How To Renegotiate Your Own Shipping Contracts

With the proper information, you are fully able to renegotiate your shipping contracts with FedEx or UPS. Some people cannot swallow the thought of paying an ongoing consulting fee for what seems like a one-time service. Step 1 – Collect the Carrier Agreements and Step 2 – Collect Shipping Data are barriers to even starting. Regardless of your shipping data source, here is some information and tips to guide you through the long process.

If the thought of renegotiating your company’s FedEx or UPS service agreements is too much, you can contact us at Refund Retriever to help with the process.  Please take a look at our carrier agreement contract negotiation services.

Let’s get started – renegotiate your shipping contracts

Lack of negotiation skills is not an issue. With the right information, you know what will benefit your company. FedEx and UPS both provide all the information you need!

• EVERYTHING is negotiable
• Never accept waivers for GSR service failures
• Never accept early termination penalization
• Shop around – submit an RFP to multiple carriers
• Accessorial reductions expire – review them before the expiration term
• Renegotiate every 12 months

Renegotiate your shipping contracts – DIY Approach

• Step 1: Collect Carrier Pricing Agreement

  • Most recent agreement and any addendums – contact your carrier representative for this information.

• Step 2: Collect Shipping Data

  • Download as much shipping activity from your carrier invoices as possible.
  • We recommend a full year’s worth of invoices.

• Step 3: Develop a Shipping Profile

  • For each service level:
    • determine total costs
    • the number of packages
    • average per package
    • zone and weight distribution

• Step 4: Determine Most Utilized Service Levels & Actual Discounts

  • Find realized discounts for each zone and weight range
  • DIM weight a factor?
  • Minimum package charges

• Step 5: Calculate Your Top 20 Accessorial Fees

  • Total number of charges
  • The average cost for each charge
  • Total costs for each accessorial fee
  • Accessorial fee price increases: estimate next year’s projected cost.
  • Next year’s cost is significant to renegotiate your shipping contracts

• Step 6: Determine Ideal Discounts & Incentives

  • This is where benchmarking comes in handy.
  • Realistic rates based on similar-sized shippers will allow you to project feasible savings.

• Step 7: RFP/Request For Proposal 

  • Specify your desired rates for each zone and corresponding weight range.
  • Don’t request additional discounts for rarely used services.
  • Determine what, if any, accessorial fees you would like to receive a discount on.
  • Send RFP to each carrier.

• Step 8: Review Proposal From Carriers

  • Proposal discount rate quantification is the toughest part.
  • Did they meet all of your discount requests?
  • Make sure the discounts are not tied to unreachable discount goals.
  • Be sure you didn’t waive the right to request late delivery refunds.

When to renegotiate your shipping contracts

• There is really never a bad time to evaluate your pricing agreement and renegotiate.
• Renegotiating every year is a good idea.
• Renegotiate when discounts are expired or expiring.
  • Custom Dimensional Weight Divisors (DIM), for example, typically expire within 12 months.
  • Accessorial fees concessions might expire.