Taranisen Mohanta   13th Jul 2022

Carrier Contract Negotiation

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 408-675-2750 or by visiting our Audintel website.