What Items are Negotiated in a Parcel Carrier Agreement? - Amware

What Items are Negotiated in a Parcel Carrier Agreement?

by | Feb 22, 2017 | Parcel

Inadequate preparation is of one the biggest mistakes shippers make before parcel agreement negotiations.  One of the best things that you can do to prepare as a shipper is to understand what is negotiable in a parcel carrier agreement.

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Why a Parcel Agreement?

If your business has transitioned from simply shipping a few packages a month to hundreds or even thousands, with growth, then you understand the significance difference in the time it takes to process, and most importantly, how much it costs.

You begin exploring these agreements when you find the right major carriers for your organization.  Although parcel carrier contracts outline special rates that allow you to maximize your shipping efficacy, they can be confusing.

Negotiating is not just an option for shippers who are newly expanding. Remember that your contract has to align with your current company volume as well as projected growth over time. One best way to avoid mistakes when negotiating your parcel agreement is to know what is negotiable. Being aware of red flags and areas of flexibility will allow you to negotiate a deal that works best for you and your organization.

The Fine Print

We have all seen the legal commercials when the narrator speeds up over the fine print. If you do not understand the fine print in your agreement the next step would be to find someone who specializes in contract terminology. The last thing you want to be responsible for is locking your company into an agreement that does not ideally serve your organization. Seeking consultation simply protects you and your organization from an agreement that could jeopardize your growth and success.

Base Incentive Discounts

Base incentive cuts are a flat percentage discount for each package. Although rarely included in the contract, shippers can ask for them. They are an excellent way to save your company money and are negotiable with your potential carrier partner.

Late Payment Penalties

Unexpected fees and penalties are also negotiable during the agreement but are often overlooked. Remember that you are building a partnership. Your carrier is interested in creating a long-term relationship. Because of this, your parcel carrier may be willing to offer discounts on penalties or take them off the table completely.

Frequency and Extent of General Rate Increases

Rate increases are a regular part of business growth. Ensure that your organization will remain unaffected by increasing costs by adding a clause in your agreement if it’s not already there. Stay proactive and diligent by checking your carrier’s website often to renegotiate if necessary.

Amware’s ParcelRate software platform uses shipping and parcel carrier contract KPI’s to show you your company’s actual data. You’ll quickly be able to see what you’re spending and losing in parcel cost. Some companies who are utilizing the ParcelRate platform are realizing both short and long-term savings in the tens of thousands and even millions.

Click here to download the free ParcelRate Guide and see what this powerful platform can actually do. Pricing information is also included in the guide.

ParcelRate Guide

About Dan Ramella

About Dan Ramella

Dan Ramella is a member of Amware's executive team, helping drive growth and manage key relationships. With over 20-years experience in the transportation and logistics industry, Dan has helped Amware become one of Northeast Ohio's premier 3PLs