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. Completely 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%. Always keep the Carriers knowing that the competitor is always an option
• Install a Third Party- Carrier Neutral Shipping System. Your UPS WorldShip and FedEx ShipManager shipping systems were given to you by the Carriers for a reason; do you really think the Carriers are giving you something for “free”? You will be able to negotiate a much better Agreement when you have shipping options. The amount of money you save by having a Carrier-agnostic shipping platform will be much greater than the nominal monthly cost of the system. If you have a Carrier provided shipping system, if your system is interfaced to your ERP system (host system) and if you are giving close to 100% of your business to a single Carrier, you are known in the industry to be a CAPTURED ACCOUNT. The Carriers own you and you aren’t going anywhere. Divorce is expensive. Do not be put in this position; your poor contract reflects it.
• Don’t let your Carrier relationship get in the way of negotiating a competitive Agreement. Your Carrier representative is compensated by how much they grow 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, regional 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 you 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 and these Agreements have certainly become confusing.

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.