Parcel Contract Rate Negotiations for FedEx, UPS, USPS, DHL, Purolator and Canada Post
Renegotiate Your Carrier & Parcel Contract Rates
Both UPS and FedEx have announced General Rate increases of 5.9% in 2024. Although these increases are lower than those implemented in 2023, they are still substantial. Furthermore, these are just average increases. Actual increases could be much higher due to a shipper’s actual characteristics. So, before these rate hikes erode profits, consider renegotiating your shipping rates with UPS, FedEx and other carriers. Parcel contract negotiations are more important than ever to protect margins and improve bottom lines for all shippers. Despite what the carriers would have you believe, it’s possible to enter into LTL and FTL negotiations from a position of strength.
Over the years, parcel contract negotiations have become increasingly complex. Most companies don’t possess the proper insight and data that help to ensure that they get the most from their international, national and regional parcel carrier negotiations. Flatbed and Step Deck negotiation as well as negotiation for “Ugly” (oversize or permit-required) parcels can be complicated. Also, the UPS and FedEx contract negotiation processes are different from those of the other carriers.
Freight carriers create pricing agreements and contracts to maximize their own profitability. They factor a multitude of variables into the contract price, such as surcharges, accessorial fees, discounts and incentives along with complex contract terms and conditions. Knowing how to negotiate contracts is a specialized skill.
ICC’s Experience with Parcel Contract Negotiations
Unless you bring knowledge, accurate data and expertise to the negotiating table, you’re paying more than you should. You need a partner to arm you with the tools to protect your bottom line. ICC can help you come to the negotiating table with the Big Data you need to negotiate your UPS, FedEx, DHL and other parcel and freight carrier contracts. ICC is intimately familiar with every element of domestic and international parcel, domestic trucking, and ocean and air international carriers’ pricing models, making us formidable at the negotiating table.
Since 1975, ICC’s freight rate negotiation support services have resulted in tens of millions of dollars in cost savings for our clients.
Put ICC in your corner, and we’ll help you negotiate the most favorable carrier rates and service agreements for your company. Call 516-822-1183 or contact us online today to help you negotiate freight and parcel shipping rates with FedEx, UPS, and other carriers and start reducing freight costs.
How Do You Negotiate Rates with FedEx, UPS, and Other Carriers?
With Successful Carrier Negotiations, Knowledge Is Power
Do you know when you last negotiated your carrier contracts? Chances are, it’s been a number of years. And it’s likely you never analyzed the new contract against the previous one to validate the savings the carrier promised you. Before you renegotiate your agreements, you need to know:
- How general rate increases have impacted your costs
- The components of your existing rates
- Whether your carrier bills are accurate
- How your discounts stack up against your competitors’
- What percentage of your total fees are acessorials, including fuel
- What your contract says regarding rates
- Whether you’re ready to change carriers or add new ones to your transportation program
- If your systems can support new carriers
A Snapshot of the ICC Parcel Carrier Rate Negotiation Process
With ICC, it’s never been easier for you to optimize rates and negotiate favorable contract terms with FedEx, UPS, DHL, USPS, Canada Post, Purolator and other regional parcel carriers. We work directly with you to develop and tailor a program that fits your company’s needs. It will take you about 30 minutes to gather the materials we need to start our evaluation. Then, we do a deep dive into your company’s shipping characteristics and our proprietary database of rates and fees we’ve developed over our many years in business. From there, we deliver a report that outlines exactly where you are leaving money on the table and what opportunities you are missing. ICC’s evaluation gives you the knowledge you need to negotiate with your parcel and freight carriers from a position of strength and optimize your shipping spend. Knowledge is power. We help put the power back in the shippers’ hands, where it belongs.
We sweat the small stuff.
Before you start a parcel contract negotiation, rely on our decades of experience analyzing carriers’ pricing models to scrutinize your transportation and logistics data, including shipping volumes, average revenue per shipment, average weight and cost per shipment, fuel, mileage and your product’s shipping characteristics. If you’re happy with your current carriers, we’ll maximize your ability to get discounted shipping rates. And if you’re ready to make a change, we’ll get pricing and service proposals from multiple carriers for you to consider.
ICC’s parcel carrier negotiations achieve substantial and ongoing cost reductions in:
- Customized pricing schedules and contracts
- Customized accessorial charges
- Customized carrier surcharges
- Verification of proper freight classification ratings
- Comprehensive analytics and costing models by Lane ID
And we’ll perform the same data analysis to help you successfully negotiate carrier rates with UPS, FedEx, DHL and other parcel and freight carriers.
But we don’t stop there. We monitor parcel and freight carrier invoices after your carrier contract rate negotiations to ensure that you’re consistently being charged the correct rates. Don’t leave money on the table. Contact ICC today and we’ll show you how we can boost your bottom line with our Carrier Rate Negotiations. Call us today at 516-822-1183 or contact us online.
What Is Carrier Contract Negotiation?
It’s said that the devil is in the details. Carriers create contracts that can be confusing. One word can change the meaning of a term. Written amendments can change your shipping expenses. Penalties based on early termination, and failure to meet minimum commitments can cost you a bundle.
ICC takes the complexity out of the contract negotiation process. Our state-of-the art, proprietary model arms you with the information to hammer out a favorable agreement with your parcel and freight carriers.
Not all carrier contracts are created equal. We help you determine if revenue-based/tiered discount agreements, custom net rate agreements, quarterly or annual rebate agreements, or a custom pricing agreement is in your company’s best interest.
Our deep industry experience coupled with our vast database of historical carrier invoice data allows us to identify available discount and incentive levels based on your unique shipping characteristics. We benchmark your contract against shippers similar to your company.
FedEx and UPS Contract Negotiation Tips
The first step in knowing how to negotiate contracts is to know what you’re already paying. ICC tracks and validates your pricing, service and performance, and then we share those results with you. Most of our shipping customers are surprised to learn where they’re over-spending and where they’re missing out on available discounts.
As for how to get discounted shipping rates, most FedEx and UPS contracts include base discounts based on zone and weight. Extra discount tiers are available based on revenue earned from the shipper. Occasionally, FedEx and UPS will offer quarterly or annual rebates, also based on earned revenue. Also, Small Parcel agreements contain a separate addendum listing accessorial discounts.
Common factors affecting domestic freight and parcel shipping rates include:
- Annual volume
- Origin-destination pairs
- Packaging dimensions, weight and type
- Packaging optimization (insert hyperlink)
- General rate increases
- Fluctuations in shipping activity and characteristics
Although you can’t control what UPS, FedEx and other carriers do, you can set yourself up for success.
- Work with a company that understands carriers’ motivations and negotiation tactics.
- Hire an expert who understands how and where to save you money without sacrificing service.
- Understand your package dimensions and weights; show how these characteristics can minimize the carriers’ costs.
- Demonstrate you pay on time.
- Thoroughly review the FedEx’s and UPS’ published, general rate increases and service-guide changes.
That last point is crucial. Carriers make changes throughout the year without notifying you or getting your approval. We notify our customers when carriers make changes and updates to their policies and rates so that they’re never surprised by an invoice.
Frequently Asked Questions
What is the difference between parcel and freight? Shipment size and service. We advise our clients the best way to ship their goods – parcel or freight – to ensure the best service at the lowest rate for the best customer experience. Once shipment weights get above 200 Lbs., it is important to compare options with LTL and Parcel carriers.
What rates can you negotiate with FedEx and UPS?
There’s very little we CAN’T negotiate. Here are the most commonly negotiated rates:
● UPS Ground Commercial Residential Discounts, FedEx Ground Commercial and Home Delivery Discounts
● UPS Next Day Air, FedEx Priority Overnight Discounts
● UPS Next Day Air Saver, and FedEx Standard Overnight Service
● UPS 2nd Day Air and FedEx Economy Discounts
● UPS International Worldwide Express, Express Saver, and Standard Service
● FedEx International Priority Express, International Express, Economy, and Ground Service
● UPS and FedEx Delivery Area Surcharge/ Extended Area Surcharges
● UPS and FedEx Residential Surcharges
● Minimum Charges
● UPS and FedEx Fuel Surcharges
● UPS and FedEx Dimensional Weight Factors
What is “Ugly Freight” and how does it differ from traditional Domestic Freight?
Ugly Freight describes goods that are difficult to ship via traditional courier or carrier freight services in van equipment. ICC specializes in Ugly Freight that is oversized and requires specialized equipment such as flatbeds, step decks and removable gooseneck trailers. Ugly Freight may also require permits and road closure documents prior to shipping. ICC can help shippers fully optimize and modernize this unique and competitive area of freight logistics.
What are the most commonly negotiated rates, discounts and surcharges?
You can negotiate rates for next-day air, second-day air, delivery area surcharges, accessorial discounts, volume-based discounts, dimensional weight pricing, residential delivery surcharges, and large package surcharges.
How do you negotiate a lower freight rate with FedEx, UPS and other carriers?
It’s simple. After 45-plus years working with shippers and carriers, we have developed a deep understanding of parcel and freight carrier’s pricing models, service offerings and contract anomalies. Coupled with this knowledge is our vast database which helps us to analyze and understand the significant opportunities shippers have to achieve optimized services, rates and contract terms with UPS, FedEx and other carriers. Our team also includes industry insiders with firsthand knowledge of how UPS and FedEx negotiate. We pass this knowledge on to our clients to help them achieve best-in-class rates and service offerings for their business.
Will the contract negotiation process impact my carrier relationship?
It will, in a positive way! Strong carrier-shipper relationships are key to a thriving supply chain. As logistics consultants, we are keenly aware of the power of those relationships and look to strengthen them with mutually beneficial contract terms and agreements.
A partnership where everyone wins is much better than a one-sided one. It is impossible for shippers to understand contracts and opportunities available to them until they take a deep dive into their current contracts and see how they stack up. Once shippers have that knowledge, they are on a level playing field with their carriers. That’s how strong partnerships with carriers and shippers are created.
How much will I save?
Savings vary based on a number of factors. First, savings can’t be the only goal but should be balanced with service offerings and other contractual values. So, there are “hard” savings in the form of percentages and “soft” savings in the form of service offerings and other valuable incentives from the carrier. Our customers on average save 10%-40% in a typical contract renegotiation. Once you begin working with ICC, in two weeks you’ll know where you stand. Worst case scenario? We discover you already have great rates and contract terms (it’s happened 2x in 45+ years). Best case? We give you the knowledge you need to negotiate best-in-class rates that help your company save significant dollars on your current spend over several years. There’s nothing to lose.
What is considered as a good parcel shipping rate?
Although it depends on the parameters, which can be complicated, ICC believes that the best parcel shipping rate is one that provides the best service, the best price, and the best customer outcome.