A Few Very Important Tips for Negotiating UPS and FedEx Contracts

UPS Contract Negotiations & FedEx Contract Negotiations

LJM's Executive Shipping Advisory has helped negotiate advantageous parcel carrier contracts for clients with anywhere from $500K in annual shipping spend to over $100M in annual shipping spend. Over our 25 years in the industry, there is little we have not seen or negotiated. Our expertise and insights help clients save 24% on their Total Parcel Spend (TPS) on average, however; those savings can exceed 45%. Here are some of tips on negotiating and renegotiating carrier contracts with UPS and FedEx based on our experience: 

• Everything in your Agreement is negotiable.
• You can re-negotiate at any time with your Carrier; you should not wait for your agreement to end.
• Never sign an addendum or an Agreement that locks you into a period of time and penalizes you if you terminate the Agreement early.
• The devil is in the details. Understand your shipping data, your shipping profile and your shipping characteristics. You can bet that your Carrier does!
• Never waive your right to file for a Money Back Service Guarantee/Guaranteed Service Refunds; no matter what the Carrier promises, it is not to your advantage.
• Do not put all your eggs in one basket. Split your business with the Carriers 80% – 20% or even 90% – 10%. Carriers should always be aware that there are competitive options.
• Install a Third Party, Carrier-Neutral Shipping System. UPS WorldShip and FedEx ShipManager are provided by the carriers for a reason — and it’s not charity. These systems are designed to lock in dependency, limit flexibility, and reduce your leverage at the negotiating table. True negotiating power comes from optionality. When you operate on a carrier-neutral, third-party shipping platform, you create real choice — and that choice translates directly into stronger contract terms, better rates, and meaningful long-term savings. In nearly every case, the financial impact of a carrier-agnostic system far outweighs its modest monthly cost. Shippers routing nearly all volume through a single carrier and relying on carrier-provided systems become CAPTURED ACCOUNTS — with limited leverage and contracts that reflect it. A carrier-neutral platform restores flexibility, strengthens your negotiating position, and protects your long-term cost control.
• Don’t let your Carrier relationship get in the way of negotiating a competitive Agreement. Your Carrier representative is compensated by growing their profits from your business. The lunches, the sporting event tickets, the doughnuts and all the other goodies are wonderful, but don’t let them get in the way of getting what you deserve.
• Use the USPS, alternative carriers and consolidators as leverage when negotiating.
• Use your LTL spend as leverage for better overall shipping discounts.
• Understand all your Accessorial Charges and how they affect your total spend.
• Understand Dimensional Weight Pricing and how it can significantly increase your costs.
• Look at your minimum net charges and how they affect your actual discounts.
• Speak with a parcel shipping consultant who handles FedEx and UPS contract negotiations professionally. They will likely save you 10% to 30% more than you will be able to save by doing it yourself.

Carrier Agreements have become very complicated. The above FedEx and UPS contract negotiation tips are just a few to consider when negotiating your Carrier Agreements. Remember, there is profit in confusion.

If you want to be absolutely certain that you have, and keep, the best agreement available, speak with the professionals at LJM at 631-844-9500 or email us at info@myLJM.com.