Coronavirus Crisis Impact on Parcel Carrier Contracts

During this unprecedented time of uncertainty, we are committed to assisting our clients in the maintenance of their critical supply chains. Recently we have assisted with a myriad of inquiries seeking guidance on how to best navigate the current turbulent economic waters.

One most common area of concern has centered on the impact a drop in shipping volumes could have on your contract with the Small Parcel Carriers, as these contracts are revenue based.

Keep in mind the information below, stay the course, and together we will plan for tomorrow today.

Understanding Your Contract

Understand the ‘self-regulating‘ portion of your Small Parcel Carrier contracts, known as a ‘Portfolio Tier’ with UPS and an ‘Earned Discount’ with FedEx, which are typically based on a 52-week Rolling Average of your shipping spend. The 52 week period is designed to create a leavening effect so that short-term fluctuations in shipping volumes will not drastically impact a shipper’s discount.

Carrier Response

To date, Carrier Response has not included any sweeping action regarding relief or adjustment to shippers who may experience a decrease in their package volumes.

Contract Analysis

We fully understand the angst this situation is causing and that Carrier Contract compliance makes up only a fraction of the many disruptions you are dealing with. To assist, LJM is proactively managing all of our clients’ Carrier Contracts for significant incentive tier adjustments. Upon analysis, if necessary, we will reach out to discuss conclusions and next steps.

Professional Guidance

Not yet an LJM client, but in need of some professional guidance? We are an excellent resource. Please feel free to reach out regarding your Parcel Carrier Agreements. We are here for you and happy to help.

3 Ways a Pivot with LJM Group Provides a Smart Restart

Stay Connected with LJM and Don’t Face the Future Alone

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Contact the Parcel Contract Negotiating Experts 631-844-9500

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