Switching their small package provider is a process numerous small package shippers are afraid to do, and this affects their ability to negotiate, because while small package shippers want cheap shipping, they’re afraid to get dumped by UPS, FedEx, DHL, or other small parcel carriers if they push too hard in shipping rate negotiation. To overcome this fear of small parcel transportation rate negotiation, you have to become as prepared as the parcel carriers you’re negotiating with.

Parcel carriers want your business, but for the right price, especially carriers like UPS, FedEx, and DHL. In order to confidently work out small package shipping rates you should know what elements small package providers look at when they examine your company’s package shipping attributes.Small package spending, provider network alignment, environment of small package provider competition, and your company’s brand are the four things small parcel providers will consider when negotiating shipping contracts.

Small Package Spending

Under $100K Yearly Parcel Shipping Spend

The amount you’re spending on small package shipping every year is among the initial factors small parcel providers like FedEx, DHL, and UPS will look at. It’s an easy routine for smaller small parcel shippers. Small parcel providers will look at ground versus air parcel shipping service usage, whether packages are delivered to commercial or residential places, size of shipped packages, and delivery density. The specifics of DHL, UPS, and FedEx small package shipping contracts will be centered around those numbers.

$100,000 or Greater Yearly Parcel Shipping Spend

The larger the quantity of small package shipping, the more consideration small parcel providers use in shipping rates and deal negotiations. Alignment with provider network, and industry vertical are now thought about by parcel providers when deciding small parcel shipping rate offers. Small parcel carriers like FedEx and UPS conduct competitive and intense reviews to ascertain how competitors operate in a vertical. Small parcel shipping rates rely a lot on this info for businesses carrying out a lot of small parcel shipping. Non-incumbent package providers do plenty of analysis of the way incumbent small package carriers price, win, and retain industry vertical, and according to that knowledge these new providers can find methods to compete in those package shipping areas with parcel carriers like UPS, FedEx, and DHL.

Package Provider Networks

Cost to ship isn’t the only consideration for small parcel providers as they negotiate shipping rates and contracts. FedEx, UPS, and DHL want to retain your business long-term, so they’ll make their parcel shipping services valuable for your industry. In the case of parcel providers who find themselves near distribution centers, parcel carriers know individual shipment rates will be cheap, but large amounts of deliveries will make up for that. In addition, no one will be able to contend with the speed of parcel shipping, or as cheap of rates as the small package carrier nearest the distribution center, making it nearly impossible for that small package shipping company to change providers, guaranteeing business for a long time.

Parcel Carrier Competition Environment

UPS, DHL, FedEx, and other parcel providers analyze how likely they are to lose your parcel shipping company as a customer, and what the risk of working as your parcel carrier is initially. Incumbent and non-incumbent parcel providers have unique worries.

Competition and Incumbents

The risk of losing parcel shipping clients is the primary concern for incumbent parcel carriers. Often the shipping solutions your incumbent parcel carrier offer will be better than usual competitive rates in an effort not to lose your business. Previous deals and agreements, shipping rate structure, services terms, and history with your parcel shipping business sway negotiation with your incumbent package carrier. UPS, FedEx, and DHL will think about whether you’ve been a longstanding faithful customer, or if you commonly threaten to leave but never do, and how ingrained your business is, which will make it less risky that you’ll leave.

Non-Incumbent Parcel Carriers

For new parcel providers, one’s you aren’t presently working with, they care about your credibility, or how likely they are to actually get your business. How ingrained you are with your parcel provider is also noticed by non-incumbent package carriers to establish if your small parcel shipping can realistically be switched to a new provider. As non-incumbent parcel carriers, UPS, DHL, and FedEx are taking risks just by participating in a conversation with you. Implying or promising to sign with a new parcel carrier and backing away from the deal will stick with executives at big package providers, and can cause difficulties for your parcel shipping company later on.

Value of Company Brand

Parcel carriers care about brand, especially for their major clients. Parcel carriers will often view alignment with brand-name shippers as a major success. Your parcel shipping rate negotiations may be more in your favor if your company’s brand adds value to your small package carrier. Frequently with small parcel providers like DHL, FedEx, and UPS, there are synergistic partnerships that form between package shipping companies and package providers that go further than just cheap shipping rates. This synergy plays a sizable role in parcel carrier’s strategic business decisions.

Negotiating Small Parcel Provider Agreements

Small package providers understand what they’re doing. For good logistics management and cheap shipping rate negotiations, you need to understand as much as your small parcel providers. Small package providers are fully aware, not only pertaining to the industry, but about you. They will know your interest in using their small parcel shipping services, brand worth, yearly parcel shipping spend, carrier network alignment, and cost to serve your business. Optimize your logistics management and negotiate cheap shipping rates by understanding the way package providers craft parcel shipping agreements and analyze negotiations.

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