Know Your Rights for Freight Rate Negotiation
Shippers know that negotiating a strong carrier rate agreement is critical for controlling freight costs. So why are so many companies reluctant to take control of the negotiation process and get the rates they deserve?
The answer often lies in misunderstanding your “rights” as a customer. You have three key rights that carriers deliberately obscure. Once you are clear on these, you’ll be armed to negotiate for the best rates it’s possible for you to get. Step one is to not take everything you hear from carriers at face value.
Here are three misunderstandings that cause freight shippers to stick with agreements they know are not the best they can get.
1 – My current agreement is still in force
That expiry date on your agreement only sets the maximum length of time the agreement can be in force. It is not a minimum length. You can renegotiate your agreement at any time. And in fact, it makes sense to do so any time your logistics landscape — market conditions, your costs, where your customers are located — changes significantly.
Markets and costs change fast in the logistics industry — and your “great” rates can quickly become above market. Optimizing your freight costs means keeping your rates and agreements current with where the market is today.
You can negotiate at any point during the life of a carrier agreement, and many companies do so after 13 months.
2 – I can’t seek assistance from a third party
Carriers live and die on their negotiating skills. A carrier that can’t win business at the highest possible rates will before long go bust. Behind every friendly sales rep there is a team of pricing analysts who understand your freight spend far better than you.
But don’t despair. Despite what you may have been led to believe, you can turn to a third party for help, and don’t let anyone tell you otherwise. And when you do turn to a third party to get an expert on your side, the carrier need be none the wiser. Companies like First Flight Solutions operate behind the scenes and even the playing field for you without damaging your relationship with the carrier.
3 – My shipping data doesn’t belong to me
Let’s examine the meaning of the word “my.” Your shipping data is yours — why would it belong to anyone else? Data is a powerful tool that enables you to negotiate better. But carriers count on most companies not understanding how best to use that tool. And when you’re led to question whether that tool even belongs to you, you’re at a double disadvantage.
The better prepared you are when you enter a rate negotiation, the stronger your hand. Effective preparation starts with gathering data about your own business. So, don’t be shy about insisting that carriers provide complete reporting on your shipping patterns and volumes.
Don’t let these three misunderstandings prevent you from doing what’s best for your business. Take control of the negotiation process and get the freight rates you deserve.