Monopolistic Carriers Shut Out Parcel Auditors


Monopolistic Carriers Shut Out Parcel Auditors

The global shipping industry may be engaging in some monopolistic practices to shore up profits in these tough economic times. One practice that recently gained attention centers on third party freight auditing consultants who audit shipping agreements and help with carrier contract negotiations.

Recent media reports have intimated that the Department of Justice Antitrust Division may be investigating UPS and FedEx for collusion to exclude third-party freight auditing consultants--who often audit shipping agreements--from being a viable option for their customers. Reports suggest that both UPS and FedEx have tacitly agreed to prohibit their customers from using third party consultants in parcel carrier contract negotiations. One such consultant sued FedEx and UPS, claiming collusion, refusal to deal, and a group boycott.

The use of third party parcel and freight auditing consultants for pricing negotiations has become increasingly popular over the past decade. Shippers have come to rely on third party consultants to audit shipping agreements, and help manage their logistics and transportation expenses. Third party consultants will typically lead and advise their clients throughout the carrier bid process. Many of these consultants provide a wide range of services to help shippers. Among the services provided are pre-contract savings analyses; bid preparation with specific price targets; contract benchmarking; negotiation strategies; and carrier bid comparisons.

Both FedEx and UPS have complex shipping rules and rates domestically and internationally. Price comparisons are not often easy, which is why some companies have turned to third-party freight auditing consultants to audit shipping agreements and help negotiate the best shipping rates.