UPS carrier contract Archives

UPS or FedEx contracts: Negotiate with shipping data advantage

February 23, 2022

by Blog Cost 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.

Pragmatic details for shippers’ contract negotiation

February 10, 2022

by Blog Cost Optimization

Shippers need efficient parcel contract negotiation with parcel carriers to maximally reduce their shipping charges. The shipper needs to know the shipment trends and characteristics before moving for carrier contract negotiation. There are many factors that affect the cut down in pricing which needs to be negotiated carefully. Being clear with these and also knowing where the carrier can leverage his profits, the negotiation table becomes a clear platform for the shipper.

Some factors to be aware before contract negotiation

Know your shipping volume and spend based on service and zone

The shipper has to be clear about how much volume and spend he does on an average per year. This should be further split into service-based and zone-based. This would make it easy to focus on key spend areas for negotiating discounts. The key spend areas should have flat discounts or in carrier terminology, the base discounts. Also, while negotiating, the carrier, knowing these details, generally, negotiate for less discounts to maximize their profits. The shipper has to be careful in these areas and not get carried away when the shipper offers more discounts in other areas.

Know which surcharges(accessorial charges) you incur more in volume and spend

The shipper should be aware of both volume and spend as discounts for surcharges are quite lucrative. One should be clear and discrete to ask for a specific percentage of discounts in these surcharges. Some surcharges have high pricing per package and it helps to get significant discounts on them. Also, it’s worth having discounts on all accessorial charges that have minimum threshold packages.

Know if you have Dim weight or actual weight in volume and spend

Dim factor is crucial if you are sending customized packages and more often the carrier applies dim weight than the actual weight. Negotiate dim factor, especially for the packages in the services that have this. The factor should also be significant to get close to the actual weight or less. This is an additional asset to shipping contract negotiation.

Know your weightage of Domestic versus International shipping

Carriers tend to give inclined discounts to either domestic or International packages depending on the spend. The shipper can get carried away and lose on the other side. One has to be careful to get the right balance of discounts in both areas.

Know if packages are hitting minimums in large volume

More often, the packages can hit minimum and the package discount is compromised. Knowing the volume can have the shipper negotiate for the Minimum Reduction Amount (MRA). Proper MRA value helps in getting savings for shippers.

Things to be beware on the contract negotiation table

Carriers’ focus

Carriers are for customers’ satisfaction and they are generally well advised on the package flow of the shipper. They know which discounts are crucial. They make the shipper comfortable to negotiate but ensure that these areas are not discussed much. Always be alert in negotiation with the carrier. They tend to divert focus from the necessary discounts to other areas where shippers would not fetch much.

How much discount can be fetched for the annual spend of your stature?

Generally, the other shippers’ discounts are not known and hence, the trend of how much to bargain for each category of percentage has to be known from experts. The carrier is not going to give more than what the shipper asks!

Focus on getting more of Grace/Base discount than earned/performance discount

It’s worthy to get Grace/Base discount as it’s a flat discount and guaranteed. Earned/performance discount places variation based on the spend. Unless the shipper is absolutely sure of his spend, it’s always recommended to secure the Grace/Base discount.

Fetch the necessary Grace/Base discount, dim factor, surcharge discount without fail

Do not come back from the negotiation without fetching the necessary Grace/Base discount, dim factor, surcharge discount. The shipper should be prepared before the meeting with the carrier on each specific aspect and gracefully convince the carrier on these.

Consider alternative carrier and negotiate to know the value of your shipping

Its always recommended approaching more than one carrier when one is not satisfied with the present carrier. By analyzing the past shipping details of the shipper, auditing companies will help in deciding which carriers to choose. Usually, for parcel shippers, UPS contract carrier agreement and FedEx contract carrier agreement are complementary to consider.

Be careful in negotiating minimum performance to make the discounts valid

The carrier always has a clause of minimum performance for aspects of the agreement to be valid. One should be careful to set these at the minimum for the rainy season.

How does Audintel help?

Audintel helps shipping companies analyze and identify shippers’ data. Analysis of key areas where they need to be careful to get the maximum discount and to select alternate carriers. Also, the minimum threshold in others. Audintel reports help the shippers to analyze the new contract presented by the carrier. The savings using already shipped packages with the new contract is presented. This carrier contract optimization can be done either for complete contracts or amendments.

Final Remarks

Shipping companies need a lot of input on their data. The trends where other shippers fetch the discounts. The carrier gives varying discounts depending on the awareness of the shipper. All aspects where discounts can be fetched with the maximum are clearly understood. This means, critical reporting capabilities and cost model philosophy clearly presented to the shipper. All assistance is given to fetch secure new and improved carrier rates. For further advice and services, call us today at +1 (619) 354 8539 or contact us or visit our Audintel website.

Scenarios in which to negotiate a new contract with shipping carriers

October 11, 2021

by Blog Cost 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.