PPB January 2017

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The companies
who receive
“best-in-class”
carrier
agreements
are those that
understand
their shipping
profile and know
howandwhen
to renegotiate
their carrier
agreements.
56 | JANUARY 2017 |
GROW
Know Before You Say ‘Go’
Consider these helpful insider tips next time
you negotiate your carrier agreements.
• 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 renegotiate with carriers at
any time. You do not have to wait for
your agreement to end to renegotiate.
• 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 percent or even 90/10 percent.
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. Your carrier
representative is compensated by
how much they grow their profits from
your business. A great relationship
doesn’t mean higher prices.
• 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.
weights and zones that aremost
significant for most shippers. Few
companies have the ability to
increase their prices every year
by five to 10 percent. Shippers
make strong arguments for why
this increase is necessary, while
typically understating the fiscal
impact. Even if your contract
includes protection against the
GRI in the formof a rate cap, this
typically only addresses a portion
of the increase.The GRI cap does
not address accessorial charges,
which are typically discounted
by a percentage or dollar value
off the gross charge. As the list
rates increase, so do these rates,
as well as minimum charges.
Accessorial fees and surcharges
can amount to 30 percent
of your shipping costs. Just
look at the impact of the new
dimensional weight rules.
In the end, remember
that your spend is extremely
important to the carriers. Each
carrier has specific discounts,
fees, rebates and incentives
that are negotiable beyond just
the initial offer they put on the
table. Ultimately, the bottom
line is that the flexibility to
renegotiate your small parcel
agreements exists prior to the
end of the initial term. The
companies who receive “best-
in-class” carrier agreements
are those that understand their
shipping profile and know how
and when to renegotiate their
carrier agreements.
Thomas Andersen is partner / vice president of supply chain services for industry business services company LJM
Consultants ). He has more than 15 years of logistics and transportation experience, and
core expertise negotiating contracts with FedEx, UPS, DHL, and the regional carriers. For information, email
Tamra Earlywine at or call 310-497-7677 or 631-844-9500, ext. 833.