Negotiating With Your Carrier For Better Rates
by Jillian Voege
Sometimes, it might seem like the cost of shipping can be inelastic; there’s a little bit of wiggle room when you negotiate rates with your carrier, but the rates and fees are what they are. Many smaller businesses don’t feel like they have enough clout to get advantageous rates, while businesses of all sizes have to deal with the increasing amount of surcharges and fees that carriers tack on with each passing year.
The trick isn’t to go into your contract negotiations trying to steal concessions. Ultimately, it’s about demonstrating value and justifying why carriers should give you better rates. If you look at it your shipping contract in those terms, then it shouldn’t matter how big or small you are. You can get a better contract by increasing your value or leverage to the carrier in any way you can.
Keeping that in mind, we have a few tips that can help you when you re-enter negotiations over your current contract with your carrier:
1. Be Informed, Stay Informed
You should know your operations inside and out, from the total packages shipped from last year to the forecast of packages shipped next year. Get a good handle on your cost estimates and your package movements. In order to demonstrate value, you have to be able to answer any and all questions the carrier might ask about your business and its future.
On top of that, get a good lay of the land of shipping rates from all carriers - not just the major ones, but regional ones too - to use as leverage when you’re negotiating lower rates or surcharges from your main carrier.
2. Maintain Relationships
The deeper the relationship with your carrier is, the more likely they’ll give you more concessions or perks when your contract is up for renewal. Don’t just talk to your account manager every year or two, check up on them every quarter to catch up. Not only will you make the relationship more valuable and future negotiations more fruitful, you’ll also stay up-to-date on any moves your carrier might make.
3. It Never Hurts to Ask
As you go into the details, it doesn’t hurt to ask or inquire about any relief from extra surcharges or fees that are tacked onto your packages. It may also help to run some projections to see if you can save money by eliminating surcharges and fees in lieu of lowering rates. This way, you’ll be aware of every angle you can push to lower your overall shipping bill.
As long as companies rely on carriers to move products, shipping will always be a major part of your operations budget. It’ll be a constant push-and-pull between you and your carrier, but if you approach your negotiations as a partner and emphasize the symbiotic nature of your relationship, you’ll come away with a much better contract that gives you more room to grow.