Contrary to what some may think, carriers do not have a uniform system for determining the level of shipping discounts and incentives offered to one shipper versus the next. Numerous variables contribute to the carrier’s process of extending any price better than their tariff rates. Certainly there are shipper characteristics that are commonly considered when a carrier is evaluating the level of discount to offer; however, carrier pricing agreements are in large part custom and unique to the specific shipper for which they were created. Consequently, negotiating carrier discounts can be a relatively subjective process.
In order to maximize their margins, a carrier’s objective will be to limit discount levels, while still successfully winning (or retaining) the customers business. To that end, a carrier will typically use “relationship” and “value ad services” as their compelling argument(s) against further rate improvements. Shippers that have had a long-standing relationship with the same carrier and/or an above average level of integration with their carrier are often the ones getting the least aggressive shipping discounts.
BEST PRACTICE SUGGESTIONS:
• Don’t let a “great” relationship with your carrier get in the way of your efforts to negotiate maximum carrier discounts. Great discounts are an important part of a great relationship!
• Let your carrier know that value ad services and solutions will be welcome in the negotiation process but will be considered separately and secondarily to great discounts and incentives.
• Get a second opinion…it never hurts! Companies like Source Consulting, who have keen analytic tools and carrier pricing knowledge, can be very useful as a sounding board to determine whether or not the “great” deal being offered by your carrier is really great or not.