Live from NCOF: Negotiate Your Way to Lower Shipping Charges

May 01, 2007 3:42 AM  By

Schaumburg, IL– Few multichannel merchants have been switching parcel carriers lately. And according to Tim Sailor, founder of Navigo Consulting Group, that’s to the merchants’ detriment.

Sailor began his Monday session, “How Critical Changes in the Parcel Industry Could Change Your Business,” by telling attendees, “All parcel industry contracts can be improved. If you think you have absolutely the best rates, think again. If I had a dime for every client I’ve heard that from I could’ve retired—10 years ago.”

But curiously few marketers are switching. According to a Morgan Stanley study of the 400 largest ground shippers, only 9% switched their ground services provider during the past year.

“If you haven’t reevaluated your shipping provider in the last year, you’re missing out on an opportunity,” Sailor said. Companies could carve percentages off their parcel bills if they’d just devote the time and energy to look at their bills vs. how their business is actually performing.

So what should you be doing? Sailor offered the following advice:

* Know more about your distribution center than the carriers do. It raises your credibility with the carrier.

* Sit down with a few bills and your service contract. Be sure to match the contract with what you’re being charged. “Are you using the services you’ve contracted for?” Sailor asked. “The devil is in the details.”

* Negotiate to include all services.

* Don’t overlook accessorial charges, such as delivery confirmation and address correction services. Accessorial charges can account for up to 40% of your parcel bill—but they’re all negotiable.

* Leverage your company’s volume. And be sure to include international shipments.

* If your company benchmarks with a peer group, inquire within the group to see who is getting the most-advantageous discounts. There’s negotiating power here, Sailor says. For example, if a company of similar size and shipping characteristics gets heavily discounted for address correction services, so should you.

* If you are a customer of United Parcel Service, be sure your company initiates a meeting the next time the contract comes up for renewal. “This is the number-one mistake I see companies making,” Sailor says. If you let Big Brown do the initiating, it’ll be on their time frame and likely won’t give you the time you need to properly prepare your case.”

* Also particular to UPS customers: Extend the typical billing cycle past 30 days because UPS is the most vigorous in applying late fees.