Lowering Shipping Rates: Some Basics to Remember
Here are some things to keep in mind about lowering FedEx shipping rates. The clearest, easiest way is to renegotiate the contract. So, to do to lower your FedEx rates is to take account the timeframe in which you last negotiated your contract.
As long as it's within a six-month to nine-month timeline, you can go back into your contract. You would take a peek around, as we say take a look under the hood. You could see if there are any areas of opportunities to optimize that contract. This is whether it's in surcharges or discounts. Both that relate to service levels themselves. You want to take into account everything and also take a look at the dimensional weight. It's obvious that both carriers are down to a 139 DIM factor on the published side. If you don't have a custom DIM factor, which get affected by a lot of dimensional weight charges. You want to make sure that you can either one, look at your packaging. That's a little bit harder to do than asking the carrier to adjust the custom DIM divisor.
Re-examining Your Contract
So the best and easiest way to reduce your FedEx shipping cost is to look at the contract. This is besides opening a new facility and lowering your zone. You could see what you might be getting as far as discounts go. You should then take a look at renegotiating that contract, even employing a third party to help you. You can bet out to see if there are any opportunities to optimize the contract. So two, or even three consultants could help you renegotiate that contract. This is whether it's UPS or FedEx in lowering both UPS and FedEx shipping rates.
How a Logistic System Rate Shops
As far as third party shipping software goes. A logistic platform or logistic shipping system will be able to rate shop. That's what we call it in the industry. It takes into account all the different aspects of our shipment. This includes all the characteristics and any surcharges that apply to a shipment. Then it rate shops. It takes your net rates into account, and then it will take a look at the best cost provider. And then again, if there are any other service level agreements you have with your customers. May it be time in transit, end cost, the system will also calculate time in transit.
There's another thing to remember. The FedEx in some areas, across the country, depending on which coast you're on, or where you are in the country. The FedEx time in transit by ground could be one day better than UPS. So the system actually takes that into account. Where everyone thinks that all things being equal, UPS and FedEx are equal. They're not equal in time in transit. The operational flexibilities and efficiencies that they both perform are also different. Our logistic platform will help you get better rates with either carrier, UPS or FedEx. This is whether it's our analytics platform or the actual shipping software.
Maintaining a Good Relationship with Your Account Manager
Your relationship with your account manager doesn't lower your rates with a carrier. The relationship is important and does affect your rates. It's that the more your account manager knows about your account. The better your relationship is with your account manager. By your account, I mean your shipping characteristics and your average weight. It includes whether you're affected by certain surcharges or dimensional weight. I mean anything that goes into your account that is an output or a higher or increased cost.
It helps you when they know more about your account manager. Or the more your account manager knows about your account. Then the more likely it will be that they can write a better story to their pricing department. This will help you lower your cost. So, your local account manager doesn't have any pricing authorities.
Help Your Account Manager Help You
So, this is something to remember any time you ask or renegotiate your contract. It's that when you do renegotiate, your account manager is only relying on what they know about your account. Or they rely on information they're getting from you. It might be competitive information or any other data that you may provide. Like growth rates or anything else. They take that information and they send it up to their pricing department. Then, the pricing department will make a decision on your account. It's based on the write up that the account manager submits.
For example, if that weren't the case. Let's say that the account manager doesn't know anything about you or your account. And that they don't have a relationship. This is going to make it hard for them to write what we would call an appeal to get better pricing for you. So, while your account manager won't be able to get you better rates right off the bat. The relationship with your account manager helps. It will help them write a better story to their pricing department. This, in the end, helps you negotiate better rates with them.
Author
Bryan Van Suchtelen
Bryan Van Suchtelen
Corporate Director of Parcel Rate Services
Prior to joining Lojistic in 2015, Bryan enjoyed a 26-year career with UPS where his roles included Pricing, Field Sales and Director-level Sales Management of some of UPS’s largest customers.
At Lojistic, Bryan leverages his wealth of experience/expertise to identify and execute supply chain cost management solutions for parcel shippers of all sizes. Bryan has helped his customers reduce their shipping spend by tens of millions of dollars.