Don’t Overlook This Important Step Prior to Holiday Shipping
Most FedEx and UPS agreements include revenue-based incentives. FedEx calls them "Earned Discounts" and UPS refers to them as "Portfolio Tier Incentives." Essentially, the greater the threshold of spend, the higher the discount.
Your carrier may be willing to extend the uppermost discount for a "grace" period regardless of attained revenue thresholds. Your business gets the highest discounts for as much as half a year, and you don't have to renegotiate your contract.
In addition, UPS shippers can pursue a rebate — UPS calls it a "deferred tier threshold agreement" — in which UPS will write your company a quarterly check as a percentage of your overall net transportation expenditures.
And if your rep is still not taking you seriously? Start a trial with their competitor. Nothing gets their attention quicker than seeing packages routed to the competition.
A few words of caution: Don't rush into a bad deal that provides short-term relief but long-term rate increases. Also, avoid signing any agreement that includes "early termination" or other penalties.
As a negotiation "give back," consider temporarily waiving your right to file money-back claims for late deliveries. Service guarantees are suspended the two weeks prior to Christmas anyway.
In summary, as your business prepares for top-line revenue growth this holiday season, don't overlook opportunities to improve your bottom line. A $100,000 decrease in operating costs is the equivalent of $1,000,000 in sales for a company operating on a 10 percent margin.
As always, let me know if I can help!
- Companies:
- Federal Express
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.
