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Is It Time to Renegotiate Your Shipping Contract?

Jun 30, 2020 9:00:00 AM

Ask yourself these questions to decide if you’re ready to sit at the contract negotiation table

At 71lbs, we know that contract negotiation is a vital and often complex procedure. However, deciding whether the time is right to enter into them is a lot easier. This can be boiled down to just a few questions your business can ask itself. Your answers will help you decide if you’re happy under the current contract terms or ready to call your carrier to the contract table.

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1. When was the agreement last negotiated?

If you’ve never negotiated and simply signed on the dotted line with no questions asked, then you’re not alone. Many businesses feel they already have enough matters demanding attention without devoting in-depth study to their contract terms. Other businesses may avoid negotiation because they lack confidence it will achieve anything or may not know shipping carrier agreements can even be negotiated.

Everything in life is negotiable, and carriers are just as hungry and competitive for customers as any other company. If you haven’t negotiated your contract within the last year to 18 months, it’s a good time to review it. Even if you’re content with your current carrier costs, you may become even happier if you do a little rooting around in the fine print.

2. Should I negotiate on my own?

This answer depends on several factors. Comfort and familiarity with your shipping carrier can equate to solo confidence at the contract table. The caveat is that a business can become too comfortable and end up taking too much on good faith during negotiations. Being on great terms can sometimes make it harder to ask the difficult questions. For example, are you 100% certain your carrier is telling you every possible way you could save money (and that they could lose it)?

A cozy carrier relationship can also eclipse the bigger picture of how your business (and the rates it receives) compares to others in your sector. A solo negotiation can leverage your own contract terms, but will it allow you to benchmark those terms against companies similar to yours on metrics like size, shipping spend, volume/weight and zones?

Going it alone also requires significant knowledge of carrier terminology. If you’re not familiar with labels like accessorial charges, CBLs, demurrage and dimensional weight — to name just a few — you’ll get a better deal by teaming up with someone who does.

Another crucial element in every negotiation is gathering and presenting all the right data regarding your shipping operation. Can you get all that information by yourself in one place, then use it to respond to and successfully bargain with a carrier? It’s great if you’ve got the time and resources to do that. If you don’t, 71lbs can manage it with ease.

3. How much is my current and projected spend?

Every business hopes to grow over time, and every carrier hopes to have bigger businesses as its customers. An analysis of your current shipping spend can help create an accurate projection for years into the future, which can also help with contract negotiations.

Successfully demonstrating to your carrier how you plan to make good on growth — and that you’d like to stay with your current carrier as you do so — may give you some leverage on current and future rates. It can often be music to a carrier’s ears to know they can count on your business to be a customer for years to come.

Make 71lbs your shipping negotiation ally

We’re here to help shippers with every aspect of contract negotiation, from clearing up contract terms to providing premium analytics that provide data you can use to gain a stronger bargaining position. Your business may even be connected to or considering a relationship with multiple carriers. If that’s the case, be aware of the pros and cons of that approach and don’t feel overwhelmed or intimidated by the people or the paperwork, because we’ve got your back.

Our tailored contract negotiation service works on your behalf to get the best possible rates, and we save our customers 15% to 20% on average compared to their current shipping spend. We’ll also break the agreement down to discover if those “savings” really live up to the title. Connect with us to make sure your next agreement puts you in the power seat.

At 71lbs, we focus on two things: a) helping customers save money on shipping, and b) helping customers understand their shipping costs. We provide refunds and savings on shipping insurance, freight and imports, among other benefits. Our automated dashboard displays easy-to-understand shipping costs and insights so you can make better business decisions. Drop by the contact page to get in touch!

Topics: carrier management, shipping contracts, logistics partners

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