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How to Negotiate Carrier Contracts

Nov 20, 2019 4:15:00 AM

Negotiating contract terms with the big carriers is a very important time for your business. 71lbs is the experienced ally you need to make the strongest deals.

For many shippers, the words “sign here” signal the beginning of a business/carrier relationship, but it can also lead to the end of many other things: The end of savings, transparency and accountability. A contract signing should be an empowering process for a shipping department that confirms the carrier is providing the service and not vice versa.

That’s what businesses do when they don’t negotiate hard for their own interests with carriers. Companies often sign away more money than they should, and the carriers sit back and rake it in. Here’s how to approach negotiations before you sign a new contract, and how 71lbs can help you get the best deal.

Understand shipping before you start

A contract is an agreement, and you can’t agree with someone if you don’t understand what they’re saying. Shipping contracts aren’t exactly worded for clarity and most carriers use industry terminology that makes reading and understanding your contract very confusing, so be sure you’ve done your homework on those invoice terms.

We’ve also covered how important it is to look out for surcharges and scrutinize a carrier’s refund policy before committing to them. Otherwise, you could lose out on paybacks if they fail to perform or even be charged just for checking up on your deliveries. It takes a while to thoroughly dissect a contract, but it’s an investment that will reduce your future shipping budgets.

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Use the psychology of negotiating

Remember: It’s an agreement. Both sides want this to be mutually beneficial, so it should be approached that way and not like a fight. There’s a fine line between aggressive and assertive; staying on the right side of it will make for a happier agreement all around.

If you already have a shipping agreement with UPS or FedEx, they’ll have someone managing your account who’s just doing their job like you are. A respectful relationship can go a long way toward getting a carrier on your side. On the other hand, it can pay to prepare for competitive environments. The more options you have, including considering regional carriers, the US Postal Service, or even local carriers can make the major carriers seem like their business in on the line. Ask for a list of every possible discount and if they can be applied to your business.

Field plenty of questions and don’t take anything at face value no matter how good it may seem. Too many businesses get locked into contracts offering discounts they will never get the chance to use. Worse, they can even be talked into waiving late-delivery refunds in exchange for other supposedly “valuable” services.

Take your time and know your business

The 71lbs dashboard is an easy way to assess the Top 5 agreement areas we’re asked about. Take all the time you need and don’t accept attempts to hurry or pressure you. Stay cool-headed and pleasant, and remember that sometimes negotiations fail.

If your carrier is being unreasonable, however, don’t be afraid to walk. Competition is fierce between the big shippers, and there are always other options. Even if negotiations go well, always make sure you know where the exit is. Set a clear end date for the contract and, if possible, a way to get out of it at any time if you’re dissatisfied.

Self-knowledge is another crucial part of contract negotiation. How well does your shipping department know its processes? If they can’t reel off the current numbers for volume, weight and frequency, then that’s a knowledge gap that will complicate negotiations and could cause shipping managers to sign up for inaccurate terms.

The more operational data you can bring to the table, the fairer your contract will be. We recommend that every shipping manager considers adding our Premium Analytics to their negotiating tools. But knowing is only half the battle — you need professionals who are well-versed in getting the job done.

Get 71lbs in your corner at the negotiating table

Partnering with us is like passing an instant master's course in contract experience, state-of-the-industry awareness and negotiating techniques. We’ve handled shipping negotiations for businesses of every size and shape, and we know exactly what to look for, when to question and when to shake on it.

On average, we save our customers between 15 and 20 percent on their shipping spend and provide the kind of data which creates contracts that fit their unique shipping needs. We pay close attention not only during the negotiating process but after it, too. That’s when we get to work dissecting the agreement to show you where you’ve saved at every point.

Don’t let another contract renewal roll around unquestioned, and don’t think you’re alone in the process. We’re here to make your contract the strongest it can be.

At 71lbs, we uncomplicate the shipping process for our customers, making it easier and faster for them to access refunds and reduce their expenses. Our automated platform gathers all your shipping information into one easy-to-use custom analytics dashboard. Drop by the contact page to get in touch.

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Topics: Carrier Agreements, Contract

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