Don’t Overlook This Important Step Prior to Holiday Shipping
Before sitting down at the negotiating table, invest a few minutes to analyze your parcel invoice data to better understand service usage, expenditures, accessorial charges and other variables. The objective of this analysis is to develop a list of opportunities and priorities to be negotiated to generate the greatest cost savings impact.
Identify the number and cost of add-on fees for residential deliveries, extended areas, fuel surcharges, weekly service fees and other handling charges. There are more than 100 of these "accessorial" charges that comprise up to 30 percent of overall shipping costs.
Quantify which surcharges have the greatest cost impact on your business and target those for waivers or reductions. In addition to pursuing lower accessorial charges, of course, try for better overall discounts and contract terms.
An effective way to gain leverage is to meet with your carrier's competitor. Ask for competitive pricing and find out how quickly it would be able to install manifesting automation and scheduled pickups.
If that option isn't available, at a minimum search the web for available parcel pricing benchmarks to get a better sense of the range of discounts that others have negotiated and what might be available to you.
Armed with your distribution analysis, relevant benchmark data and a proposal from your carrier's competitor, schedule a meeting with your carrier sales representative.
Share with your rep the information learned from the parcel analysis, especially those areas of greatest spend and accessorial impact. Ask for his or her commitment to help achieve your cost reduction goals, even if only temporarily during your highest volume shipping season. Make the focus your company's bottom line and not the carrier's margins.
If nothing else, seek generic relief. For example, request a 5 percent overall rate decrease, even if only temporary during the holiday peak.
Rob Martinez is the CEO of Shipware LLC, a professional services firm that transforms businesses through intelligent distribution solutions and strategies. Rob has helped some of the world’s most recognizable brands reduce parcel shipping costs an average of 25 percent through contract negotiations, rate benchmarking, modal optimization, invoice audit and other savings vehicles. A cum laude graduate of UCLA, Rob has 20 years of transportation industry experience, including executive positions at DHL and Stamps.com, in addition to his work as an outside consultant since 2001.