Another Perspective on Carriers’ “Guaranteed Service Refunds”

UPS and FedEx are two of the best run corporations in the United States and they are extremely good at what they do; however, it is becoming more and more evident that both carriers have embarked on an initiative to renegotiate customer contracts to include the elimination of the Guaranteed Service Refunds (GSR’s). This is rarely, if ever, a wise decision for a shipper.

How can not holding your carrier to an on-time delivery standard impact your business? Potential unsatisfied or lost customers, increased customer service calls, increased returned merchandise, lost shipping charge revenue, etc. Companies spend a tremendous amount of time and money putting processes in place to ensure the customer service experience for their clients is the best it can be; from the time an order is taken to the time it is shipped. Why then would your carrier expect you to disregard all that time, effort and investment to your infrastructure and not hold them to their service guarantee? Shipping is your last chance to make a good impression on a customer. If a package is late, it can destroy the entire customer experience.

The carriers may offer an additional incentive in exchange for you not holding them to a service standard. They may also add a clause in their agreement stating that as long as they are 98% on time, you cannot file for a late delivery refund. Neither of these choices should be acceptable.

I often wonder if the real reason why carriers promote the GSR Waiver is ultimately to try to discourage the shipper from using an outside auditing/contract negotiating company. Knowing that the majority of auditing companies focus primarily on guaranteed services refunds for their income, a shipper who has waived their right to claim late delivery refunds is less appealing to an auditing company. Many auditing companies will not take on a client that has a GSR Waiver. The better auditing firms are not deterred by the GSR Waiver because they understand there are many additional refund opportunities, including: inaccurate residential adjustments, duplicate billings, dimensional weight errors, bogus address correction fees, packages that were manifested not shipped and delivery area (rural) surcharges to name a few.

In our many years of experience, we are certain, that through proper contract negotiations, you will be able to receive the additional incentives the carriers offer while continuing to hold the carriers to a service standard. You do not have to sacrifice service for discounts. After all, it is both the shipper and the customer who potentially suffer from the service failures.

We recommend that you never give up your right to file for late deliveries and when it comes time for contract negotiations, you seek professional assistance.