UPS and FedEx 2024

GRI 2024: Effects and comparison between FedEx and UPS GRIs

by BlogTSM

The holiday season is here. It’s the time for shipping carriers to announce their General Rate Increase (GRI). Major shipping carriers like FedEx and UPS have already announced the GRIs for 2024. Well, what does this mean for e-commerce retailers or small companies? This blog will discuss the concept of General Rate Increase, its impact on businesses, and the strategies adopted by them. Further, we give a comparison of FedEx and UPS rates for 2024.

General Rate increase

General Rate Increase or GRI is the annual percentage increase in shipping rates by shipping carriers. This rate hike is across all services offered by parcel and freight carriers. GRIs announcement is usually in the fall of the previous year. The percentage hike is generally between 4-6%. The GRI announcement allows businesses to plan the shipping costs of their packages.

Many factors influence GRI, like labor shortages, operating costs, and insurance. In addition, rising inflation, market demand, supply chain disruptions, and government regulations can influence GRI. Moreover, various challenges to shipping carriers’ distribution networks have influenced GRIs this year. Shipping carriers mention service enhancement, technology innovations, and fleet maintenance for the annual General Rate Increase. These rates vary between shipping carriers. Understanding the GRIs of different parcel carriers is essential for shippers to manage shipping costs.

GRI: its significance in the shipping industry

Companies with domestic and international shipments can’t take rising GRIs lightly. The shipping rates also include surcharges or value-added services. In addition, the fees of different shipping carriers rise annually. Companies can calculate shipping costs based on service levels, distances, package weights, etc. The increase in shipping rates is responsible for the rise in shipping costs to various destinations. Shippers have to plan their shipments according to the impact of GRIs.

Impact on General Rate Increase on shippers’ packages.

GRI percentage is higher for packages going a longer distance. Moreover, express packages or air freight rates are high. Usually, GRI is more economical for ground packages than express ones.

The impact of GRI is less for companies that have negotiated a rate cap in their shipping contracts. They can further ask for discounts from the shipping carriers. However, companies with no contracts pay extra with the rise in GRIs annually. However, the rate cap does not apply to surcharges.

Our earlier blog has discussed about impact of GRI. Here, we will discuss the new shipping rates in 2024 of the premium big carriers, FedEx and UPS.

Comparison between FedEx and UPS rates

FedEx GRI will come into effect from January 1, 2024. UPS GRI will be effective from December 26, 2023. GRI varies from the surcharges or value-added services levied by FedEx and UPS.

The U.S. domestic, export, and import services, FedEx Express shipping rates have increased to 5.9% on average, as per the FedEx website. According to the UPS website, the rates have increased to 5.9% for UPS Ground, air, and international services. Both FedEx and UPS claim that GRI 2024 is lower than last year’s GRI. However, their demand surcharges for the holiday season are moving northwards. These rates also do not include fuel surcharge.

The annual rate guides of FedEx and UPS help shippers decide their shipping strategies. We will try to understand the figures in service and preview rate guides for 2023 and 2024.

  • Daily rates of UPS and FedEx

The UPS service guide consists of the domestic daily rates for packages weighing 1 lb to 150 lbs within 49 contiguous States. Daily rates for packages weighing less than 150 lbs for international shipments are under different UPS Worldwide, UPS Standard from Canada and Mexico, export, and import headings.

The UPS service guide contains domestic rates for services like UPS Next Day Air Early, UPS Next Day Air, UPS Next Dy Air Saver, UPS 2nd Day Air A.M., UPS 2nd Day Air, UPS 3 Day Select, UPS Ground for shipping Zones 2-8 within the 50 states. Chart 1 compares between 2023 and 2024 daily rates for the UPS express and UPS ground package delivery services.

Chart 1: UPS list rates

Chart 1 will focus on list rates of : UPS packages of 1 lb within the U.S. daily rates for services in Zone 102 (Next Day Air), Zone 202 (2nd Day Air), Zone 2 (Ground), Zone 242 (2nd Day Air A.M.) for Destination ZIP codes starting with 004-005. For further details on all the daily rates of UPS, check their website.

FedEx service guide provides information about the list rates of FedEx Express packages within the U.S. and the international package rates for export and import. The guide consists of the FedEx ground rates within the U.S. and Canada. UPS Ground and FedEx Ground services are cheaper than Express Services.

The FedEx U.S. express packages cover FedEx First Overnight, FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day A.M., FedEx 2Day, and FedEx Express Saver services. It includes Zones 2-8 in the contiguous U.S. for packages weighing less than 150 lbs. Further, Chart 2 covers the U.S. express packages of 1 lb in Zone 2 (within 150 miles) across service levels, including Ground. It compares the 2023 and 2024 rates and their GRI percentages.

Chart 2: FedEx list rates

Chart 2 will focus daily rates of FedEx packages of 1 lb within the U.S. for services in Zone 2. For further details on the service levels of FedEx, check their website.

Shippers can explore the services that deliver their parcels faster and economically. Further, companies can explore the list rates of other services to suit their shipping needs.

  • Surcharges or Value-added services offered by FedEx and UPS

Alternatively, companies know about the surcharges levied by FedEx and UPS every year. Below Charts (3 and 4) compare FedEx and UPS surcharges for 2023 and 2024.

The value-added services of UPS will be effective from December 26, 2023. Domestic charges like additional handling, address correction, delivery area surcharge, remote area surcharge, Pickup fees, and more have seen an upward trajectory. The below chart 3 gives an overview of a few value-added services from 2023 and 2024.


Chart 3: UPS Surcharges

UPS website gives information in detail about the value-added services and other charges. In addition, it also provides the changed zip codes, where the delivery area surcharge is in 2024.

According to the FedEx authorities, there will be an assessment of Additional Handling charges and Oversize charges of packages for multi-piece international shipments. FedEx Ground and Express services will face an increase in surcharges from January 1, 2024. The customs clearance service fees on imports are also increasing in 2024.

Chart 4 depicts the increase in the percentages of surcharges in 2024 compared to 2023.

Chart 4: FedEx surcharges

Zones 3-4 also include  U.S. Ground Zone 22 (Intra-Alaska), U.S. Ground Zone 14 (Intra-Oahu), and U.S. Express Intra-Hawaii.

FedEx freight shipping charges are also changing from January 1, 2024.

Not just the daily rates, companies are facing the brunt of high demand surcharges and fees levied by UPS and FedEx. Businesses need to devise shipping strategies to circumvent the impact of increasing GRIs year-on-year (YOY).

  • Effect of Minimum Charges and the necessity of rate caps

Minimum charges are the lowest fees a shipper will spend on any package. Carrier package minimum charges are the fees for a Zone 2 one-pound package. Minimum charges apply to shippers even if they have existing discounts.

Chart 5 compares the UPS Minimum Net Charges for some services in 2023 and 2024.

Chart 5: UPS Minimum Net Charges for package with 1 pound weight for UPS Ground – Zone 2, UPS Next Day Air-Zone 102, UPS 2nd Day Air- Zone 202, UPS Next Day Air Saver – Zone 132

Fedex sets minimum charges for all services. It is usually for a Zone 2 one-pound package for all services. The comparison between the services in 2023 and 2024 is in Chart 6.

Chart 6: FedEx Minimum charges for zone 2, 1-pound packages

Shippers can get discounts on low-weight packages with FedEx minimum change reductions in their contract agreements.

Moreover, companies with rate caps can limit any increase to a value close to a negotiated rate cap. Hence, companies must include rate caps in their contract negotiations to keep rate increases in check.

Ways to offset the impact of GRI on businesses

It’s not possible to avoid the impact of GRI on businesses. However, there are ways to reduce shipping costs effectively. A few ways to offset the GRI impact are:

  • Negotiations

Shippers can revise their contracts if they have not renegotiated for many years. Further, parcel carriers face competition from new entrants and fluctuating shipping volumes. It gives shippers a chance to negotiate for better shipping rates. 

  • Intelligent use of shipping data

Companies can use their historical shipping data to plan their shipping strategies. The data helps shippers understand their shipping operations. A deep knowledge of the shipping profile, service levels, distance, and package weights helps keep shipping costs down.

  • Diversifying carrier network

Shippers can use alternative carriers, regional carriers, and postal services at competitive rates. Packages can be sent to various locations easily through different shipping carriers. It helps in reducing the impact of shipping rates substantially.

  • Focus on packaging

Oversize packages are expensive to ship for companies. So, shippers have to focus on packaging goods to minimize space and save money.

Conclusion

Businesses need to understand the different aspects of GRI. In addition, its impact on shippers’ shipping profiles will help companies reduce shipping costs. Conducting an audit of the shipping operations allows companies to negotiate better with shipping carriers. Further, partnering with Audintel gives shippers valuable insights into their shipping profile. It helps them to prepare cost-effective shipping strategies to reduce GRI impact.

About Audintel

Audintel is a technology-first and customer-focused organization that optimizes logistics and shipping costs. Our trustworthy solutions help clients gain deeper insights into their logistics spending. For more information about GRIs and their impact on your business, contact us at +1 (619) 354 8539 or visit our Audintel website.

Carrier contracts

Carrier contracts: negotiate effectively for better savings

by BlogCost Optimization

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.

manage contracts

Carrier contract negotiations: manage contracts with ease

by BlogCost Optimization

We are almost reaching the end of the year, but new challenges await us. Parcel and freight shipments are facing disruptions domestically and globally. These disruptions are many such as inflation or unrest among union workers. The Union workers include drivers, temporary workers, and package handlers. Hence, shipping costs are rising for delivering high-quality goods on time.

According to the latest reports, freight prices are increasing in the second half of 2022. So, shippers have to negotiate contracts with shipping carriers to save money. This article will focus on new changes expected in existing carrier contracts and negotiation parameters.

Why are carrier contract negotiations so important now?

For the past two years, there’s been a disruption in the U.S. supply chain. High shipping rates and port congestion are causing disruptions in the U.S. supply chain. In addition, shippers need confirmation that there is no change in their carrier contracts. They have to periodically review the carrier contracts for any changes made concerning rates. Further, shipping volumes affecting the shipping expenses need periodic review. As a result, shippers should have new changes in their carrier contracts and negotiate better.

Carrier contract management

Managing contracts with different shipping carriers are complex. Tracking each carrier’s performance against a company’s goals requires greater clarity. Also, aligning the invoices with the agreed terms of the carrier contract is necessary. It is to ensure that companies are not paying more to shipping carriers. Hence, managing carrier contracts requires integrating technology into shipping operations. It allows shippers to make strategic decisions and detect future problems. Further, handling claims and resolution management give shippers a competitive edge.

Parcel contract negotiations

Small parcel contracts have terms that are difficult to understand for an average person. Experts in this field, like Audintel, can negotiate for businesses and save money. The options that are available for shippers during parcel contract negotiations include

  • Better options from the same carrier

During contract negotiations, shippers can opt for better, alternative services from the same carrier. It allows companies to save money and pay only for the services needed. For instance, FedEx Smart Post is cheaper than FedEx Ground shipping. FedEx Smart Post does not include residential surcharges. So, opting for the FedEx Smart Post service saves money for shippers.

  • New amendments in agreement

Parcel contracts can have amendments based on the weight of packages. In addition, the shipping zones for parcel delivery also make a difference. If companies feel that they deliver lightweight, small parcels to customers, they can make the required changes to their contracts. Alternatively, if most package deliveries do not go to remote locations, necessary amendments in the agreement are possible.

  • Renegotiate with carriers

When contracts expire or need renewal, shippers can renegotiate with carriers on parameters such as

  • Discounts

Shippers can receive discounts from parcel carriers based on different tiers and shipping volumes.

  • Minimum spend

The lowest billed price of a parcel is possible during negotiations with shipping carriers.

  • Surcharges

Parcel carriers can levy surcharges on fuel, address correction, Saturday delivery, and more. By reassessing shipping data, shippers can evade surcharges during renegotiations.

  • Refunds

Parcel carriers offer refunds to companies for late and failed deliveries. In addition, parcel carriers have to refund money if they have overcharged for any service. The refund clause has to be a part of amendments in parcel contracts.

Optimizing your parcel negotiations

Parcel shipping is becoming expensive with the rise in shipping rates. In such a scenario, carrier contract negotiations are necessary. Each carrier contract’s details have to be fine-checked for any drawbacks. While negotiating, companies need to know their data, shipping volumes, and preferred carrier fees. In addition, shippers need to know the services offered by various carriers and their best rates. If these negotiation strategies feel overwhelming, there are audit services like Audintel to assist you. We optimize your parcel negotiations and provide efficient solutions to our customers. Let Audintel help you in negotiating improvements in your contract agreements.

Conclusion

The dynamics in today’s shipping industry are evolving. Shippers face new challenges such as shipping rates, monitoring and tracking packages, and communicating with the customers for any delays. In short, shippers need help getting the best deals from their shipping carriers. With Audintel, shippers can rest easy about their carrier contract negotiations. Our experts are here to help shippers during each step of the negotiations. For further assistance on contract negotiations and more, contact us on +1 (619) 354 8539 or visit our Audintel website.

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Carrier contracts: Negotiate to simplify the complexity

by BlogCost Optimization

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?

by BlogCost Optimization

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

by BlogCost Optimization

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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Efficient contract negotiations with shipping carriers

by BlogCost Optimization

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

by BlogCost Optimization

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

by BlogCost Optimization

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.