Carrier Contract Negotiations
Optimizing carrier contracts is by far the most efficient and effective way for a shipper to substantially reduce its transportation expenses. Unfortunately, this is much easier said than done! Historically, the only tactics available to shippers attempting to negotiate improved pricing were to pit carriers against each other, threaten to move the business and simply brow beat the carrier reps. While these approaches may earn you a few token improvements, you're still left asking the same questions:
- Did I leave money on the table?
- What are the carriers' margins on my business?
- How do my rates compare to those of my competition and shippers with similar characteristics?
Carriers maximize profitability by knowing more about a shipper's parcel characteristics than the shipper itself, over complicating contracts, rate structures and invoices, forcing annual rate increases (GRI's) and keeping their true 'cost to serve' and margins veiled in secrecy. By doing so, carriers ensure that they maintain the upper hand throughout the negotiation process. Until a shipper can accurately quantify answers to these questions and level the playing field, it will forever be at a disadvantage when negotiating.
DMG was founded with the definitive mission of lifting the carrier veil of secrecy, answering these critical questions and arming shippers with the ammunition necessary to level the playing field!
The parcel pricing experts at DMG use proprietary, advanced analytics software to assess a shipper's parcel landscape, just as a carrier would when presenting pricing to the shipper. Via an intensive analysis of the shipper's parcel invoice data, DMG pinpoints the 34 key shipping, parcel and delivery attributes that drive the carriers' cost to service the shipper. The shipper's current contractal terms are then loaded into DMG's system to define the carriers' overal profit margin and specific margins by service, weight, zone and accessorial charge. Once the carrier cost drivers and margins are defined, DMG then benchmarks the shipper's characteristics and contractual terms against its competitors and like-shippers to more closely define the market value of the shipper's parcel business.
What DMG will do to reduce shipping costs:
The carrier contract negotiation process can be confusing and intimidating. Taking control of the fine print, understanding the benefits of the various services, and handling the broad range of rate enhancements is a complex task. But paying close attention to the small print can mean big savings to a company's bottom line.