Dear Shipper,

There’s something you may have noticed in the last year or two. It’s increasingly obvious that UPS and FedEx are doubling down on their plan to systematically renegotiate customer contracts, with an attempt to eliminate guaranteed delivery times.

Your carrier may also try to add a clause in its agreement stating something like the following: “As long as we are 98 percent on time, you cannot file for a late delivery.”

Unfortunately, the carriers are the ones monitoring their own performance. In some instances, UPS and FedEx are even offering to monitor and credit late-delivery refunds back to clients accordingly. This looks a lot to us like a classic case of “the fox watching the hen house.”  

It’s a bit ironic how the two major small-parcel carriers will continue to increase their rates and accessorial charges year after year – and recently, several times per year – like clockwork, while at the same time making a conscious effort to have you waive your right to hold them to a service standard.

The carriers are looking to deter shippers from having their invoices and carrier agreements thoroughly analyzed by a professional auditing and contract negotiating company. Have you ever asked yourself why the carriers try so hard to eliminate third-party auditing companies? There’s good reason.

Shippers spend a tremendous amount of time and money putting processes in place to ensure that the customer-service experience for their clients is the best it can be, from the time an order is taken to the time it is shipped. Why, then, would a carrier expect you to disregard all that time, effort and investment in your infrastructure, and not hold it to its own self-implemented service guarantee? After all, shipping is your last chance to make a good impression on a customer. If a package is late, it can destroy the entire customer experience.

Because most auditing companies do little more than recover guaranteed service refunds (GSRs), your carrier knows that you will become an unattractive prospect for the typical auditing firm if you’ve waived your right to claim a refund for late packages.

You have a right to maintain standards. We strongly advocate holding your carriers to a service standard that is both monitored and quantified by an independent source.

Historical data makes it clear that the number of shipments that fail to live up to the service guarantee will predictably increase when carriers are not held to a service standard – as is the case when you are asked to waive your right to late-delivery refunds in exchange for some extra incentive or discount.

We strongly suggest that no shipper waives its right to late-delivery refunds. Almost any incentive that your carrier may offer can also be offered without such a waiver. After all, it is ultimately your customer who suffers from service failures. Late-delivered packages are a major reason why shippers lose clients.

Just a few of the ways that late packages impact your business:

1. Potential unsatisfied or lost customers
2. Increased customer service calls
3. Increased returned merchandise
4. Restocking costs
5. Lost shipping charge revenue

You do not have to sacrifice service for price.

If your carrier asks you to waive your right to audit your invoices for late deliveries or for any other reason, a red flag should go up. With proper contract negotiations, you will still be able to receive the additional incentive it’s dangling – while continuing to hold the carrier to a service standard.

As the carriers continue to raise prices, we recommend that you never give up your right to file for late deliveries. And when it comes time to renegotiate your agreement, seek the assistance of a professional firm that lives and breathes carrier negotiations.

Carriers are making a healthy profit year after year due to many factors, two of them being billing errors and additional accessorial charges, such as dimensional weight, address corrections, residential charges, additional handling charges, delivery area surcharges, packages manifested but not shipped, duplicate invoices, rating errors and many more.

The carriers provide you and your customers a valuable service for a premium price. You should make sure that you and your customers get the premium service you’re paying for.

Ken Wood is founder of LJM Group, a provider of consulting, auditing and rate negotiation for parcel shipping.