The Small Package Shell Game
FedEx and UPS have owned and controlled the small package arena for decades and now the small package game is much like a shell game. These carriers turn their reps over on a frequent and regular basis; it is difficult if not impossible to compare one against the other and they do provide discounts but you have to know exactly how to go about asking for them. The following are seven strategies that will help you optimize your small package expenditures.
Strategy #1: Include multiple carriers in the process.
Make sure you play FedEx off against UPS and include your regional small package player(s) as well. There is a certain level of arrogance that comes with these billion-dollar players, so make certain they know that you have options and that you are not afraid to exercise those options.
Strategy #2: Don’t negotiate with your day-to-day sales rep.
Make certain that they enroll the assistance of their supervisor and that their supervisor understands you have options. I have even gone so far as to get packaging materials from their competitors and point out that their competitors are “ready to go” if they are not willing to come to the table.
Strategy #3: Don’t ever accept the initial proposal.
The two major companies that make up the “duopoly” will often come forth with token proposals that are loaded with value-added services, so don’t ever fall for this initial volley. You may even consider asking them for a proposal prior to your initial meeting but always be prepared to tell them that their proposals are unacceptable and send them back to re-sharpen their pencils.
Strategy #4: Invite a small package re-seller to participate.
There are a number of third party resellers that can bring you more than one option. Industry scrub rules may serve up some initial obstacles but these reseller-reps will be more stable in their positions, more flexible in their approach and more “hungry” for your business. As a matter of fact, my own company is an authorized re-seller and has an integrated platform that includes FedEx, UPS, DHL and Purolator (for Canada).
Strategy #5: Enroll the services of an independent audit firm.
Any discounts you might be able to negotiate will pale in comparison to the savings you can achieve through an audit process. A good reseller will offer a free post audit and there are abundant audit firms that will take a percentage of the savings that they achieve on your behalf through an authorized audit process. Not too shabby when you consider the fact that 25 percent of all small package invoices contain billing errors that favor the carrier.
Strategy #6: Don’t settle for rebates in lieu of actual discounts.
Oftentimes carriers will tempt you with rebates in lieu of refunds for future audits. This can be a dangerous path to pursue because if you accept the rebates you may be denied the right to audit past invoices and request refunds for service failures and overage fees. It’s important to reserve the right to review everything and hold your carrier(s) accountable to their individual service pledges.
Strategy #7: Don’t ever be intimidated - everything is negotiable.
If a carrier tries to tell you that they don’t discount surcharges or won’t improve your dimensional pricing that’s simply not true. If you have the appropriate data available and have planned your negotiations accordingly, every line item is a negotiation point and an opportunity to improve your position.
Steven P. Haas is a board-certified marketing consultant, a seasoned, sales professional and an Association Accounts Representative for DLS Worldwide. He oversees programs for DLS Worldwide and has negotiated special freight rates and carrier concessions for shippers within the automotive and heavy duty truck parts arenas. DLS Worldwide has a new user interface with a comprehensive carrier mix and a zero-deductible, full-coverage, allrisk insurance option. You can contact Mr. Haas at 612-296-1806 to request access to this program and platform