Shipping Rate Negotiation Tactics | Lojistic [ ](https://www.lojistic.com)- Why Lojistic - [ All Inclusive. Zero Cost. Every Lojistic solution. No limits. No fees. ](https://www.lojistic.com/pricing) - [ All Modes. All Carriers. All Currencies. 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Zero Cost. Every Lojistic solution. No limits. No fees. ](https://www.lojistic.com/pricing) - [ All Modes. All Carriers. All Currencies. Parcel, LTL, truckload, ocean, rail, air freight. ](https://www.lojistic.com/carrier-connectors) - [ Industries Served Retail, eCommerce, 3PL, manufacturing, and more. ](https://www.lojistic.com/industries-served) - [ Roles Most Impacted & How Supply chain & logistics, procurement, finance leaders. ](https://www.lojistic.com/roles-most-impacted) - [ Use Cases How Lojistic helps manage and reduce shipping costs. ](https://www.lojistic.com/use-cases) - Platform Features - [ Global Analytics & Reporting Predictive analytics and scenario modeling for all carriers globally. ](https://www.lojistic.com/shipping-analytics-software) - [ Rate Optimization & RFPs Tech-powered data prep, strategy, and rate impact analyses. ](https://www.lojistic.com/rate-optimization-rfps) - [ Parcel and Freight Audit & Payment *+PAY* Carrier refunds and payments automated and made simple. ](https://www.lojistic.com/freight-audit-and-payment) - [ GL Coding & ERP Sync Automatically code shipping costs down to the order level ](https://www.lojistic.com/gl-coding-erp-sync) - [ Lojistic API & App Integrations Easily integrate normalized shipping data to your business systems. ](https://www.lojistic.com/api-app-integrations) - [Pricing](https://www.lojistic.com/pricing) - [About](https://www.lojistic.com/about) - [Company](https://www.lojistic.com/company) - [Culture](https://www.lojistic.com/culture) - [Careers](https://www.lojistic.com/careers) - [Partner Programs](https://www.lojistic.com/partner-programs) - [Security](https://www.lojistic.com/security) - [Media](https://www.lojistic.com/media) - [Ratings & Review](https://www.lojistic.com/reviews) - [Videos](https://www.lojistic.com/videos) - [Blog](https://www.lojistic.com/blog) - [Contact](https://www.lojistic.com/contact) [Create Free Account](https://app.lojistic.com/demo/connect-carrier?activeStep=create-account&trackDemo=false) [View Demo](https://app.lojistic.com/demo) [ Log In](https://app.lojistic.com/demo/account/login?trackDemo=false) Shipping Rate Negotiation Tactics ================================= ![Icon denoting blog author information in Lojistic’s content layout](/images/pages/blog/icon-author.svg)Rich Harkey ![Calendar icon used to display blog post dates on Lojistic’s website](/images/pages/blog/icon-calendar.svg)July 30, 2020 ***Editor's Note:** This post has been updated with new links and content. **Original Publication Date:** December 2, 2011* Today we’re discussing one of our favorite topics, [shipping rate negotiation tactics and negotiating carrier agreements](https://www.lojistic.com/rate-optimization-rfps). Let’s begin with how most companies approach carrier negotiations. Common Approaches to Shipping Negotiations ------------------------------------------ Lots of companies just call up their carrier and say something like, our costs are going up and we need better rates. Or they'll call the carrier and say, I just got a proposal from your competitor and I need you to match it. Both of these are cookie-cutter approaches that businesses use with other vendors. There isn’t much data, or science, or planning behind it. Factors in Shipping Rate Negotiation Tactics -------------------------------------------- Unfortunately, because of the way carriers charge for packages now, the marketplace isn’t as simple or competitive as it could be. Based on the data, packages today aren’t just shipped from zone two to zone six via ground for $10. There will be, on average, three to five different charges packages get hit with along the way. Now you've got several different charge types and thousands of rows of data on any given invoice, depending on the size of the shipper. And again, each tracking number probably has at least two or three, sometimes up to five different charges associated with it. Customized Agreements --------------------- Another important factor is that every single agreement is customized, even if two companies are literally next door to each other and ship the exact same widget to the exact same customer. That said, there is what we call ‘briefcase pricing,’ where an account manager might be able to work a certain agreement out. But it’s usually based on that customer's spend if nothing else. Resources for Small Parcel Shippers ----------------------------------- Buyers trying to negotiate rates in other industries use resources and data to help level the playing field. Car buyers, for example, turn to resources like TrueCar or KBB to do research. The freight industry has resources like that too, especially for small parcel shippers. Companies like [Lojistic](https://calendly.com/tyler-lojistic/rateoptimization) and others can arm customers with the information they need to make the right decisions. By pushing the right buttons and pulling the right levers, users can get the custom pricing that they need. Aside from that, however, there are few [standardized resources](https://www.nist.gov/pml/weights-and-measures) or forums where shippers can go to determine their pricing -- if any. ### Applied Negotiation Expertise Negotiation expertise and experience can translate from other industries to the small parcel industry at a high level. But you'll still need to fully understand the data behind your supply chain. On the [small package](https://www.lojistic.com/blog/parcel-negotiation) side, understanding what impacts every single charge is essential for negotiations. Having negotiating skills helps, but if you don't really understand the data or everything that goes into the charges behind a package, then you're only going to get so far. In other words, it doesn't matter how good of a negotiator you are if you don't know what you're negotiating for. ### Relevant Industry Experience We often work with companies that say they’re great negotiators, but even then, they’re probably negotiating with their carriers once a year at most. In our experience, most customers wait until two or three years before they renegotiate carrier agreements. We have very few that do it every year. Let’s return to the car-buying analogy. When you buy a car, the dealership is always going to have the upper hand because they are in the business of selling cars. That's what they do every day, and you as a consumer buy cars very infrequently. And to mix metaphors a bit, if you know how to negotiate a carrier agreement, that doesn’t necessarily mean you’ll have the upper hand at a car dealership. There will always be specific elements that don’t quite translate. Key Components of Shipping Rate Negotiation Tactics --------------------------------------------------- There are really two sides or key components in a shipping rate negotiation. You've got the science part, which is knowing all the data and everything that goes into the modeling that we’ve been referring to. [All the characteristics for each package and movement.](https://www.lojistic.com/shipping-analytics-software) In conjunction with that, though, is the art or emotional side of the negotiation. And if you've got the data side down 100%, this is usually overlooked. This is what gets the carriers to sit up straight in their chair and understand what you're looking for and why you're looking for it. You put those two together and you've got a complete negotiation. You can have all the data that you need for a successful outcome. But there could be something that happens specific to the relationship with your carrier, that can impact the outcome either favorably or unfavorably, based on whatever it is that happens. Get a Best-in-Class Carrier Agreement ------------------------------------- If you’re trying to negotiate a best-in-class carrier agreement, the most important takeaway is going in with a plan backed by your data. Understanding that, and everything driving your supply chain, can lead to the best negotiation you’ll ever have. Negotiating with carriers is unique because a lot of shippers think that they [only have two choices](https://www.lojistic.com/blog/modern-day-oligopoly-ups-and-fedex), UPS and FedEx, when shipping small parcels. And because of that lack of competition, shippers can feel like they don’t have leverage at the bargaining table. ![]() But going in with a customized plan is the best chance you have for a favorable outcome. For more information on how you can join the thousands of businesses currently using Lojistic to control and reduce their shipping costs, [please click here to contact us](https://calendly.com/tyler-lojistic/rateoptimization). ![Rich Harkey Headshot](https://www.lojistic.com/assets/public/users/rich.png) Author Rich Harkey Rich Harkey Senior Strategy Manager Rich Harkey is a results-driven professional with extensive experience in the logistics and supply chain industry. As the Senior Strategy Manager at Lojistic, Rich leverages over three decades of expertise to help businesses improve their shipping strategies and reduce costs. With a deep understanding of the requirements of shippers and the operational intricacies of carriers, he excels in everything from optimizing business rules and managing carrier invoices to negotiating carrier contracts. Rich's comprehensive knowledge of the logistics industry, combined with his strategic insights and passion for data analysis, has enabled thousands of companies to gain visibility into their shipping expenses, driving impactful results. [« Previous Post](/blog/is-the-annual-rate-increase-a-thing-of-the-past) [Next Post »](/blog/on-time-performance-not-so-well-done) **Lojistic Blog** [Recent Posts](https://www.lojistic.com/blog) | [Categories](https://www.lojistic.com/blog/categories) Why Lojistic ---------------- - [All-Inclusive. Zero Cost. ](https://www.lojistic.com/pricing) - [All Modes. All Carriers. 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