How to Boost Your Confidence Before Your Next Contract Optimization

by | Jul 7, 2020

3 min read

You’re all set. You’re going to optimize your carrier contract like a pro, you just know it. 

You get on the phone with your carrier rep and wheel and deal with the best of them. Yes! You talk them into the next pricing tier so you can get the discount you need to keep offering free shipping

But, hey — wait a minute! While you were focused on the pricing tier, your minimum charge went up, wiping out the value of the discount you worked so hard to optimize.

 

Most shippers struggle to get the right carrier contract

Unfortunately, this is all too common, and I talk with shippers every day who think they’ve struck a great deal with their carrier rep only to realize in some cases that they’re actually going to be paying more for their shipping.

During a recent webinar, Andy Brueckner and I talked about this and many other carrier optimization topics. Throughout the webinar, we asked attendees about their experiences when working with their carriers on new agreements. Some of the results blew us away!

carrier contract negotiation

 

More than half of those surveyed hadn’t optimized in a year. And I know from experience that it’s probably been at least that long — if not far longer — since most shippers have taken a good look at their shipping data to look for trends and changes.

 

You need to dig into your data

But gaining the confidence you need before your next optimization starts with careful analysis of your shipping operations. Get to know your shipping profile. (Your carrier already knows it well — I guarantee it.) We recommend that you review your shipping data at least once a year or every 18 months at the most.

This annual review is critical to ensuring you have shipping terms and rates that meet the needs of the business you’re doing today, not two or three years ago. I think we can all agree that 2020 has given us all a unique set of circumstances, making this a better time than ever to review. 

When you understand your shipping profile, you’ll be able to:

  • Target issues in your shipping operations like packaging, batching and other costs you can control internally.
  • Look for fees and surcharges that are disproportionately impacting your business.
  • Optimize for contract terms that support your business’s current and future needs. 

It’s not about getting adversarial with your carrier rep, though. When you understand your shipping profile, you can have more proactive, productive conversations with them. The way you work within your carrier’s network will be more seamless, and because you’re both operating with the same information, your carrier will be better prepared to handle your business. 

 

The financial impact of knowing your own data

If you’ve been optimizing without understanding your shipping profile, you stand to realize significant savings in your next optimization — particularly if you have access to a little help. The longer you’ve gone without optimizing, the bigger savings you’ll see next time you reevaluate your deal if you empower yourself with the right tool — roughly an additional 10% in savings for every year that has passed since you have reworked your agreement. 

Many shippers go far too long without addressing their contracts with their carriers. But when you prepare properly with the right information, you’ll feel far more confident in working amicably with your rep toward a deal that works for both of you.

Topics: Carrier Optimization, Contract Optimization
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