Carrier contract negotiations are more important now than ever before. Rob Glover, vice president of sales with OSM Worldwide, explains why.
With so many new entrants into the carrier market, and a panoply of options available to shippers, carrier contract negotiations are a matter of top priority, Glover says. Brands and retailers are striving to meet consumer expectations, and one way of doing that is by selecting the right carrier for the job. “That’s vital to maintaining and controlling costs,” he says.
The balance of power between shippers and carriers is changing constantly, in line with shifting economic trends and variations in supply. For the last few years, carriers have been in the driver’s seat, as shippers vied for a limited amount of capacity at high prices. With the pandemic abating, and consumer demand beginning to slacken, the market is softening in favor of shippers.
Regardless of the market dynamic of any given moment, shippers need to pay close attention to the contracting process. The first step, says Glover, is providing carriers with the necessary data. “To be successful in contract negotiations, you have to prepare — to get information about what it is that you ship.” Crucial data includes anticipated volumes, weight, dimension of boxes, destinations and service requirements.
Shippers must also understand how carrier pricing has changed over the past few years. Today, they’re more likely to be hit by higher rates, including additional fees, surcharges and penalties for tendering more or less volume than promised. “The more precise you can be with your predictions,” says Glover, “the more you’re limiting the carrier’s risk.”
That said, it’s easier today to get out of contracts if the shipper discovers it can get a better deal elsewhere. But it’s smarter to start by hiring multiple carriers, thereby reducing the chance of disruptions if one carrier is unable to handle the business.
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