When carriers determine discounts and incentives for their customers, they may utilize some similar tactics, but overall, they do not have a singular system to differentiate between one company to the next. Therefore, they create custom, specific shipper strategies for pricing agreements and makes negotiating carrier discounts highly subjective. There are many different factors that the carriers utilize to try and extend a price that is better than the tariff rates.
A carrier’s objective is to maximize their profit margins and limit discount levels while still maintaining a customers’ business. This type of mindset will have carrier representatives speak about their relationship with you and value add services rather than improving shipping rates. To note, those shippers that have a long-standing relationship with a carrier or an above average level of integration with carriers usually get the least aggressive discounts.
BEST PRACTICE SUGGESTIONS:
-You need to let your carrier know what’s important to your company and what isn’t. Value add services and solutions are welcome during a negotiation but are not your main goal. Instead, let your carrier representative understand that great discounts and incentives are your primary focus. Even if you have a great relationship with your carrier, great discounts and a good negotiation process can improve and strength a carrier-to-customer relationship.
-Try to get another set of eyes to look over the agreement. An experienced third party can both analyze and give suggestions as to whether or not the carrier offer is positive or negative. Source Consulting, for instance, has up-to-date analytic tools and an experienced staff of former carrier employees to help give specific analysis to reduce your shipping costs.