Transportation Impact, a 2013 Inc. 5000 company, is the industry leader in parcel spend management. The North Carolina-based company has more than 190 years of combined parcel carrier experience and utilizes its expertise to aid high-volume FedEx and UPS parcel shippers in reducing costs through its parcel auditing and parcel contract negotiation services.

1. Making the most out of
your next negotiation.
Analyze. Strategize. Realize.

2. Back to the basics
• Before you can accurately project where you want to be
in terms of the price you pay for FedEx and UPS parcel
shipping services, you have to definitively understand
where you’re at. There’s no better place to glean this
information than from your company’s unique shipping
characteristics; think of it as your ‘package DNA’.
– Your carrier can provide you with raw data that
breaks down all of your company’s parcel shipments.
The key to success lies within the proper segregation
of this vital information, enabling you to ‘speak your
carrier’s language’ with regard to market-appropriate
rates for the services your company utilizes.

3. Cost justification
• Let’s face it: The time and resources necessary to dive
into your data can be extensive and expensive,
especially if your internal resources are constrained by
other initiatives.
– Before you write off the exercise, it’s important to
understand the amount of cost savings that typically
hide within a company’s parcel supply chain.
Companies that take the time to understand what
drives their costs save an average of 22% more than
those who don’t. This makes failing to perform a
thorough parcel data analysis on the front end a far
more expensive proposition in the long run.

4. Utilize your audit
• Whether companies audit in-house or through a third
party, they enjoy the fringe benefit of more manageable
data in addition to parcel credit recovery. This 90-second
video illustrates this and other benefits:

5. Strategic planning
• If simply asking for what we wanted were an effective
strategy, our children would have a lot… more… toys. Of
course, even a 5-year-old will tell you it’s not that easy.
Every negotiation is a delicate balance of give and take.
Be realistic about what you want to accomplish and
substantiate your request with the data to justify your
business case. Focus on your strengths (cost drivers,
demonstrated growth, enticing strategic initiatives, etc.)
and position those to your carrier.

6. Manage your information
• It’s important to be realistic; if your volume in certain
shipping lanes is lagging, then your carrier will throw a
wrench in its profitability by discounting those particular
rates. This will, in turn, prevent them from making
concessions that matter. This approach might make
more sense, however, if, for example, your company is
planning to roll out a new product or planning to expand
into a new location that will pump volume into a new
service level. In either instance, it’s important to focus
on the buckets that will impact your bottom line and be
willing concede in other, more inconsequential areas.

7. Focus on price
• Both of the major parcel carriers have made names for
themselves by delivering on their commitments with
staggering efficiency. If you ship it, you can be more
than 99% sure that it’s going to get where it’s supposed
to be by the time it’s supposed to be there. A silver
lining within a market with limited genuine competition
is that dependability remains relatively constant,
regardless of which carrier you choose. This allows
shippers to focus more heavily on the price they pay for
services. Ignore the fluff, and get straight to the bottom
line.

8. Read between the lines
• A significant portion of parcel carriers’ profits come from
accessorial charges like address corrections, delivery
area and residential surcharges. As such, the terms of
these surcharges are negotiable and should be
addressed within the terms of your agreement.
• Even if your carrier is offering a service-level discount
that looks good on paper, it’s important to understand
how minimums can impact the net effect of those
discounts. The 2014 Zone 2, 1-pound minimum, for
instance, is $6.24. Regardless of your discount, your rate
will never fall below this amount. If you have a 50%
discount on a $10.00 package, instead of paying $5.00,
you’ll pay $6.24, leaving your actual discount (37.2%)
12.8% short of what you were expecting, and that can
add up quickly.

9. Lock in your rates
• You’ve spent all this time negotiating; make sure you
don’t have to do it all over again a year from now.
Though the terms of a typical agreement are three (3)
years, there are often discounts within that agreement
that may expire automatically after a shorter period of
time has elapsed. Carefully read the language of your
agreement to ensure that all the terms you negotiated
will remain in place for the life of the agreement.
Otherwise, you’ll be back to square one before you know
it.

10. Monitor your performance
• Nothing can impact the amount of money you pay for
your carrier’s shipping services more than falling out of
your ‘target tier’, the minimum revenue threshold that
must be met in order for your company to achieve the
negotiated discounts. Keep an eye on your data
throughout the term of your agreement to make sure no
unforeseen changes have taken place. Significant
fluctuations within your shipping characteristics can be
costly… very costly.

11. Summary
• Understand your ‘package DNA’.
• Find an auditing process that does more than secure
refunds.
• Develop a strategy that focuses on your strengths.
• Be realistic and willing to make concessions where
necessary.
• Focus on price!
• Understand the impact of accessorials and minimums.
• Lock in your discounts.
• Continue to monitor your characteristics post-negotiation.

12. Stop Shipping Your Money Away!
We Can Help!
• Contract Negotiation
– 22% avg. savings
– 5-6 week negotiation period
– 3-4 hour time commitment
• Parcel Auditing
– 1-5% average savings
– web-based, non-intrusive
– no commitment or upfront fees
• Reporting & Optimization
– 150+ canned reports
– unlimited ad-hoc reports
– customized, automatic delivery
Contact Transportation Impact
w: transportationimpact.com
p: (252) 764-2885
e: info@transportationimpact.com