Parceling Out Tricks of the Trade

Apr 01, 2009 9:30 PM  By

With sales not coming in the way they used to, most multichannel merchants today have to cut costs. Negotiating parcel contracts can yield serious savings, but it helps to have an expert with inside knowledge on your side. That’s where Gerald Zsenyuk comes in.

While still in college in Michigan, Zsenyuk began working for FedEx as one of the carrier’s first employees in that state. He then spent 20 years with FedEx, opening up offices as the company expanded into new locations, including Hawaii. Eventually he was moved to global sales, as FedEx expanded to Hong Kong and other sites in Asia.

Zsenyuk joined a consulting firm in the mid ’90s, then struck out on his own to form Columbia Services, a package/freight delivery consultancy in Vancouver, WA.

Now Zsenyuk is ready to impart some of that experience during his on March 26 NCOF session titled “Tools for Hard Dollar Savings on Parcel Contracts — Inside Tips for For Shippers Only.” “Having been in the small package space all these years, I plan to share some tools for controlling shipping costs,” he says.

“In this economy, the carriers are compressed by the fact that their volumes are dropping,” Zsenyuk says, “but with their margins dropping, they have to watch their bottom lines.”

So if you can make yourself attractive to the shipper, you may get a better deal. Part of the process is common sense, Zsenyuk says.

“If you tell the carrier things like, ‘We pay our bills on time,’ you’re a customer they want to keep,” he notes. “But if you say, ‘We’re going to shop around because our business is circling the drain too,” you won’t be that attractive.”

Before beginning the negotiating process, Zsenyuk typically asks a client, “How do you wish to conclude this?” For instance, does the client want to go with any small-package carrier, or stay with their current carrier but get a better deal?

Sometimes determining the answer to that question depends on a number of differences between carriers. “FedEx has an overnight [delivery service] that’s unlimited weight,” Zsenyuk points out, “while UPS has weight limits.”

There’s also an unlimited shipping contract that allows you to ship to other zones for the same price, he notes. But it’s prepaid: “If you only ship the same items to the same zones, this is probably not worth it.”

What Zsenyuk frequently sees in his contacts with clients is frustration. “Usually, shippers have an existing contract with a carrier that gives them a certain level of discount — but they’re stuck,” he explains.

“The person who’s been doing the negotiating wants to know, ‘How do I get to the next level? I’ve been getting a 15% discount; how do I get to 20% or 25%?’ ” Zsenyuk says. “I school them in how to set up the negotiation.”