One big factor that may really eat into your budget and product profits is shipping rates, which might vary greatly from one provider to one other. Sometimes, these unexpected costs can cancel out any savings you made earlier in the manufacturing process. So, it’s price knowing tips on how to negotiate shipping rates to protect your profit margins.
From coping with UPS, FedEx, and USPS to freight lines, getting the best deals would require a thoughtful strategy — especially because you don’t need to skimp on key elements like service and speed.
Excellent news — this text has all of the info you wish. Keep reading to learn tips on how to improve shipping rates.
Easy methods to Negotiate Rates with Shipping Lines
Step one in negotiating rates with shipping lines is understanding the market landscape. For instance, UPS and FedEx hold a good portion of the market share, making a duopoly that sets the standard for pricing.
Since this duopoly accommodates around 70 to 80% of the market share, they set the rates for the entire industry in comparison with one another, not in comparison with what it actually costs to ship a parcel.
Nonetheless, this doesn’t necessarily mean that you’ve got no room to negotiate. It’s vital to research and compare prices from various carriers to have a higher understanding of what’s considered reasonable.
The good news is that almost all shipping carriers follow a similar process for negotiating rates. This implies the information below can make it easier to with any carrier you select to work with.
Creating an Account
The simplest technique to save on shipping is to create a free account with a provider of your selection. In addition to having fun with shipping discounts, having an account opens up other cool perks like free shipping supplies, scheduling recurring collections, different tracking options, and more.
If you run a small business, creating an account is a great technique to start saving on shipping costs. For instance, if you must know tips on how to negotiate shipping rates with UPS, their website claims you’ll be able to save up to 11% on every shipment with a free UPS account.
USP provides more advantages for customers who’ve an account
Explore multiple carriers and compare their perks before signing up. Some provide free package pickup and
Integrations with Ecommerce Platforms
The ecommerce platform you utilize for your online store can even help save on shipping fees. Certain shipping providers, like USPS, integrate with ecommerce platforms to offer discounted rates to their customers. Consider it as if shipping rates have already been negotiated on your behalf.
Take Ecwid by Lightspeed, for example. When using Ecwid for your online store, you not only profit from discounted shipping rates but additionally have the convenience of printing shipping labels directly out of your Ecwid admin.
If you’re wondering tips on how to negotiate shipping rates with USPS, this selection may be just what you wish. Ecwid sellers in the US can purchase and print discounted shipping rates through USPS, while those in Belgium, the Netherlands, and Germany can utilize Bpost, PostNL, and DHL, respectively.
If you’re from one other country or need to use a different shipping provider, you’ll be able to buy discounted shipping labels using apps from the Ecwid App Market.
Accessing discounted rates through an ecommerce platform is a convenient technique to manage all elements of your online store in one place somewhat than juggling multiple accounts and services.
With Ecwid, you’ll be able to buy shipping labels right where you manage your orders
Shipping Contracts
While the first two options work great for small businesses, larger sellers may consider signing a shipping contract with a carrier. This means that you can negotiate custom rates based on your specific shipping volume and needs.
Once you’ve got chosen a carrier, it’s crucial to understand how the negotiation process works. Typically, carriers will review your shipping history and volume to determine your rates. The more you ship, the higher rates you’ll be able to negotiate.
It also helps to clearly understand your average shipment size and destination zones, as this information can affect your negotiated rates.
A shipping contract is a legal agreement between you (the corporate or manufacturer) and the carrier (UPS, FedEx, etc.). Depending on your manufacturing and shipping model, such a contract will hammer out the details of what’s being shipped and in what volume.
For instance, a contract can contain:
- Agreements on how much is being shipped in a given period
- Where to
– individual customers (called parcel shipping) or bulk shipping to other corporations (called freight) - Packaging dimensions
- Mode of shipment (ground, air)
- And other vital aspects.
A contract normally covers several items, corresponding to payment terms, insurance, and liability. Signing a shipping contract can even provide additional advantages, corresponding to dedicated account managers, specialized customer support, and other perks.
Nonetheless, it’s essential to rigorously consider the contract’s terms and conditions before signing. Thoroughly review the pricing structure, service level agreements, and hidden fees or surcharges.
It’s also beneficial that you just compare multiple contracts from different carriers to get the best deal for your online business. Don’t be afraid to negotiate and ask for higher rates or added services that suit your needs.
More Things to Note When Negotiating Shipping Rates
Now that you understand tips on how to negotiate shipping rates with FedEx or any other carrier, listed below are a few more things to keep in mind when securing shipping contracts.
Consider Your Business Needs
Carriers have different pricing structures and may offer discounts based on the volume or frequency of shipments. Consider your online business’s shipping needs and negotiate accordingly.
If you sometimes ship large volumes, you’ll be able to leverage this as a bargaining chip for higher rates. On the other hand, if your shipping needs are more sporadic, specializing in negotiating higher service levels somewhat than lower rates could also be more helpful.
Negotiate the Contract Duration
One other vital aspect to consider is the duration of the contract. Most contracts have a set term, normally starting from one to three years. Fastidiously review this and negotiate for a long run, as this could often lead to higher rates and more stable shipping costs.
Learn About Extra Fees
One other critical factor is to discover about any extra fees carriers may charge for overnight and peak delivery, fuel surcharges, address correction, and even residential delivery. These assessorial charges can run up significantly if not considered.
Keep in Mind Grace Periods
Some shipping carriers may extend a grace period if your shipping volume is not yet high enough to procure attractive discounts and you expect your volume to increase rapidly. This grace period will can help you benefit from those lower prices now, but you’ll lose your discounted rate if the sales goals aren’t met.
Connect with Your Account Manager
Typically, after you sign a contract with a carrier, you can be assigned an account manager or representative. It is vital to establish a good relationship with this person as they will often provide invaluable insights and help resolve any issues which will arise throughout the shipping process.
Review Your Contract Repeatedly
Finally, it’s vital to recurrently review your shipping contract and renegotiate when crucial. Shipping rates are continually changing, so be at liberty to reach out to your carrier and negotiate for higher terms if you notice a significant cost increase. It’s also helpful to compare rates from different carriers periodically in order to ensure you’re getting the best deal for your online business.
Easy methods to Negotiate Freight Rates
Inquisitive about the difference between freight and shipping? Let’s delve into the details.
The Difference Between Freight and Shipping
When it involves freight, we typically consider moving large shipments, often in bulk. Consider it as the heavy lifting in logistics. Shipping is a broader concept, encompassing anything from tiny packages to entire shiploads. It isn’t constrained by size or quantity.
Freight and shipping costs can differ significantly. When it involves freight, weight, volume, and distance play a big role. It’s all about loading smart and planning routes well to lower your expenses.
Like many other carriers, FedEx uses distinct terms for freight and package shipments
Shipping rates are influenced by much more aspects like the way it’s transported, how quickly it’s delivered, and what’s being shipped.
Selecting between freight and shipping depends upon cargo type, delivery speed, budget, destination accessibility, and service specifics. Freight suits large, heavy items, while general shipping works for smaller loads.
Negotiating Freight Rates
Handling freight comes with various factors in comparison with shipping parcels. For instance, freight is typically calculated in bulk.
Much like shipping carriers, freight shippers work with contracts that outline the terms and conditions under which goods can be transported.
This kind of contract covers the transportation of goods from one place to one other, detailing the price, payment terms, delivery dates, and responsibility for loss, damage, or delays during transit.
When negotiating freight rates, it’s essential to understand the aspects that impact pricing and how you’ll be able to leverage them to get a higher deal.
Consider the following:
- Volume. Shipping more allows for higher rate negotiation with carriers, who profit from transporting larger quantities efficiently. Consolidated freight shipping costs are also typically lower than shipping individual packages.
- The style of goods being shipped. Hazardous materials or oversized items may require special handling or have specific regulations and restrictions, which might increase the cost of shipping.
- Operating costs. Demurrage fees, free time, detention fees, and container
pick-up/return locations can add up, potentially surpassing savings from lower freight rates. - The mode of transportation. Air freight is normally pricier than sea or ground transport but offers a faster alternative for urgent shipments.
Wrap Up
Contract negotiation could make a big difference to your bottom line, for higher or for worse. So, do your homework, stay informed, and understand your individual bottom line and budget. Then, suggest and negotiate until you discover the perfect shipping deal that suits your requirements.
Selecting an ecommerce platform is just as vital as choosing a shipping provider — each play key roles in your online business success. For a robust online store with the added advantages of
Ecwid provides you with various shipping tools so which you can offer your customers a smooth and transparent shipping experience:
- Display
real-time, accurate shopping rates at checkout from trusted carriers like UPS, USPS, FedEx, etc. - Buy and print discounted shipping labels from the Ecwid admin
- Offer
real-time order tracking and more.
