In tough economic times, the opportunity for self-evaluation and continuous process improvement seems to be a common initiative. Your transport carriers are no different. In recent months we have seen UPS and FedEx take a very controversial position as it relates to negotiating with shippers who use a consultant to assist them with data analytics, as well as with actual contract negotiation. With DHL's departure as a domestic carrier service provider, UPS and FedEx have taken a stand against pricing wars and are focused more on protecting their bottom lines. As some of the articles in this newsletter discuss, there are a number of strategies and tactics that have been recently implemented by the carriers.
Does anyone else find it interesting that in these tough economic times that carriers are reporting significant increases to their bottom-line profitability, on a quarterly basis? Shippers need to beware of some of the strategies and tactics that are being implemented by UPS and FedEx. For starters, have you tried to negotiate your service agreement lately? Both UPS and FedEx have made a policy against negotiating service agreements for shippers when the shipper has engaged a third party consultant. We have seen situations where the carrier sales representative has informed the shipper that they would not present pricing if the shipper was using a third party to help them negotiate. We have seen situations where the carrier has gone as far as to require the shipper to sign a very strict Mutual Non-Disclosure Agreement (MNDA) with terms that prohibit the shipper from sharing the pricing proposal with anyone outside their company. Is that not like telling someone that they cannot use an attorney to represent them in a legal matter?
Now, more than ever•Shippers need to stand tall with their carrier negotiations and not allow the carriers to push them into significantly reducing their negotiation abilities and their ability to leverage expert negotiators. It is more important than ever that shippers have access to their data and analyze it correctly, so that they have as much information as the carriers about their own freight spend.
Ask yourself this. If one of your suppliers found out you were charging them more than the going market price, what would they do? Your carriers are banking on the fact that you will do nothing and continue shipping with them as usual. The real question is... What are you going to do?
Does anyone else find it interesting that in these tough economic times that carriers are reporting significant increases to their bottom-line profitability, on a quarterly basis? Shippers need to beware of some of the strategies and tactics that are being implemented by UPS and FedEx. For starters, have you tried to negotiate your service agreement lately? Both UPS and FedEx have made a policy against negotiating service agreements for shippers when the shipper has engaged a third party consultant. We have seen situations where the carrier sales representative has informed the shipper that they would not present pricing if the shipper was using a third party to help them negotiate. We have seen situations where the carrier has gone as far as to require the shipper to sign a very strict Mutual Non-Disclosure Agreement (MNDA) with terms that prohibit the shipper from sharing the pricing proposal with anyone outside their company. Is that not like telling someone that they cannot use an attorney to represent them in a legal matter?
Now, more than ever•Shippers need to stand tall with their carrier negotiations and not allow the carriers to push them into significantly reducing their negotiation abilities and their ability to leverage expert negotiators. It is more important than ever that shippers have access to their data and analyze it correctly, so that they have as much information as the carriers about their own freight spend.
Ask yourself this. If one of your suppliers found out you were charging them more than the going market price, what would they do? Your carriers are banking on the fact that you will do nothing and continue shipping with them as usual. The real question is... What are you going to do?
What are the carriers’ really telling shippers by deploying this type of strategy? I’ll state the obvious…they are saying that shippers who utilize a third party consultant have been getting better pricing than shippers that negotiate agreements on their own.
