Just as important as the negotiation of a new agreement, is the implementation process. After spending many weeks negotiating a new agreement with their carrier, people often miss the following critical step, to ensure that negotiated components are applied: The decision to apply the Prior History, or Not To. It’s important to decide if the prior shipping volume should remain intact, reset, or if a ramp-up period should be applied, when implementing a new agreement.
Typically, it is recommended that prior history is utilized. It keeps the prior 52 weeks' history intact, so there is less concern about dropping into a lower revenue qualifier. There may be situations that would warrant otherwise, though, where resetting the history and/or applying a ramp-up period, is recommended, whether it’s heading into the peak of one’s seasonality, growth through acquisitions or through other means, or a shift from multiple to fewer carriers.
Before making any such decision, gain visibility to your shipping characteristics and seasonality and always request a “Prior History” (UPS) or “Earned Discount” (FedEx) report, to determine the volume, in relation to achieving anticipated volume incentives.
Finally, make your request, prior to awarding your business, as it’s a component of the negotiation process.
Typically, it is recommended that prior history is utilized. It keeps the prior 52 weeks' history intact, so there is less concern about dropping into a lower revenue qualifier. There may be situations that would warrant otherwise, though, where resetting the history and/or applying a ramp-up period, is recommended, whether it’s heading into the peak of one’s seasonality, growth through acquisitions or through other means, or a shift from multiple to fewer carriers.
Before making any such decision, gain visibility to your shipping characteristics and seasonality and always request a “Prior History” (UPS) or “Earned Discount” (FedEx) report, to determine the volume, in relation to achieving anticipated volume incentives.
Finally, make your request, prior to awarding your business, as it’s a component of the negotiation process.
Thomas Andersen, MBA, is the director of pricing for Logica and an industry-leading expert in identifying and negotiating small-parcel cost savings. If you have questions, please contact him attandersen@logicacorp.com or 800-930-8543 ext. 726.
