Lowering UPS Shipping Rates: First Steps
The best way for lowering UPS shipping rates is to get detailed reports on your current shipping. This should include all the relevant characteristics. It should be things like your average cost is by service level and your average discounts.
Take a look at those, especially if your last negotiated contract was about six to nine months ago. Nine months is usually a pretty good time frame to call the representative. They can help you see if there are areas of opportunity to optimize that contract. The first thing you want to do is make sure you get a good handle on what you spent and how you spent it. You should see where your dollars are actually going.
Your Shipping Costs: Where to Look
You may be thinking that all your spending is on the ground. But you might be surprised to see that a lot of your charges are actually surcharges. This could include a residential surcharge or the delivery area surcharge. Or it may be things like late payment fees with UPS. That's one thing that FedEx doesn't currently have. They haven't implemented a late payment fee. This is something you want to take into consideration as well.
So take a look at all your data to have a good idea of where you want to lower your costs. And bring that back to your account manager. You can then see opportunities to optimize your contract. From a software standpoint, Lojistic can help with our third party shipping platform. We could use that software or platform to help you rate your packages. We could do a net rate comparison between the two carriers. Then, the system will spit out the net rate for both carriers. The net rate depends on the characteristics of each package. It also depends on where the package is coming from. It takes that all into account.
Lojistic's Shipping Platform Helps Out
A rate shopping system like the Lojistic platform gives rates for both carriers. You'd want to have net rates and you would be rate shopping net versus net. And the fallout will be the best rates for both. That takes into account size related surcharges and also distance related surcharges. Your net result will be the net rate. So you can pick and choose between the best rate. Second to that is the timing transit and any requirements you have there. We also offer services that would help you negotiate your FedEx and UPS shipping rates. That service is our parcel rate service. We help you take a strategic approach to negotiate your UPS contract or FedEx contract. We can also help with lowering both UPS and FedEx shipping rates.
Account Manager Helps Lowering UPS Shipping Rates
So the best way to describe it will be your relationship with your account manager. It is as important as your relationship with the driver that comes to pick up your packages. It could be even more important. Your relationship with your account manager affects how well you know your account. When the account manager knows more about your account, the better off you are. Also, they will be able to describe what they need and why they need it when it comes to pricing. This is something that you may not have known. Your local account manager doesn't have any pricing authority at all. The only thing they can do is submit requests for pricing. And along with that submission is a detailed write-up.
Say that the account manager doesn't know your account. And they don't know the details on your shipment characteristics. It would be hard for them to understand your business, your requirements. It would be hard for them to understand why they're asking for the discounts they're asking for. They also need to understand why you deserve the discounts that they're asking for. So the relationship with the carrier's account manager is very important. They must understand your business, your needs, and the requirements you have. They can then let them write the best possible story about your account. Then they can get you the best discounts available.
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.