Supply chain leaders are being asked to slash their transportation budgets without disrupting operations. It’s forcing teams to revisit their parcel strategy. They’re looking deeper into supply chain costs, renegotiating carrier agreements, and trying to lock in stronger contracts. The problem is many parcel contracts quietly become outdated almost as soon as they’re signed.
In parcel, the biggest risk for companies is often not the contract itself, but the assumption it’ll keep working as the business and market change. For leaders trying to build a stronger parcel strategy and avoid hidden costs, here’s what you need to know.
Understand How Your Business Really Functions
One of the biggest mistakes companies make is assuming they understand their shipping profile because they’ve operated the same way for years. Often, the data tells a different story.
They may assume they’re mostly sending commercial shipments only to discover their volume is heavily residential. They may believe their network is optimized until finding out much of their volume is shipped cross-country into higher-cost zones.
This matters because parcel optimization isn’t just about negotiating a bigger discount with FedEx or UPS. Rather, leaders need to understand what parts of their business actually need those networks and where better opportunities may exist. E-commerce and direct-to-consumer companies have a multitude of non-traditional carrier options today. USPS and DHL eCommerce are the obvious examples, but newer providers are also building aggressive service and cost models that optimize networks and enhance the customer experience.
Much of our work over the last 12 to 18 months has focused on exactly that. For example, maybe a company falls within FedEx’s $10 million to $20 million spend tier and sits at $15 million annually. Instead of chasing a small discount inside the tier, the smarter move may be shifting $3-4 million of gross spend where the economics better fit the business.
That’s where companies generate real savings. Many get excited about negotiating a 2% discount. But that matters little if there’s another part of the network where they could save 10% by diversifying carriers and aligning strategy with how the business actually operates.
Utilize Your Data to See the Full Picture
Many companies negotiate a contract, secure a fuel discount, and assume they’re covered for years. They negotiated 30% off fuel, but months later, they’re paying far more than they should because no one is actively tracking how the agreement is performing against the market.
The companies that struggle most are usually the ones without access to detailed, usable data. In parcel, FedEx and UPS at least provide reporting platforms and electronic billing systems that give companies a baseline view of their shipping activity. It’s usually enough to understand the business basics, but it's rarely tied back to the contract to measure performance.
This work starts with individual charge-level data. Most organizations don’t have the time, resources, or patience to dig through this data consistently. It’s how hidden costs go unnoticed for years. The goal here is to uncover where costs are buried. With that visibility, leaders can identify where a contract is working, where it’s drifting, and where they are quietly overspending.
Stay Ahead of Market and Carrier Shifts
Companies may think their parcel strategy is locked in, but then the market shifts. Carriers adjust fuel surcharge tables, accessorial charges creep up, service guides get updated, and new regional carriers enter the market with different pricing structures. All the while, supply chain teams are focused on business as usual, not checking for what’s changed.
Take fuel, for example. Many assume when oil prices drop, shipping costs follow. But carriers often change their surcharge schedule, meaning companies may still be paying more than they were six months ago, even under similar market conditions. A negotiated discount won’t mean much if the underlying surcharge structure keeps changing. These details are easy to miss until someone takes a closer look and realizes their transportation spend is far higher than expected.
This is common in parcel. Supply chain leaders are juggling staffing, customer, cost, vendor, inventory, and pressures. They don’t have time to monitor every price adjustment. Oversights occur in negotiations, too. A carrier may offer a large percentage cut that appears competitive but may not discount the services that matter most. The better approach is to slow down early, understand the network, and compare the market before getting too deep into negotiations.
Parcel strategy isn’t something companies can afford to revisit every few years. The companies performing best over time are those that understand their business, keep their data in view, and continually reevaluate whether their parcel strategy still works for the business they operate.
Paul Brinkman is President of Trans-Solutions Consulting, a transportation spend management and logistics consulting firm that helps mid-market and enterprise shippers improve visibility into freight costs, identify savings opportunities, and optimize transportation performance. With more than 15 years of experience in logistics and supply chain consulting, Paul specializes in transportation spend analysis, carrier contract optimization, freight audit and recovery, and cost reduction strategies.
