Negotiate Better Deals with Parcel Carriers

Published rates have spiked throughout the parcel industry, and will impact the bottom line of any cataloger who ships goods through any of the major parcel carriers. But according to Tim Sailor, founder/president of Long Beach, Calif.-based Navigo Consulting Group, the impact doesn’t have to be negative. Despite recent rate hikes, catalog/multichannel shippers still can cut good deals if they play their cards right.

“Shippers don’t have the advantage now, since carriers are incentivized to sell their services at the highest possible cost,” Sailor said during a session at last week’s National Conference on Operations & Fulfillment in Schaumburg, Ill. Recent rate increases by all the major carriers — UPS, FedEx, DHL and the U.S. Postal Service — are the highest since 1998.

But all carrier contracts “can be improved,” Sailor pointed out, “it just takes some effort.” How? First, shippers should opt for electronic invoicing. “You have to know as much or more about your distribution than the carrier,” he emphasized. “They know the details of what you’re shipping and which weights are going where. You can, too, if you have electronic invoicing. It gives you the depth of details you need to negotiate.”

Leverage Your Volume

Furthermore, shippers should leverage their volume, Sailor noted. High-volume shippers who use more than one carrier are in a good position to do this if they switch to a single carrier for all their needs. This way, the shipper can get as much as a 15 percent discount. “Discounts should be negotiated to include all services, not just the ones a shipper might use most of the time,” he said.

For example, Sailor cited one client who had used ground shipping for most everything, and didn’t see the value of asking for a discount on second-day air. “They were paying published rates for second-day air, and when it was time to renegotiate, we asked for and got a discount for that, too,” he recalled. “They were using it more than they realized, and the discount saved them $50,000 a year.”

As for accessorial charges, the devil is in the details. “Carriers will say that accessorial charges aren’t negotiable, but guess what? They are,” he said. “And they’re no small things, even though each one might seem small.” Accessorial changes add up to about 40 percent of all shipping costs.

Sailor also suggested taking advantage of various rebate programs that carriers have in place but don’t necessarily publicize; auditing invoices for erroneous charges and making sure that service levels are achieved as contracted.

Finally, he recommended keeping an open mind about switching carriers. “Contracts with carriers are complicated and are an effort to keep up with,” he said. “But if you do, it’ll be well-worth it.”