Today we are talking about improving parcel rates and why analytics matter for shippers. More specifically, why shipping analytics are so important for allowing shippers to improve their parcel rates.
One of the most effective ways a shipper can reduce their rates is by improving their contracted rate. But how can a shipper improve their contracted rate?
The best and easiest way is to just ask the carrier for a revised contract. And that’s different from asking the carrier for a better rate. “A better rate” is kind of ambiguous. But you can go to the carrier and tell them that you’ve noticed you’re paying more and that you want them to look at your contract and make some changes.
In a nutshell, that’s what we call contract optimization. And you can kick off a contract optimization by tapping the carrier on the shoulder and asking for changes.
Why Analytics Matter for Contract Optimization
There are a few essentials that shippers should look for when they enter that contract optimization or negotiation period.
When it comes to analytics, you need to have an understanding of what it is you're shipping. And not necessarily of the product themselves, but the actual boxes.
What makes up the profile of your shipments? The weight, the size, the density, the number of packages you're shipping out, the different service levels you're using, and then what kind of minimum charges you have in place right now. And the discounts as well, obviously.
Do you have discounts on your service levels? What surcharges are you being impacted by, and do you have discounts on those? And if you don't, which surcharges should you be asking discounts for? You're impacted by some more than others.
There are also the minimum charges. With ground shipping, if you have a lot of lightweight ground packages, you want to make sure that your minimum is reduced. You want to get as much of a discount as you can in the 1- to 5- and 6- to 10-pound range with a reduced or adjusted minimum.
Those are the characteristics that encompass a shipper's profile, which Lojistic is designed to help companies understand.
Understanding Your Shipping Profile
If you have your account numbers or your accounts tied to the Lojistic platform and we're ingesting your data, all you have to do is login to run a myriad of reports.
There are several perspectives where you can actually see the average cost per package by service level, surcharge, average weight, and actual versus build weight. And you can pull down and run all kinds of reports, anything you need in order to really know what is going on with your shipping. This way you can be well-armed when you ask the carrier to revise your contract.
It's one thing to say, "Hey, I need a better contract," or, "I want a better contract," but it's another thing to say, "Hey, I see that this, this, and this have increased, and it's because of this, this, and this, and I need you to do this, this, and this. Specific to these surcharges, I need this, this, and this, because I've seen an increase in these."
Through the Lojistic platform, you can see all of that information, pull reports, and be prepared for any sort of negotiation or contract optimization discussion you're having with your carriers.
In short, it gives you a much better understanding and a fuller portrait of your profile. You know that if you make a change in one area, for example, it will or will not affect other components. And you know that if the carrier concedes to something, you're actually getting a discount.
Also, you don't want the carrier to be able to play a shell game. You don’t want them to come back with a contract that requires you to figure out what the carrier did.
If you know what you need and what you’re asking for on the front end, then you'll know what they're giving you on the back end as well.
How Does Lojistic’s Analytics Help with Negotiations?
Shippers who want to optimize or negotiate contracts can start with Lojistic. The easiest way is to connect your carriers to the platform.
First, you have to let the system ingest some data. Then you can come back to the platform a day or two later and start running reports. You can compare that data to your contract and go from there.
And if you need help negotiating your contract, the Lojistic team is available for that as well. We offer a contract optimization service and help customers actually negotiate their contracts.