shipping carriers while calculating the shipping costs.

Billable weight is the weight that shipping carriers put on the shipping bills. Its calculation by the parcel carriers involves comparing the DIM weight and the actual weight. The parcel carriers use the higher value of the two weights. Billable weight varies for each parcel carrier and service.

Impact of the DIM factor on shipping costs

Shippers review their packaging strategies when shipping lightweight, large boxes. Different packaging designs and materials will give a better customer experience and save money with minimal changes. Customized boxes or poly mailers help companies reduce their shipping expenses. Advanced cartonization and streamlining the packaging processes can lower shipping costs.

Partnering with shipping experts allows shippers to ship their packages efficiently and lower shipping costs. 3PLs can also help negotiate lower shipping rates even for packages with higher DIM weights. Further, FedEx has packaging design consultants that help shippers to pack efficiently and prevent damage to goods.

Audintel advises its clients to negotiate on the DIM factor when signing contracts with shipping carriers.

DIM factor in Carrier contract negotiations

During carrier contract negotiations, shipping carriers have their shipping analytics to understand a company’s shipping profile. And shippers require to have detailed shipping data at their fingertips when negotiating with shipping carriers. Though shipping carriers have standard DIM factors for services, shippers can negotiate for lower DIM charges. Businesses can also ask for volume-based pricing of packages, which may be cheaper to send small parcels of less than 20 pounds. Further, shippers need to seek dimensional weight waivers or bargain for discounts on the Dimensional weight of packages.

To get the best out of the contract negotiations with FedEx or UPS, partnering with Audintel gives information about ways to negotiate the DIM charges. We help in optimizing the Dimensional weight of packages and lower shipping costs. Our team keeps track of DIM factor changes so that shippers can negotiate better with the relevant data. Audintel’s software tools help our clients bag the best deals by negotiating discounts with parcel carriers.

Finally

Companies must enter into contracts with shipping carriers to manage their shipping expenses. Understanding Dimensional weight charges and negotiating for lower rates requires shippers to have information on real-time data. Partnering with Audintel allows companies to bargain effectively on Dimensional weight charges with parcel carriers. With good negotiated contracts with parcel carriers, our clients can give the best price to customers and improve their profits. Contact us at +1 (619) 354 8539 or visit our Audintel website for further information about DIM factor and Dimensional weight.

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.

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Carrier contracts: Negotiate to simplify the complexity

The advent of the e-commerce boom has accelerated the way businesses ship their goods. Prompt and cost-effective shipping is the new mantra. Customers expect fast delivery of goods, whether by freight or parcel.

For this reason, shippers need better carrier contracts with effective negotiations. Our earlier blogs were about the importance of shipping data when negotiating with UPS or FedEx contracts and upgrading the carrier contracts. This blog explores carrier contracts, their management, and the negotiation process.

Contract negotiations and carrier contracts

Contract negotiation is a deliberation between two or more parties on the contents of a contract. The contract is a legally binding agreement agreed upon by the parties involved. The parties mutually agree to the terms and conditions of the agreement or contract. It is mutually beneficial and outlines the priorities and expectations of all the involved parties.

Carrier contracts involve contracts between shipping carriers and businesses. Shipping experts negotiate on carrier contracts regardless of the shipping mode. As a result, companies get discounts, shipping offers, and a reduction in general increase rates. In addition, carrier contract negotiations compare the services of shipping carriers so that businesses get the best deals.

Carrier contract management

Managing carrier contracts is tedious as it involves having in-depth knowledge of the terms and conditions. Further, a thorough review of the current or proposed agreement is vital. By examining the fine print of carrier contracts, businesses receive attractive discounts, reduced shipping rates, and other incentives. In addition to understanding the complexities of the contract, it is equally important to have insights into pricing agreements. To negotiate and renegotiate the terms of your contract, you can call the experts at Audintel.

Carrier contract negotiation strategies

Negotiators have to understand the transportation spend before settling to negotiate with shipping carriers. The fees and other expenses charged by the shipping carriers need checking. It includes value-added services such as surcharges, pallet fees, documentation fees, etc. Let’s explore some of the negotiation strategies.

  • Know your shipping profile

Shippers need to understand their past shipping volumes and transportation spend. It includes the type of services, number of packages, the weight of packages, and zones of shipments.

  • In-depth study of carrier contract agreement

The price of packages sent out depends on the shipping carrier’s rates. Shippers can expect discounts on guaranteed services and weights of packages. In addition, incentives are offered based on shipping spend.

  • Benchmarking

Analyze the existing contracts for pricing and accessorial charges. Shippers can compare the amount paid to the real-time rates paid by other similar-size shippers. This helps them to negotiate with the carrier with confidence.

  • Request for proposal

Shippers ask for a written request for proposal (RFP) from shipping carriers to conduct negotiations. It will include different services, discounts, bill options, packaging options, surcharges, etc.

Shipping negotiation process

The shipping negotiation process involves interaction with the carrier’s representatives. So, to save time, shippers can highlight the points that need discussion. It helps in streamlining the negotiation process without getting sidetracked by irrelevant issues. Further, it is vital to keep the negotiation process open for re-negotiation when necessary.

Knowing one’s shipping data and additional charges is critical for successful parcel contract negotiations. For instance, asking for discounts on delivery area surcharges is vital, especially if a parcel delivery to a customer is in a rural area. In addition, negotiators need to know the parcel carriers’ market position and the company’s impact on the carriers’  network. Further, shippers receive proposals for multiple shipping carriers and can choose to negotiate with the parcel carrier that fits their shipping needs.

The carrier contract negotiation process is confusing for shippers but not for experts. Audit companies such as Audintel can save money for shippers with their expertise.

Focused negotiations by Audintel

As audit experts, we believe that effective management of carrier contracts enhances a company’s growth. Audintel ensures that the shipping invoices align with the contract terms agreed upon while negotiating carrier contracts. Effective shipping negotiations improve a company’s bottom line. Our intuitive platform helps our clients know their shipping spend before negotiating carrier contracts. We have ample experience dealing with shipping carriers and understand their thinking and operating methods. This experience helps us leverage the client’s data so that clients can walk with a favourable carrier contract.

Final thoughts

Complex carrier contracts are not easy to understand for shippers. It is necessary to get expert advice regarding the intricacies of contracts. Audintel’s team of experts explains the complexity of the carrier contracts and negotiates the best deal suitable for your business needs. Avoid leaving money on the table and save money. Let Audintel help you in boosting your profits by contacting us today at +1 (619) 354 8539 or by visiting our Audintel website.

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Why is periodic up-gradation of carrier contracts essential?

How recent is your contract with your parcel carrier? Is it a few days or years old? Does your contract offer discounts for some services? These are some questions that businesses need to address in 2022. With this in mind, contracts with shipping carriers play a crucial role for companies.

A periodic contract review is essential to minimize financial and legal risks. This article explores the importance of carrier contracts. And the ways to navigate the challenges shippers face during parcel carriers negotiations.

Importance of carrier contracts

With the rise in fuel prices, businesses have to be careful they do not pay for “peak”  surcharges. Recently, parcel carriers such as UPS and FedEx have raised General Rate Increase (GRI), among surcharges. The impact of these surcharges will affect shippers’ budgets and resources. A robust contract with shipping carriers ensures that businesses pay the amount mutually agreed by the two parties. But, shippers have to be aware of when their contracts end, or it may cost them dearly.

Challenges faced while negotiating with parcel carriers

In the first place, shippers need to know the challenges they face during contract negotiations. Incidentally, parcel carriers have in-depth knowledge about a business’ shipping characteristics. And so, shipping businesses have to know about their shipping history before negotiating with the parcel carriers. Here’s a list of challenges that shippers need to address:

  • Identify the areas to save money

Shipping history and past shipping data help shippers understand the areas to reduce shipping costs. Shipping businesses should know their shipping services with the carriers of their choice. They have to review factors influencing the shipping spend, such as shipping zones of parcels, the weight of packages, package dimensions, and more. Knowledge of one’s shipping characteristics helps businesses close better deals with parcel carriers.

  • Examine the often used accessorial charges

Additional expenses may reduce to a large extent by examining shipping data. For instance, residential deliveries are more costly than commercial deliveries. Further, surcharges like additional handling, address correction, large packages, remote areas, etc., add to the shipping costs. During negotiations, shippers need to find ways to eliminate the extra charges.

  • Keep parcel carriers’ competitor’s data ready

Shippers should have the competitor’s data handy during negotiations with parcel carriers. This data gives an upper hand to shippers to secure better rates in the carrier contracts. In addition, businesses know what to bargain for when negotiating with shipping carriers.

  • Work towards a mutually beneficial contract

Shipping businesses need to work towards a mutually benefitting carrier contract. The contract has to be drafted so that shippers can ask for renegotiations at no particular time. The contract should not be time-bound or favor the parcel carriers. A mutually beneficial carrier contract makes life easy for both shippers and shipping carriers.

  • Do not waive money-back guarantee services

It is a vital part of carrier contract negotiations. Parcel carriers like UPS and FedEx offer a money-back guarantee for late deliveries of packages. However, during contract negotiations, they ask businesses to waive the money-back guarantee clause by offering discounts. Shippers need to be careful not to waive the money-back guarantee clause as they will lose money in the long run.

  • Ask for discount incentives

Each shipment is eligible for discount incentives from the parcel carriers. Carrier contract negotiations involve discounts based on the weight of packages, type of services, and shipping zones. In addition, based on shipping volumes and their shipping data, shippers ask for a discount.

  • Avoid risks by partnering with experts

Shippers can avoid financial risks by partnering with audit experts. Detail analysis of shipping data gives an idea of the overall cost of each shipment. Companies need to hire extra resources to understand the intricacies of shipping rates of various parcel carriers. It is where audit firms such as Audintel can provide the leverage to save money for companies.

The significance of periodic renegotiation of shipping carrier contracts

In addition to the challenges mentioned above, shipping companies need to renegotiate their carrier contracts. Parcel carriers may dissuade shippers from renegotiations, citing no change in shipping costs or disruption in carriers’ discounts. However, shipping companies need to renegotiate their carrier contracts periodically to benefit from discount incentives. Shippers have to balance budgets along with providing best-in-class customer services. If the current carrier contract does not help shippers, it is best to renegotiate or consider using other shipping carriers.

How does Audintel help in carrier contract negotiations?

Audintel’s team analyzes the data of the client and the parcel carriers to give the best deal. Our experts have a deep understanding of the working of parcel carriers’ pricing models. We root out anomalies in carrier contracts so that our clients get the best service rates. Audintel considers the current market conditions that will influence negotiations. We negotiate for our clients fairly and transparently and save money.

Conclusion

The parcel industry has faced several challenges in the past two years. The challenges include shipping delays from parcel carriers, capacity constraints, etc. In addition, UPS and FedEx have surcharges increasing every year. The frequent increase in expenses is hurting the bottom line of many shippers. Audintel assists shipping companies in carrier contract negotiations by auditing their shipping spend. We inform shippers about new carrier practices and encourage them to upgrade their carrier contracts periodically. Finally, for queries on shipping carrier contracts and negotiating tips, get in touch with us or you can call us at +1 (619) 354 8539. However, you can also learn about our services on the Audintel website.

UPS or FedEx contracts

UPS or FedEx contracts: Negotiate with shipping data advantage

Lately, negotiations with parcel carriers are becoming more complicated. Do you often wonder whether your UPS or FedEx contracts give you the best shipping rates? Are you paying extra for services you don’t need? Shipping companies have a better idea in contract negotiations with only their shipping data.

Carrier contract negotiations were a part of our discussion in our earlier blogs. This article will explore the importance of shipping data in carrier contract negotiations.

Small parcel contracts with UPS and FedEx

Shipping companies enter into agreements with UPS and FedEx for small parcel shipments. Parcel carriers try to make as much profit as possible with complex shipping information. But, businesses can maximize their UPS and FedEx small parcel contracts with the knowledge of their shipping data. Companies need to understand their shipping spend and profile to negotiate with parcel carriers. For instance, an invoice has added Surcharge, based on the shippers’ products. However, during contract negotiations, clarity on the accessorials and discounts is a part of the discussions. Example: Additional Handling Surcharge.

Impact of General Rate Increase on negotiations

FedEx and UPS have announced their annual General Rate Increase (GRI). (check out our blog on this). GRI is not only for accessorials but prices are also based on each service, zone, and weight of packages. The contract negotiations with UPS and FedEx need to discuss GRI specific to a shipper’s profile. The contracts need to include clauses that save money for businesses even if there is a change in shipping rates later. Audit companies understand the nuances of GRI and list rates of UPS and FedEx. Partnering with Audintel will make the task easier for shippers.

Shipping knowledge- shippers’ advantage

Knowledge regarding list rates, surcharges, and other data is essential during contract negotiations with parcel carriers. Shippers have a competitive advantage over the parcel carriers with this knowledge. For this reason, shippers have to consider the following aspects during contract negotiations with UPS and FedEx.

1.  Impact of DIM factor on pricing

DIM is the Dimensional weight of a package. DIM weight is based on length, breadth, height dimensions and DIM factor. Shipping carriers like FedEx and UPS calculate shipping prices based on DIM weight and actual weight. Further, shippers can negotiate DIM factor and save money.

2. Understanding Multi weight/Hundredweight services

Companies that have multiple packages weighing more than 200 lbs. to be sent to a single location opt for FedEx’s Multi weight service. This service is only available for companies having shipping contracts with FedEx. UPS Hundredweight service works on similar lines and is for multiple-package shipments. Shippers should understand the potential costs and negotiate rates with FedEx/UPS representatives.

3. Avoid Money-Back Guarantee waiver

Money-Back Guarantee (MBG) waiver waives the right to file refunds for late shipments. Shipping companies should avoid signing agreements having an MBG waiver. Though UPS and FedEx will offer discounts for an MBG waiver, businesses need not sign such contracts.

4. Incorporate minimum reduction

Each parcel shipped by UPS and FedEx has a minimum charge based on service, weight, and zone. Minimum reduction is a negotiated value aimed to reduce the published minimum charges. Shipping companies may save money on their shipments with minimum reductions clause. Shippers have to make sure that it is a part of the agreement during negotiations.

5. The necessity of accessorial discounts

UPS and FedEx increase accessorials or surcharges annually along with rate increase. Businesses need to be careful not try to negotiate accessorials for services not used by them. In addition, shippers can ask for more discounts on accessorials used by them from parcel carriers and save money. In short, it is necessary to have discounts on UPS and FedEx contracts during contract negotiations.

The above aspects need to be understood by shipping businesses. Further, it has to be part of the discussion with parcel carrier representatives during contract negotiations. In addition, businesses unsure how to proceed with UPS/FedEx contract negotiations need to seek help from experts, such as  Audintel.

How partnering with Audintel will help?

Audintel provides the requisite information about UPS and FedEx to its customers. Our customers have their shipping profile data handy when negotiating with the parcel carriers. Audintel advises businesses about making changes in their UPS/ FedEx contracts that will benefit them. As a result, shipping companies save money when they partner with Audintel. In addition, we help customers get the best possible deals with data strategies.

Final Thoughts

Carrier contract negotiations are complex. However, having shipping data in hand is an advantage for shippers. Audintel provides data to businesses for better UPS/FedEx contract negotiations. Shipping contract negotiations are made simple with shipping data in the hands of shippers. Alternatively, Audintel provides its expertise in carrier contract negotiations to its customers. We are just a step away-call us at +1 (619) 354 8539 or contact us by clicking here or visiting the Audintel website.

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What can you expect in the new year from FedEx and UPS General Rate Increase?

FedEx and UPS issue General Rate Increases(GRI) every year. Businesses have to prepare for rising shipping costs based on their shipping profile. Keeping this in mind, we would like to study the General Rate Increases (GRI) of these two premium parcel carriers for 2022. We will also look at the increase in surcharges and other additional charges of the two shipping carriers.

This article will help shippers understand the price changes in 2022 and choose the parcel carrier according to their needs.

Highlights of General Rate Increase 2022

General Rate Increase (GRI) gives shippers an estimate of the rise in base shipping rates. Depending on the contract negotiations with the parcel carriers, the impact on the shipments for shippers will vary. In addition, accessorial charges also increase every year. The shipping costs vary based on factors, such as distance/zone, dimensional weights, and more. So, our team at Audintel has identified three key highlights from the GRIs of 2022. Further, this comparison is for the United States domestic shipping rates and surcharges only.

A General Rate Increase at the service level

FedEx and UPS offer competitive rates for the domestic US shipping market. However, there appears to be a marked rise in the shipping rates, as seen in the below charts.

List rates of UPS and FedEx

The charts (Fig. 1 and Fig. 2) are for list rates, mainly focusing on 1-pound packages in zone 2. There are eight zones for US domestic shipping zones based on distance. As the distance increases, so do the shipping costs. The shipping list rates are calculated based on the weight of the packages and the shipping destinations. In this chart, UPS and FedEx Ground services show a ~6.8% increase in rates from 2021. Incidentally, parcels with a dimensional weight of more than 150 pounds appear to have a low rate increase.

UPS Rates 2022

Fig. 1: UPS 1lb daily rates  for services in Zone 102(Next Day Air), Zone 242 (2nd Day Air AM), Zone 202 (2nd Day Air), Zone 2(Ground) for destination ZIP codes starting with 004-005

FedEx Rates 2022

Fig. 2: FedEx 1lb rates  for services in Zone 2

Minimum charge reductions as seen for UPS and FedEx

A discount for low-weight packages is possible with minimum charge reductions. It is known as “Minimum Net Charge” by UPS and “Minimum Package charge” by FedEx. Both parcel carriers, UPS and FedEx, offer minimum charges to their customers. Shippers having a large volume of shipments can negotiate for minimum charge reduction in their carrier agreements.

UPS Minimum charges

Fig. 3: UPS Minimum charges for packages

FedEx Minimum Charges

Fig. 4: FedEx Minimum charges for packages

Thus, negotiating for minimum charges with parcel carriers is vital for shippers. Our experts in Audintel help businesses negotiate minimum costs in their contracts. Contact us for further information on UPS and FedEx minimum charges.

Accessorial fees and surcharges

With the General Rate Increase announced each year, accessorial fees and surcharges increase annually. We see an increase in some vital surcharges, such as Additional Handling Charges, Delivery Area Surcharges (DAS), and Residential Surcharges. The impact of these surcharges affects the bottom line of shippers. In the case of UPS, an immense change in 2022 is the addition of Remote Area Surcharges for the lower 48 states. It is known as “US48 Remote Area Surcharge”. Earlier, the Remote Area Surcharge was for some zip codes in Alaska and Hawaii.

UPS Surcharges 2022

Fig. 5: UPS Surcharges

Fig. 5 of UPS surcharges indicates an increase in shipping prices zone-wise. In addition, it appears the introduction of Remote Area Surcharge for additional zip codes in the US will affect the profits of some businesses.

FedEx Surcharges 2022

Fig. 6: FedEx Surcharges

For FedEx surcharges, our observation is that the Additional Handling Surcharge for zone 2 is less than the charges of 2021. Further, the oversize charges for zone 2 are less than the amount charged in 2021. This information is vital for businesses sending oversize parcels to zone 2. It is good news for shippers sending packages for short distances.

As seen in the above charts, the surcharge increase is due to Additional Handling Charges of packages. In addition, Large Package surcharges (UPS) and Oversize packages (FedEx) indicate the rise in price due to the size of the parcels.

Worried about rising shipping charges – let Audintel help you

Our intuitive audit platform provides innovative solutions to businesses. Audintel addresses the challenges faced by shippers. Our team aids shippers in reducing the impact of the steep GRIs, announced by shipping carriers. We help businesses to

  • negotiate better deals
  • receive discounts for services, surcharges
  • choose the best-quality services of alternate, low-cost parcel carriers

Audintel supports shippers in reducing the shipping charges announced by shipping carriers with our contract negotiations services.

Closing Remarks

Choosing the ideal shipping carrier is difficult. In addition, different shipping carriers have various shipping pricing models that may confuse the shippers. Audintel’s team aids businesses to have a clear idea about the carrier agreements they are signing with the parcel carriers. Our aim is that shippers save money and garner profits simultaneously. So, learn about the impact of GRIs affecting your parcel delivery from Audintel. Reach out to our team at [email protected] or by visiting the Audintel website or call us at +1 (619) 354 8539.

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FedEx Rate Increase 2022 – Impact on your business

With the year 2021 drawing to a close, businesses are preparing their budget for 2022. Did you know that the yearly shipping rates offered by carriers have seen an exponential increase? FedEx announced the rate increase for 2022, and it is not the same as before. Here, we will discuss the FedEx rate increase for 2022 and its impact on business. Further, we will explore how small parcel audit services help shippers save money despite the rate increase.

General Rate Increase by FedEx

Initially, we need to discuss the concept of a General Rate Increase (GRI). A GRI denotes an increase in shipping rates applied by the shipping carriers. According to US regulations, a shipper has to receive notification of a new GRI at least 30 days in advance. Since 2013, the GRI yearly increase was about 4.9%. However, for 2022, parcel carriers like FedEx and UPS have increased the GRI by an average of 5.9%. The hike is due to the high demand for e-commerce shipments. The parcel carriers are spending more to transport small parcels and freight.

Ways to handle GRI with audit intelligence

Shippers prepare their annual budget early with the announcement of the new GRI. Partnering with small parcel audit services like Audintel helps shippers understand their shipping profiles. The different aspects of a business’ shipping profile include

  • the type of services
  • weight of packages
  • dimensions of packages
  • pick-up and delivery locations
  • surcharges.

Audintel helps its customers identify the specific aspects of the shipping profile that need consideration. For instance, customer X ships products through FedEx Ground service. Our role is helping customer X receive discounts on fees and surcharges, specifically for FedEx Ground service.

Contrasting features between GRI and Surcharges

GRI involves an increase in the shipping rates for a long time. For instance, GRI was about 4.9% since 2013. Further, surcharges are the additional top-up costs for a specific service, zone and have a short timeline. The change in global demand and supply of goods affects GRI. Surcharges vary with each shipment and may change randomly. For example, an additional handling surcharge is not for every shipment.  The surcharges may differ for each shipping carrier.

FedEx Rate Increase of 2022 and its impact on businesses

FedEx announced FedEx Rate Increase for FedEx Express, FedEx Ground, and FedEx Home Delivery services from January 3, 2022.  The increase is for domestic, export, and import Services. This rate increase of 5.9% does not include surcharges and other fees of the shipping carriers. The rise in shipping rates, new surcharges, and fees impact businesses. As a consequence, shippers have to adjust their annual budget or pass on the extra expenses to the customers. Alternatively, shippers can balance out their shipping costs to some extent by using the software solutions offered by audit services.

FedEx surcharges of 2022

FedEx surcharge increase is different for each shipper, based on the corresponding agreement.  The fuel surcharge is in effect from November 1, 2021. It is due to fluctuating fuel prices and the rates calculated by the oil companies. Similarly, there are surcharges such as Additional Handling Surcharge, Delivery and Returns surcharge, and many more. The surcharge increase is by zone as well as by weight. For instance, the Oversize surcharge by FedEx US express/ Ground in zone 2 has increased by 4.76%. For further information about FedEx’s surcharges and fees, click here.

How can Audintel help shippers?

Audintel analyzes the data and the kind of packages shipped by the clients. Our team studies the shipping patterns of shippers. Audintel recommends cost-reducing opportunities to shippers. We help our clients receive discounts on surcharges and fees from the parcel carriers. In addition, we negotiate or renegotiate the shipping contracts on behalf of our clients. Audintel also suggests alternatives to FedEx with cheaper regional carriers. In this way, we optimize shipping costs for our clients.

Conclusion

When expenses rise, we often wonder whether we can afford them. Similarly, the FedEx rate increase has made shippers think about their shipping costs. Audintel explains complex carrier agreements to our clients so that they get the best rates. We help businesses negotiate their shipping contracts effectively and save money. Our experts help shippers optimize their shipping spend. We have the best audit services to manage shipping costs. For further information about FedEx General Rate Increase (GRI), contact us at [email protected]. Learn about us by visiting the Audintel website or call us at +1 (619) 354 8539.

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Efficient contract negotiations with shipping carriers

Carrier contracts are sometimes confusing with legal jargon. And negotiating with carriers regarding services, fees is hard for companies. Shippers wonder if they are getting the best from their carrier contract negotiations.

Businesses need different carrier networks and strategies to get the best carrier contracts. In this article, we will discuss carrier contract management and the steps in the contract process.

Negotiation with small parcel contracts

Negotiating small parcel contracts is a complex process. Shippers need to know that they can use multiple carriers for the shipment of parcels. It is good to understand which shipping carrier is offering the best rate and discounts. Also, companies must send out a request for proposal (RFP) to get good deals from shipping carriers. In addition, shippers should renegotiate whenever possible. Further, shipping more volumes gives better rates and discounts. Audintel’s expert negotiators help you get the most out of these negotiations.

What are the steps in the carrier contract process?

Every year shipping rates change. So, shippers must look at their shipping contracts. It is necessary to ascertain the need for re-negotiations of shipping contracts or the initiation of new contracts. Companies have to review shipping carrier contracts stepwise. However, in a fast and changing supply chain environment, these steps are vital in the contract process.

Know your shipping profile

Shippers should have their data handy when negotiating with shipping carriers. Because shipping carriers already have access to the companies’ data before negotiations. Companies should have information about shipping volumes, service mode, zone, parcel weight, dimensions, accessorial charges, and more. Audintel helps companies access real-time data and visibility of their profile for better negotiations. Audintel tries to minimize transportation costs as much as possible.

Capitalize on differences between carriers

Shippers should consider using multiple carriers to get the best rates from a shipping carrier. By leveraging the differences between carriers, shippers get good discounts. For example, small parcel delivery through regional couriers does not focus on surcharges. Companies get benefits like better rates, delivery time, and more.  Shippers can walk away from the negotiating table with a better deal. Audintel helps businesses in fostering competitive shipping deals with shipping carriers.

Examine the carrier contract

Shippers must review the carrier contracts regularly, whether it is a new contract or renewal of an old contract. Understanding the fine print of the carrier contracts is necessary. Companies need to know about any change in the shipping contract; for instance, an increase in the package characteristics such as oversize fee. Audintel will identify and examine the fine print of carrier contracts. Our automated systems determine what is best for our clients.

Understand the fees

Companies have to know the fees and surcharges in the shipping contracts. These fees can make or break the contracts. Sometimes, hidden charges in a contract can increase a company’s budget. Many companies are unaware of the addition of value-added services in the carrier contract. Audintel helps its clients understand the fees and saves money.  Transportation charges and surcharges are part of the fees.

  • Transportation charges involve the cost of delivering a package from the shipping carrier to the end consumer.
  • Surcharges are many and varied depending on the type of shipping carriers. Negotiations can bring good discounts for shippers.

Some shipping surcharges include:

  • Fuel surcharges

The calculation of fuel surcharges is crucial for determining shipping costs. Shipping carriers calculate fuel surcharges for different services. Negotiations with shipping carriers can lower the shipping costs.

  • Residential Delivery Surcharge

Shipping carriers levy surcharges for deliveries to residential areas. Different carriers levy fees based on the shipping options. Negotiations that involve different services of carriers can reduce or eliminate the costs.

  • Oversize package Surcharge

This surcharge is for packages that exceed the weight or size parameters of shipping carriers. Shippers can ask for discounts depending on the size or weight of the parcels. The surcharges can be a part of the carrier contract negotiations.

  • Saturday Surcharge

The surcharge is applicable for deliveries made on Saturday. Shippers can opt out of Saturday Surcharges when negotiating with shipping carriers.

  • Address correction surcharges

The surcharge is applied when a shipper’s carrier has to correct the incorrect or incomplete address of parcels. Shippers can avoid the application of this surcharge during negotiations.

  • Delivery area surcharge

This surcharge is for shipments that are outside the standard delivery area.  Shippers can opt out of this surcharge during negotiations.

Audintel can choose the surcharges that apply to its clients’ shipping needs during negotiations. We, at Audintel, calculate the accessorial charges individually in our systems.

Other areas in carrier contracts negotiations

Shippers need to be wary of accepting a refund waiver from any shipping carriers. Companies should review the terms and conditions of the shipping contracts. It is better to be patient while negotiating with the shipping carriers to get the best deal. Negotiations and re-negotiations will bring a positive outcome for both shippers and carriers.

Expert negotiators at Audintel make sure that businesses get good shipping contracts that bring in profits.

The bottom line

The overall shipping environment is changing. As a consequence, shipping contract negotiations are evolving for the better. Businesses are looking for a healthy relationship with shipping carriers. Towards this end, shipping contract negotiations are a bridge in this relationship. For any trouble in shipping contract negotiations, contact us at [email protected]. You can also learn about our services by visiting the Audintel website or call us at +1 (619) 354 8539.

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Scenarios in which to negotiate a new contract with shipping carriers

Are shipping companies satisfied with the services provided by shipping carriers?  Also, are shippers overspending on their parcel shipment?  Shipping contract negotiations with shipping carriers can address these queries. Shipping companies require contracts that provide quality service at the best price.  So, shippers can reduce shipping costs at each stage. This article covers the kind of improvements to existing shipping agreements. We will also discuss the scenarios for the preparation of new or renewal of shipping contracts.

Shipping contract negotiations

Shipping companies enter into shipping contracts with carriers for parcel shipping.  Shippers have to know their shipping profile when negotiating with shipping carriers. Shipping companies must understand what the fine print of the contract says. As the shipping rates change every year, shippers need to keep a tab on the shipment costs. In addition, over time, shippers may realize that some parts of the agreement need improvement.

What are the improvements to be made to existing shipping agreements?

Shipping companies view information on shipment details. The shipping reports provide them information on the number of packages, total spend, services, etc. They want to see improvement in the delivery services and costs.  As a result, they examine the shipping agreements to make any improvements. These improvements could be in Dim divisor, surcharges, earned discount and base discount, minimum, MRA, etc.

Scenarios for preparing shipping contracts

Shippers are looking for ways to renew shipping contracts that benefit them. Alternatively, they are searching for shipping carriers that offer competitive prices with quality delivery service. There are five scenarios that shippers look at based on data inputs and other parameters.

  • Optimization of existing shipping agreement

Initially, when shippers and shipping carriers sign shipping agreements, the parameters are different. These parameters include surcharges, accessorial charges, weight calculation, minimum charges, and more. Each year, these charges vary due to new regulations. Consecutively, the shipping costs on each package increase every year. So, to optimize existing shipping agreements, parameters including discounts, MRA, Minimum, Dim Divisor, Surcharges are considered. For example, shippers need to review the respective carrier’s Money-Back Guarantee regularly to receive the refunds due to them.

  • Change in existing shipping contracts for cost-effective services

Existing shipping contracts require change when the services are costly. Components such as maximum weight, zone, etc., interfere in providing cost-effective services. In the case of short-distance shipments or not urgent packages, it is wise to choose cheaper services. For instance, shippers change from one service to another service that costs less for shipments.

  • Use of alternate shipping carriers for business profitability

Shippers use multiple shipping carriers to increase their business profits. The shippers have an understanding of what the competitors are offering. While negotiating shipping contracts, shipping businesses can shortlist the shipping carriers that bring them profits. If a shipper is not happy with a particular carrier’s terms and conditions, they can opt for alternate carriers which have better terms and conditions suitable for their business.

  • Expired shipping agreement

For a shipping agreement that will expire in a year, shippers can consider a new shipping agreement or renew the old one with new terms. Shipping companies can set their timeline for the termination of the shipping agreement. They can put favorable terms and conditions in the shipping contracts that improve their bottom line.

  • Discontinuation of services of shipping carriers

Shipping contracts with shipping carriers should give prominence to quality service. But if the services are causing harm to the shippers’ profits, it is best to discontinue those services. For instance, if a shipping carrier does not provide accessorial discounts to domestic Air express services. Then it is best to shift to another shipping carrier that provides these services.

How is partnering with Audintel helping shipping businesses?

Audintel plays a vital role in empowering shippers to get the best out of their shipping contracts. Our experts analyze the data and also review and improve the shipping contracts of our clients. We point out any deficiencies in the shipping contracts. Audintel helps in improving the shipping costs for shippers. Audintel helps clients understand the intricacies of an existing shipping contract. And if necessary, we help to negotiate a new shipping contract on the clients’ terms.

Conclusion

When negotiating shipping contracts, understanding shipping rates is vital. Also, the reliability and efficiency of the shipping carriers are essential. Shipping contracts should be beneficial for both shippers and shipping carriers. Audintel helps you in cutting shipping costs and balance your bottom line. If you need help in shipping contract negotiations, contact us at [email protected]. You can also learn about our services by visiting our Audintel website or call us at +1 (619) 354 8539.

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Best Practices For Shipping Contract Negotiations

Shipping contract negotiations are essential for the shipping business. They help in saving the costs of the shipping companies. However, contract negotiations are complex and time-consuming. The negotiations have to be mutually advantageous to both clients and carriers. There needs to be transparency and open communication. With this in mind, let’s explore the best practices in shipping contract negotiations.

To begin with, let us understand: What are Shipping contract negotiations?

Shipping contracts are legal documents between a client and a carrier. The regular review of contracts is necessary to increase the shipping business of client with carrier. Shipping carriers like UPS and FedEx announce rate increase periodically. Therefore, it is essential to track the rise in shipping spend. The shipping contract negotiations relate to services, weights, accessorial charges, and more.

There are different kinds of shipping contract negotiations such as:

Small Parcel contract negotiations

Small Parcel contract negotiations involve reading the fine print of the contract with the carriers. Shippers need to review their service contracts regularly. In addition, they have to be aware of the incentive offers and discounts. The shipping contracts should list all the services that are essential for shippers. In addition, it should give clarity about surcharges and tariff rules. Nonetheless, negotiating the best parcel rates requires careful planning and monitoring. Audintel services help small parcel businesses in shipping data analysis, optimizing agreements, and reduce parcel costs.

Freight contract negotiations

Negotiations regarding freight contracts include volatile freight rates. In addition, negotiations should consider unforeseen surcharges. Also, there should be clarity in the contents of the freight contracts. Factors such as rates, routes, services, free days, space protection, surcharges, and credit terms play a vital role in discussions. Negotiating freight rates is a complex process, which experts at Audintel are good at handling.

Negotiating rates with carriers

For successful negotiation of shipping contracts, shippers need to know the carriers and their services. Even after finalizing a shipping contract, new surcharges and tariff rules can emerge. Re-negotiations are necessary when an existing shipping contract does not align with a company’s business. Audintel has insights on the working of the carriers. Their team of experts will help in negotiations that are favorable for shippers.

The Best practices followed for negotiating Shipping Contracts are:

  • Gathering relevant data

Before starting negotiations, shippers should have relevant shipping data. The data contains the past performance of the shipping carriers.  Reviewing the historical shipping data gives an insight into the most frequent shipping zones, etc. Moreover, the data helps in identifying the rates and factors to determine the transportation needs. Audintel reviews the historical data for providing to-the-point negotiations.

  • Request for Proposal (RFP) drafts

Shippers send out Request for Proposals (RFP) after gathering data. A good RFP encourages potential carriers to give clients the best, competitive contract. The draft of the RFP includes the background of the shipping company and the types of products sold. Further, it should contain the shipping history, delivery requirements, and terms. RFPs help shippers in reviewing carriers’ proposals and compare their offers. Audintel takes a close look at RFP drafts and suggests shipping carriers to their clients.

  • Identify accessorial charges and surcharges

Shippers need to reduce additional expenses during shipment. The additional fees are also known as accessorial charges for carriers like FedEx and UPS. These charges occur where there is redelivery of packages, residential deliveries. Further, surcharges include fuel surcharge, after-hour deliveries, Saturday Delivery, additional handling, etc. Audintel helps in identifying the extra expenses. Audintel suggests cost-effective charges so that the shippers can save money while negotiating with carriers.

  • Review packing strategy: Dimensional weight Pricing (DIM)

The majority of the shipping carriers use a pricing technique called DIM weight. The dimensions of the package are in consideration for the price calculation. Shippers can cut shipping costs by reviewing the packing strategy. Packaging odd-sized materials require efficient use of packaging material. In addition, Audintel can negotiate with shipping carriers to improve the DIM divisor appropriately for shippers. As a result, it will reduce shipping costs.

  • Use of carriers

For better negotiations, shipping companies can use multiple carriers or single carrier for effective cost.  It leverages competition between the shipping carriers so that shippers get the best price for their business. As a result, shippers get better rates. They can choose the shipping carrier with the best delivery performance and rates. Audintel suggests alternative shipping carriers based on the parcel spend characterisitics.

  • Know the terms and conditions of the contract

Before signing shipping contracts, it is necessary to read all the clauses. It is essential to understand the terms and conditions of the shipping contract. There is a need for regular review for open-ended negotiations. Shippers need to thoroughly read the shipping contract and assess what will be beneficial for business. Audintel helps shippers understand the intricacies involved in the shipping contract negotiations.

The novel approach adopted by Audintel

Audintel follows the above best practices. And we have a novel approach towards contract negotiations. We have an intelligent mechanism in place to enhance your savings. The holistic approach adopted by Audintel is advantageous for clients.

Finally

It is vital to have good relationships with shipping carriers. A business negotiation based on mutual respect and trust will go a long way. Having a good rapport with the shipping carriers will ensure successful shipping contract negotiations.

When you sign up for services from Audintel, negotiations become simple. For further queries and details, write to us at [email protected] or visit our website Audintel, or contact us at +1 (619) 354 8539.