With the recent refusal of UPS and FedEx to engage with third party negotiators, it’s time to take a look at the industry and answer two obvious questions. Where are we headed, and who will ultimately benefit?
While it seems that parcel shippers themselves would be affected the most by recent decisions of UPS and FedEx to discontinue working with third party negotiators, it is the third parties who are crying foul the loudest. As the President of a third party consulting company, let me assure you that I understand the fear that is being expressed! However, all of us need to take a step back and look at the big picture of where this development takes the industry long term. Until then, we may be giving advice to shippers that is grounded more in our own need for self-preservation than an actual concern for our customers.
First let’s take a look at the opposing viewpoints that are being offered to you, the actual paying customer of both carriers and negotiators. On the one side we have the two carriers who maintain that you are better off negotiating without a third party who does not “add value”, while on the other side the third party negotiators maintain that you will achieve better rates with a third party involved. These positions are obviously in direct conflict with each other which leaves you in the difficult position of being caught in the middle. Compounding this dilemma is the fact that both parties are using the shippers as ammunition against each other. Carriers force an unreasonably restrictive Third Party Agreement on you while third parties pursue legal action citing your “best interests” as their motivation. In the middle of this confusion, many shippers are asking, “Who is right?” The answer to that question is not as simple as we would like because in some ways both sides are right.
UPS and FedEx are right in that they prefer to deal directly with their customer and shippers do benefit from a good relationship with their provider. Unfortunately, some third parties have made that relationship unnecessarily difficult. However, third parties are correct in stating that study after study shows they are able to achieve lower rates for their clients than shippers who do not utilize them. So without a definitive answer to the “who is right?” question, we are left with a much more relevant question, a question whose answer will shape the industry for a long time: How will this affect your transportation costs as the shipper?
If either side wins this battle outright, the implications to you are fairly easy to predict. If UPS and FedEx win, shippers will lose the ability to employ skilled and experienced negotiators in the process to negotiate on their behalf. If the third party negotiators win their legal battle with the big two, it will only force the carriers to come back to the negotiating table. It will not have any bearing on their willingness to offer competitive rates to a third party. So in effect, a legal victory by third parties will be the ultimate example of winning the battle and losing the war! However, there is a third possible outcome that is the most likely result of this current situation. This outcome is inevitable because it benefits the shippers and it is you, the paying customer who holds all the cards! In the end, third parties will offer all of their resources and training to the shipper instead of inserting themselves into the negotiation, and the carriers will deal directly with you, their customer. This gives you the best of all worlds: sophisticated analysis and modeling tools, professional negotiation training, and the ability to deal directly with the carrier. This combination makes you the clear winner. Not only is this the inevitable outcome, it has actually been the best solution for quite some time. Our experience has shown that clients who take advantage of our analytics and modeling tools combined with negotiations training geared directly for UPS and FedEx have always come out with a net gain over any other scenario.
So who is the loser? Third parties who did not see this coming and failed to adapt their products to meet this changing environment will not survive, although they will make a lot of noise as they are dying off. So as you read the articles and blogs telling you to fight the carriers and “stand up for your rights” to keep the third party negotiators at the table, just remember that the industry in general, and shippers specifically, will be much better off once the dust settles.
While it seems that parcel shippers themselves would be affected the most by recent decisions of UPS and FedEx to discontinue working with third party negotiators, it is the third parties who are crying foul the loudest. As the President of a third party consulting company, let me assure you that I understand the fear that is being expressed! However, all of us need to take a step back and look at the big picture of where this development takes the industry long term. Until then, we may be giving advice to shippers that is grounded more in our own need for self-preservation than an actual concern for our customers.
First let’s take a look at the opposing viewpoints that are being offered to you, the actual paying customer of both carriers and negotiators. On the one side we have the two carriers who maintain that you are better off negotiating without a third party who does not “add value”, while on the other side the third party negotiators maintain that you will achieve better rates with a third party involved. These positions are obviously in direct conflict with each other which leaves you in the difficult position of being caught in the middle. Compounding this dilemma is the fact that both parties are using the shippers as ammunition against each other. Carriers force an unreasonably restrictive Third Party Agreement on you while third parties pursue legal action citing your “best interests” as their motivation. In the middle of this confusion, many shippers are asking, “Who is right?” The answer to that question is not as simple as we would like because in some ways both sides are right.
UPS and FedEx are right in that they prefer to deal directly with their customer and shippers do benefit from a good relationship with their provider. Unfortunately, some third parties have made that relationship unnecessarily difficult. However, third parties are correct in stating that study after study shows they are able to achieve lower rates for their clients than shippers who do not utilize them. So without a definitive answer to the “who is right?” question, we are left with a much more relevant question, a question whose answer will shape the industry for a long time: How will this affect your transportation costs as the shipper?
If either side wins this battle outright, the implications to you are fairly easy to predict. If UPS and FedEx win, shippers will lose the ability to employ skilled and experienced negotiators in the process to negotiate on their behalf. If the third party negotiators win their legal battle with the big two, it will only force the carriers to come back to the negotiating table. It will not have any bearing on their willingness to offer competitive rates to a third party. So in effect, a legal victory by third parties will be the ultimate example of winning the battle and losing the war! However, there is a third possible outcome that is the most likely result of this current situation. This outcome is inevitable because it benefits the shippers and it is you, the paying customer who holds all the cards! In the end, third parties will offer all of their resources and training to the shipper instead of inserting themselves into the negotiation, and the carriers will deal directly with you, their customer. This gives you the best of all worlds: sophisticated analysis and modeling tools, professional negotiation training, and the ability to deal directly with the carrier. This combination makes you the clear winner. Not only is this the inevitable outcome, it has actually been the best solution for quite some time. Our experience has shown that clients who take advantage of our analytics and modeling tools combined with negotiations training geared directly for UPS and FedEx have always come out with a net gain over any other scenario.
So who is the loser? Third parties who did not see this coming and failed to adapt their products to meet this changing environment will not survive, although they will make a lot of noise as they are dying off. So as you read the articles and blogs telling you to fight the carriers and “stand up for your rights” to keep the third party negotiators at the table, just remember that the industry in general, and shippers specifically, will be much better off once the dust settles.
