FedEx Contracts Have Changed
FedEx contracts have changed like UPS. In fact, FedEx calls it over-max fee while UPS calls it unauthorized charge fee. It's the same thing. It's for packages that are heavy and large, and with FedEx, that charge went from $300 up to $675. So they're more expensive than UPS now, but both fees are exorbitant.
These are things that you have to keep an eye on if you are shipping large or heavy items. Also, they took a very similar rate increase to UPS, which is around 4.9% on average. But how that actually impacts your spend is always going to vary, because it's an average increase. So in certain surcharges, that percentage of increase is actually higher than the 4.9, in some it's less. It's important to understand how that average increase would affect your spending.
Rate Impact Analysis
A rate impact analysis is important to understand how your FedEx rates will change from year to year. You take the published increase of FedEx surcharges and base rates. And they're marking those up from year to year. And what we do here at Logistic is we analyze your historical shipping data to know with these new rates in effect. This includes how the same shipments changed from the year before. Assessing the rate health of your FedEx contracts is important. It is also a pretty simple process. You want to understand where you are now with your rates, your incentives, and your surcharges. Then, you compare how those match up against other shippers of similar size and spending.
You, for the most part, don't know what you don't know. When you have someone to help you compare to other shippers of your size, it lets you know if there's room to grow. Or it tells whether you're performing great on your own. A company like Lojistic has a multitude of services. The most important service from Lojistic is data analytics. And it can help you to understand the rate health of your contract. We can analyze your spending over a large number of shipments and characteristics. We understand how those compare with thousands of other shippers. This allows you to better understand your costs.
Things to Consider in Negotiation
One last thing I wanted to cover about understanding where you are as a shipper. In negotiations with a carrier like FedEx, one of the knee jerk reactions is to say, "We'd like to reduce our cost by 10%." This is difficult because your spending is distributed across over a hundred points in your shipper profile. So understanding what points are going to drive cost reduction is important for you. It could be transportation charges, it could be dozens of surcharges, or it could be fuel. They may be things that you haven't worried about in the past. All these things have an impact on your spending. This is crucial information when negotiating for the right concessions with the carrier.
Author
Bryan Van Suchtelen
Bryan Van Suchtelen
Corporate Director of Rate Services
With more than 34 years of parcel experience, Bryan Van Suchtelen is the Corporate Director of Rate Services at Lojistic, one of the nation’s top logistics and transportation cost management companies.
Prior to joining Lojistic in 2015, Bryan enjoyed a 26-year career with UPS where his roles included Pricing, Field Sales and Director-level Sales Management of some of UPS’s largest customers.
At Lojistic, Bryan leverages his wealth of experience/expertise to identify and execute supply chain cost management solutions for parcel shippers of all sizes. Bryan has helped his customers reduce their shipping spend by tens of millions of dollars.