Uncertainty surrounding tariffs is forcing shippers to take fresh approach to their relationships with parcel carriers, says Bill Taylor, chief marketing officer with Reveel.

Tariffs are one part of landed cost — the calculation that assesses all of the components that define profitability and product margin. Actions must be taken in the short, medium and long term to mitigate their impact, but it’s uncertain as to whether current tariffs will ever return to pre-disruption levels. “So you focus on things you should be doing anyway,” Taylor says.

A key aspect of long-term decision-making is network design. Companies need to fully understand their shipping profile in order to make data-driven decisions in this area, Taylor says. If, for example, a product is shipping over long distances with zone-based surcharges, the shipper might consider locating distribution centers closer to the end market, or working with carriers that don’t impose those surcharges.

The key to making the right decisions lies in the details. Not all products are impacted by tariffs in the same way, Taylor says. Yet many companies don’t understand their profitability at the product level, especially when it comes to parcel shipping, “where every shipment is a unique event.” Parcel shippers need to combine invoice data with information about the actual contents of each package.

In carrier negotiations, knowledge is power. To react properly to tariffs, “you need to know your shipping profile as well as, or better than, the carrier does,” Taylor says. Armed with that information, the shipper is then in a position to ask for rate concessions on products that are specifically affected by tariffs — “something the carrier rep can take to its pricing department and get approved.”