Ensuring that you select the right carrier to meet your needs without overcharging can be a painstaking and time-taking process—but the energy you devote to finding the perfect carrier will pay off in the long run. Below, we have accumulated the best tips on negotiating with potential carriers in order to get the right shipping rates for your company.
Leverage your shipping volume and freight association
In general, a larger shipping volume will grant better freight quotes, but low volumes can still fetch some desirable numbers. Don’t forget that a carrier wants to do business; they want their trucks and planes to be full and they want to avoid wasting empty space. Consider using a transportation management system to find accurate shipping volumes. You never know what size will be appealing to a carrier.
You can also leverage freight associations if you are shipping small items, which will help you get affordable group buying prices. Double check any associations you currently have a membership with, and if you don’t have any, you may want to look into joining an association purely for the savings.
Explore your options
Don’t feel locked down to a mode you used in the past or think will be best for your business. Different modal options might decrease prices in surprising ways. Modes like Parcels, Truckloads, Intermodal, Ocean, and Air might have hidden pros and cons that cause one to stand out as the most cost-effective.
Only pay for what you need
What is important to your company, and what is unnecessary? Freights may offer benefits that just aren’t going to help you reach the objectives you set out to reach, and that’s okay. In fact, you can use this to your benefit. If you don’t need the speed of shipment they’re offering, compromise on a slower time for a lower rate. Decide what is and isn’t important to you, tell your carrier, and craft a contract that meets all your needs and puts the benefits you don’t want into something more important.
Remember the volatility of pricing
Prices are volatile. Don’t put your trust in estimates that change depending on the season or particular instances and problems. Rates can rise with special issue on cargo ships or fall with peak seasons. Anticipate nuances and readjust your expectations.
Don’t jump at the first offer
Fuel and accessory charges, freight rates, and other costs can usually be negotiated. Even if your first offer is an attractive one, it is likely that there is a little wiggle room to lower the costs.
Don’t shy away from signing contracts with multiple carriers, either. Comparing rates between carriers is where you’ll find the biggest wealth of information on what is most affordable (and most logical) for your company. it is possible to renegotiate with carriers after seeing all the offers, even if you already have a contract.
Moreover, it may be beneficial to look for ways that you can benefit the carrier, rather than the carrier just benefitting you. Do you have the ability to pay faster than they recommend? Is there something about your business that will make their job easier, or perhaps reduce their costs? Those factors can be used in your favor to get lower rates.
That said, remember to balance negotiation and relationship. If you end up doing business with a carrier, you’re going to want a positive relationship for now and the future. Don’t make unreasonable demands, and don’t refuse to bend to their requests as they bend to yours.
Honesty is key
You might be tempted to pad your numbers in order to get a better rate, but oftentimes companies who don’t meet the shipping volume they initially proposed will be charged hidden fees. Be honest with your shipping volume. Even better, make it clear in your RFP that you are not making any volume commitments.
Confess to carriers that you are exploring other options—the competition can often prompt them to lower their rates in order to be your top choice. If you’re using a TMS that sorts your carriers by lowest cost, let them know, especially if they aren’t the lowest on the list.
Also check that you have read the fine print and know everything a carrier is coming at you with. Hidden fees and inflexibilities are not things you want to worry about after doing business together for a quarter. That initial quote that sounded so good when you first heard it might be laden with issues you need to bring to the surface and negotiate.
Craft a Master Agreement
A Carrier Master Agreement can be one of your biggest tools in making sure you get what you need. This agreement is private between you and your carrier. It solidifies everything you discussed on paper, and it isn’t seen by the carrier’s entire shipper base.
Confirm the carrier that the Master Agreement will take precedence over their tariff. That way, the points you worked hard to negotiate in the agreement don’t go to waste by another document they hold in higher esteem.
Shipping can be complicated and costly. Luckily, shipping rates aren’t written in stone—they are malleable with the current market climate and the individual needs of a company. Take the time to negotiate with your carrier in order to strike an optimal deal for both parties involved.