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announce during the General
Rate Increase (GRI). Considering
that most negotiations can take
one to three months, it’s healthy
to review your carrier contracts
annually (at a minimum)
and proactively address any
shortcomings when necessary.
When the carriers announce
a significant change, such as
the new dimensional weight
rules in 2015, you should be
prepared to analyze the impact
and make your case to have
the increase mitigated.
Can You
Negotiate Too Often?
There is a fine balance
between negotiating too often
and not often enough. Two
years between full RFPs shows
the carriers that you are serious
about managing your parcel
costs, and it also shows a degree
of loyalty where the carriers can
expect to keep your business for
a minimum of two years; longer
if they continue to be receptive to
making changes along the way.
Companies that actively keep
two carriers engaged typically
have more competitive pricing
than companies that remain
“married” to a single carrier.
Is There A Time
Of Year That’s Best
For Negotiation?
There is no rule of thumb,
but you can typically expect
negotiations to be a bit more
challenging in November and
December due to holiday
operational challenges.
Historically, the carriers
announce the increase in
September, with the increase
to be applied around January 1,
so being prepared to tackle any
required adjustments related
to the GRI at the end of Q3 or
beginning of Q4 will typically
provide enough time to have
issues resolved prior to year-end.
As for managing RFPs or more
comprehensive negotiations, the
other 10 months are often better
suited, in order to get the full
attention from your carriers.
What Should
You Know About
Multi-Year Agreements?
The big carriers have a yearly
increase where they typically
suggest a four to five-percent
rate hike. However, the impact
varies quite significantly by
shipper, based on shipment
profiles and characteristics.
Most shippers end up taking an
increase ranging from six to 10
percent each year.This is because
the increase does not apply
equally by service, zone and
weight, and it’s designed to have
amore substantial impact in the