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With UPS and FedEx agreements becoming more and more complicated, many companies are looking at third party professionals for help. Here are some helpful insider tips for you to consider next time you negotiate your UPS/FedEx agreement.
Everything is negotiable, but don’t try to negotiate everything. Put your efforts into areas that have the greatest impact on your bottom line.
You can re-negotiate with UPS/FedEx at any time. You do not have to wait for your agreement to end to re-negotiate.
Never sign an agreement or addendum that contains an early termination clause.
Make sure you completely understand your shipping data, your shipping profile and your shipping characteristics. Your carriers know everything about your shipments. You need to as well.
No matter what the carrier promises, never waive your right to file for a Money Back Service Guarantee/Guaranteed Service refund. It will never be in your favor and you will lose your ability to reclaim thousands of dollars in refund opportunities. Late deliveries lead to unhappy and lost clients.
Don’t put all your eggs in one basket. Split your business with the carriers 80% / 20% or even 90% / 10%. Let the carrier know you always have another option waiting for the opportunity to earn your business.
Have a solid grasp of your key shipment variables, including, but not limited to: pickup and delivery density, single piece versus multi-piece, commodity type, packaging, parcel conveyability, special handling requirements, perishability, hazardous materials, weights, services and zone distributions.
Use the USPS, Regional Carriers and Consolidators as leverage.
Don’t let your carrier relationship get in the way of negotiating a fair and competitive agreement. Carriers will wine and dine you with lunches, tickets to sporting events and donuts; always remember, your carrier representative is compensated by how much they grow their profits from your business. So don’t let the relationship get in the way of getting what you deserve. A great relationship doesn’t mean higher prices.
Utilize a Third Party Carrier-Neutral Shipping System. The shipping systems your carriers give you, UPS WorldShip and FedEx ShipManager, may seem like a great deal because they’re free, but the carriers are giving them to you for a reason. When you use their systems you are putting the carriers in complete control of your shipping. If you have a carrier provided shipping system, and if your system is interfaced to your ERP system (host system) and if you are giving the majority of your business to a single carrier, you are known in the industry to be a “CAPTURED ACCOUNT.” Don’t be married to your carrier; divorce is expensive and the carriers know it. You will be able to negotiate a much better agreement when you have shipping options. The amount of money you save by having a carrier-impartial shipping platform will be much greater than the nominal monthly cost of the system. Do not put yourself in this position; your contract will reflect it in a negative way.
Use your LTL spend as leverage.
Understand all of your accessorial charges: Residential Adjustments, Dimensional Weight, Address Corrections, etc., and how they affect your total spend.
Look at your minimum net charges and how they affect your effective discounts.
Speak with a professional parcel shipping consultant who negotiates carrier agreements for a living. They will likely save you 10% to 30% more than you will ever be able to save by doing it yourself.
The above are just a few great tips to consider when negotiating your carrier agreements. Remember the carriers know there is “profit in confusion.”
LJM Consultants has been helping companies re-negotiate their UPS/FedEx agreements since 1998 and is one of the pioneers in this industry. LJM actively negotiates hundreds of new carrier agreements every year for clients who spend from $500K to $250 Million dollars yearly with UPS/FedEx/USPS and Regional Carriers. LJM has saved clients hundreds of millions of dollars due to their years of parcel pricing experience from both the carrier’s side as well as the shipper’s side. LJM typically saves clients five to six times more than what shippers would otherwise save on their own.
If you want to be absolutely certain that you get the best agreement available, speak with the professionals at LJM Consultants at 631-844-9500 or email kenwood@myLJM.com. Our services are strictly contingency based. Just like our auditing services, our only fee is a percentage of what we help you save. You have absolutely nothing to lose. Call today!
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