Negotiated Rates Affect Your Business
Negotiated rates with UPS and FedEx could help your business and I am here to explain why that is. What I'm answering is the question of, what is a negotiated rate with UPS and FedEx?
Inconsistent pricing from FedEx and UPS is something many companies are dealing with. This is because of the negotiation skills or the experience each company has with UPS and FedEx. They're receiving different rates and different incentives than companies right down the street. Companies who could be shipping the same amount of stuff as them.
Understanding How It Works
So what's important is understanding how pricing with UPS and FedEx works. Also, it's important to know how negotiated rates happen. First, what you start with is base pricing that UPS and FedEx provide for anyone who can ship a package. That pricing is consistent among all companies. The way that UPS and FedEx provide more incentives or savings to larger shippers is custom rates. What you're doing is taking the base rate that you receive from UPS and FedEx and get a negotiated rate.
Most companies in this instance receive the same base rates. The only thing that differs is the incentives they receive. It also includes incentives and negotiated rates on things like surcharges. It can range from things like residential surcharges or for very large shippers fuel. So, the idea that you're paying the same as a company of the same size, is a little bit of a fallacy. This is because it comes down to the individual relationship that you have with the carrier. Also, your ability to negotiate improved incentives helps too.
How To Negotiate The Rate
Now, how do you negotiate an improved discount that you know is competitive for a shipper of your size? The key is using a company that can provide analytic support. They can show you how much a shipper of your size with similarities to you is paying. This way you can understand your rates among the marketplace.
Having that information allows you to go to the table with an advantage with UPS and FedEx. You know your worth to the carrier.
The more information you have allows you to make some competition between FedEx and UPS. Then use that leverage to get the best-negotiated rate for your shipments. With a negotiated rate you can ship feeling comfortable that your costs are fair. Your costs are competitive against other industries that you are interacting with.