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The Three Biggest Mistakes Parcel Shippers Make!

Several key factors in today’s fast-paced business world are driving the explosive growth of online shopping.  These factors, such as millennials, (and others for that matter),desire to shop on line, rather than in physical stores; the growth of entrepreneurs starting new businesses to sell just about anything online; and manufacturers needing to sell at the wholesale as well as at the retail level.

The net result of these factors and others, is more and more companies are utilizing parcel carriers to deliver their products to the ultimate consumer.  With this growth comes a need and responsibility to clearly and thoroughly understand all of the rules, regulations, rates, shipping options and legal ramifications of dealing with the parcel industry as a whole.  Today, we’d like to explain what we believe are the Three Biggest Mistakes Parcel Shippers Make.

  1. Not Benchmarking Competing Carrier’s Rates and Services– The first mistake we believe parcel shipper’s make is not understanding all of the options available to them from the ever-growing list of parcel carrier service providers.  Time and time again we witness shippers who never step outside their comfort zone to interview, review and analyze various competing carrier services to benchmark whether they have a good deal or not.  The reality is, if a shipper does not continually benchmark their services and rates they are paying, by default, they accept the status quo and oftentimes that means paying much more for transportation services than they really need to.

Yes, we thoroughly understand that switching volumes of business from a long time preferred parcel carrier may come with some implementation pain.  However, if a parcel shipper does not test the competitive waters they may be boxing themselves into paying higher rates year after year.  Another key point to take into consideration is service level comparisons.  Oftentimes, regional parcel carriers can deliver products faster in certain lanes compared to some national carriers.  What about USPS as an alternative?  This is not your father’s Post Office any longer.

Some additional food for thought; do cable companies, home alarm companies, mobile phone service providers, and other service companies charge their longtime customers more for services than they charge their new customers?  You bet they do and unless a parcel shipper analyzes all of the options available to them on an on-going basis, they will probably pay more year after year as well.  If a parcel carrier feels they have a “lock” on a shippers business, (primarily because the shipper has never utilized a bid process to evaluate the benefits of competing carriers), what incentive would that carrier have to publish lower rates?  That’s correct, absolutely none.  The fact is the incumbent carrier may turn out to be the best choice for a particular shipper, but unless that shipper benchmarks services and rates of competing carriers, they will never ever really be sure.

  1. Read The Fine Print, and More– Most parcel carriers provide their shipper customers with a pricing agreement or contract which outlines the various services to be provided and the associated rates and charges they have agreed to assess for those services.  Warning to parcel shippers!  Don’t just sign the agreement without reading it thoroughly to make sure all of the terms and conditions are EXACTLY as you and the carrier agreed to.  Here are several questions we would ask every parcel shipper who has recently negotiated a new pricing agreement or re-negotiated a contract with a parcel carrier.
  • Did you agree to a Guaranteed Service Refund Waiver with your parcel carrier sales representative?  No, then why is it now in your contract?
  • What Dimensional Weight Divisor did you and the parcel carrier agree would be published?  Is that the Divisor that is now published in your new contract?
  • Do you understand that many parcel carriers make their contracts subject to provisions of a service guide that is not a physical part of the transportation contract you are signing?
  • Do you know the parcel carriers can change the provisions of those service guides at will and do not need to specifically notify each and every one of the customers when they do?
  • Parcel carriers typically provide differing pricing incentives for various service levels, are you sure all of the discounts and incentives have in fact been published exactly as you and the parcel carrier agreed to in your negotiation sessions

Why ask these questions?  Precisely because for some parcel shippers these exact issues have arisen and many of these companies never identified them until it was too late; so our advice to all parcel and freight shippers for that matter is; Caveat Emptor, let the buyer beware!

And, one final point, a very important point; we strongly recommend that each and every parcel carrier contract, or any transportation or logistics services contract for that matter, should be reviewed by a                 qualified Transportation Attorney, before any of those contracts are signed.

  1. Continually Audit Parcel Carrier Invoices– Once the contract has been signed, all parcel shippers should ensure they have a qualified third party audit firm auditing each and every invoice to make sure the rates being charged are the rates the shipper agreed to in its pricing agreement or contract.  The auditors will also be able to file for refunds for Guaranteed Late Delivered packages, as long as the shipper has not waived their right to file such claims.

Parcel Audit firms also provide on-line access to their client’s pertinent shipping data and can even report results based on specific Key Performance Indicators (KPI’s) their shipper customers agree to.  They also provide continuous and meaningful reports on a variety of different metrics so the parcel shipper always has their finger on the pulse of what’s going on with their parcel shipping expenses.  We’ve all heard the statement, “you can’t manage what you can’t measure” and unless your firm has the technical expertise to generate this critical shipping data in-house, outsourced parcel audit firms have all the reporting power a parcel shipper would ever need.

Tony Nuzio, ICC Logistics

Tony Nuzio, CEO of ICC Logistics, Featured In June 2016 TransDigest Article About “Damaged Shipments: What you need to know”

TransdigestAn article entitled, “Damaged Shipments: What you need to know” was just published in the June 2016 issue of TransDigest on Page 13. Written by ICC’s own Tony Nuzio, the article is based on ICC’s 7 step process for ensuring claims are settled properly and promptly.  Among the advice is knowing the importance of ease of scheduling an inspection of damaged goods, debunking the “15 day rule”, and differences in types of damages and how to approach them.  The article is chock-full of useful information and a must-read for any shipper, big or small.
A PDF of the article can be accessed and downloaded here: TransDigest, June 2016
Tony Nuzio, ICC Logistics

Tony Nuzio, CEO of ICC Logistics, Featured In January 2016 TransDigest Article About UPS’ New Fee, “Third Party Billing Service”

trans-digestAn article about UPS’ “Third Party Billing Service” was just published in the January 2016 issue of TransDigest on Page 9. Written by ICC’s own Tony Nuzio, the article clarifies what shippers need to know about the new fee, which many shippers will begin to see on their weekly UPS invoices.

Tony suggests that, after reading the TransDigest article, shippers “take a close look at their weekly UPS invoices to evaluate and determine exactly what the total impact of this new fee will be on their business.” He also suggests that “shippers should make sure before they attempt to make a Third Party billed shipment via UPS in 2016 and beyond, that the intended payer of the freight charges does in fact have a valid account with UPS, or stand the risk of receiving chargebacks from UPS.”

A PDF of the article can be accessed and downloaded here: TransDigest, January 2016

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Guaranteed Service Refund Waivers: Who’s Really Benefiting?

A Guaranteed Service Refund Waiver, or GSR Waiver as it is commonly referred to, is a contract provision that has been appearing more and more in new contracts from your Parcel transportation and logistics providers.

Should your company agree to accept such a waiver?  

By agreeing to the waiver provisions in your contract your Parcel Carrier typically agrees to provide you with additional pricing incentives to reduce your annual freight spend. In return, you forfeit your company’s right to file claims for refunds for late deliveries.

This doesn’t sound so bad, does it? You get some extra savings on your annual parcel spend and you don’t have to worry about auditing your invoices to submit claims for late deliveries. Everybody wins…or do they?

According to industry experts, every year an average of $2 Billion goes unclaimed in late delivery refunds from the major Parcel Carriers. It all comes down to the numbers.

Will my company benefit from signing a GSR Waiver?  

The answer is, it depends. If you are saving $30,000 per year in additional discounts by signing a GSR Waiver, but losing $100,000 per year in Guaranteed Service Refunds, it’s obviously not worth implementing that provision in your contract.

The best way to know is to have an audit performed on your invoices. Logistics Consulting companies have the know-how and technology tools to quickly and efficiently audit your company’s parcel invoices to determine which avenue is most beneficial to your company. Most often, it takes less than 30 minutes to gather the information needed for the audit and about two months to get a comprehensive analysis performed that will arm you with all the pertinent information you’ll need to make the proper decision.

We always say, “knowledge is power!” And in that regard, here is a great example of how Knowledge truly paid off for one of our clients.

Recently we initiated an audit for a new client’s Parcel Carrier invoices.  The company had an $8 million annual parcel spend. After our comprehensive audit, we uncovered that even with their GSR Waiver,they were entitled to and actually received approximately $8,000 in refunds. However, had they not had the GSR Waiver in their contract this company would have received refunds of approximately $500,000 for a year. $8,000 vs $500,000. That’s not chump change! And, the most important fact we uncovered is that the client had no way to identify just how much savings they received in additional discounts, if any, not to mention losing complete visibility of the Parcel Carrier’s delivery service.

So before you sign away your company’s right to file and receive refunds for late delivered packages, make sure the additional pricing incentives far outweigh the potential refunds the company would receive by not agreeing to the waiver.

And, one final point!  Most shippers that do sign away their right to file claims for late deliveries also often do not feel it is necessary to audit their Parcel Carrier invoices because of the waiver.  That too is a big mistake because it takes away the shipper’s ability to audit for many of the other refundable errors that occur on a regular basis.

 

Tony Nuzio, ICC Logistics

An Article by Tony Nuzio: Let’s give the Trans-Pacific Partnership a chance

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Check out Tony’s article in last week’s LIBN!

Here is a link to the PDF: LIBN-Let’s give the Trans-Pacific Partnership a chance by Tony Nuzio.

Deal

Seven Steps to Better Negotiating: Tony’s Top Tips

We’ve said it before…negotiation is a fine art. Whether you are negotiating logistics contracts, salary terms or new partnership agreements, proper negotiating tactics yield tremendous results. Below are seven of my top tips for negotiating in business and beyond.

1. Know The Rules. The better you know the rules of engagement, the more effectively you’ll make your case. By rules, I mean the terms that govern the buyer-seller transaction. Terms can be detailed in the contract you signed, defined by state or federal legislation, codified by regulatory decisions, or specified in industry practices or codes of ethics. The rules may be complex and always subject to change. Don’t negotiate anything until you know all of the rules you will be subjected to.

2. Update Your Knowledge Base. In other words: Keep current on industry trends and keep learning. The more you know about your business, and the more you know about your suppliers’ business the better off you’ll be.

3. Bring Time To The Negotiating Table. While money is rarely, if ever the only transaction variable, often it becomes the sole focus of negotiators. You know the scenario: one side says $X, the other says $2X, and confrontation begins. To break the logjam, bring other variables to the negotiating table such as time. Can you, for instance, accept a protracted delivery schedule? Will your vendor further discount the invoice if you pay their invoice promptly? Can your service provider accept payment in 60 days rather than 30 days?

4. Give To Get. Before you sit down at the negotiating table be prepared to offer several concessions in return for what you actually need.

5. Understand Your Own Goals. Too often businesses sit down at the negotiating table without having assessed their own long-term goals. Ask yourself: What do you really seek from your supplier or strategic business partner in this intended relationship? What will it take to arrive at that goal? The answers may totally reshape your deal-making process.

6. Never Use Criticism To Leverage Price. Yes, most businesses sit down at the negotiating table to lower their costs. But don’t knock the service provider’s service currently being provided to your company, don’t belittle the other teams negotiator or the products they sell and don’t demean the vendor to get what you want . Believe me, you won’t. get what you think you’ll get.

7. Always Be Courteous and Professional. I’ve seen too many negotiations boil over because the parties at the table took things personally. Remember this is not about you, it’s about achieving desired results that affect many more individuals than yourself.

I hope these tips prove helpful to you.

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