Comparing Shipping Rates: How to Get the Best Contracts Author: Nathan Wheadon
March 15, 2021

Comparing shipping rates, or performing a shipping rate comparison, is essential for shippers who want to maximize their budgets.

Why Comparing Shipping Rates Matters

Let's say two people operate similar companies. They have a similar product and they're located in the same geographic area.

But after comparing shipping rates, we discover that they are not the same. Why?

It could be the account manager, but not necessarily, so let's call that equal as well. If the geographic area, customer base, and distribution are basically the same, the biggest factor is probably that one shipper might know something that the other doesn't.

It might be that you know your characteristics better, and you are able to hone in on certain parts of your contract better. You might have someone helping you that knows the market better and can assist with negotiating the contract, which would be someone like Lojistic.

Insight into the shipping characteristics, and detailed information into what comprises your shipping profile, is really paramount to getting the best rate possible.

You really want to understand exactly what you are shipping, how you are shipping it, and the cost to ship it. That's the starting point for any negotiation. You can't just start a negotiation with your carrier by saying ‘I want better rates’.

It’s much more effective to say, ‘I'm looking at these areas and it looks like I should be getting this and this rather than this or this.’ And if you have more background information than that, even better.

Carrier Data Doesn’t Move the Needle

Now, UPS and FedEx will give you those types of insights in a quarterly business review, and they are usually aware of this high-level feedback and information. How much you shipped, for example, how you shipped it, your average zones, on-time performance, other performance details, and things like that. But nothing is detailed to where you can break it down.

The carriers try to make it difficult to pinpoint exactly what's what from a cost standpoint.

That’s why having a platform like Lojistic to lean on helps a lot. There are myriad reports that pull in all of those billing details from both carriers and process them on a weekly basis. And that data helps customers understand exactly what's what in their shipping.

What’s the First Step in Comparing Shipping Rates?

Again, the key is understanding what you are shipping, how you are shipping it, and the cost. You must know how those are impacting your true cost for shipping a package out the door.

Minimums are also important. You need to understand your minimums. If you have lightweight packages, for example, you should get a discount on your minimums, or a reduced minimum, and things like that.

You’ll need to understand the impact that a minimum could have, or the lack of a minimum reduction could have, on your costs as well.

If we’re both shipping one- to five-pound packages and you might have a 50-cent minimum reduction and I don't have any minimum reduction, you’re essentially getting a one- to five-pound discount.

We could have the exact same discount, but you'll get a better rate because your minimum is reduced by 50 cents.

In conclusion, you definitely need to understand what you are shipping, how you're shipping it, and the costs for each of those to perform your shipping rate comparison.

To see how you can join thousands of businesses using Lojistic to monitor, manage, and reduce shipping costs, click here for a free demo!

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