Get
Steeper Discounts with Carrier Data
Postal World, October 27, 2003
How
often do you review your accounts with your private carriers? You should
have answered every 6 months.
As
part of your account review, look at each key areas as on-time service,
volume of packages shipped, claims ratios (dollar value of claims for
packages damaged in delivery divided by total value of all packages
shipped), payables outstanding and lane segments to show geographically
where you're shipping, says Tabb Burton, transportation analyst, enVista,
speaking at last week's Parcel Shipping and Distribution Forum in Chicago,
IL. The carriers should have the data readily available even if you
don't.
The
review will prove you're a professional who is holding the carriers
accountable, and it should give you information you can leverage in
your next round of price negotiations, Burton says. If the carrier claims
to have 95% on-time delivery, ask them to prove it to you. "So
many times carriers aren't held accountable for their activities,"
he says.
The
review also shows that you want to build a relationship with your carrier
in which the reps are looking out for your best interests. As your relationship
deepens, so will your ability to negotiate steeper discounts.
The
key, says Burton, is to make your business attractive to the carriers.
Here are the top 4 characteristics Burton says carriers will look for:
- Number
of packages per day or per week. The more the better because
the carrier's costs decrease as the volume per pick-up increases.
- Average
weight of the packages. The heavier the packages, the more
revenue for the carrier. For instance, the industry average is 5
pounds, so if your average weight is 21.4 pounds, your business
would be attractive to the carriers and you would be in a better
position to negotiate discount rates.
- Length
of haul. The farther the packages travel across the zones,
the more the carriers can charge. Example: The average is 4.25 so
an average zone of 4.61 would put you in a better negotiating position.
- Percent
of residential shipments. The fewer residential deliveries
you have the better because that means fewer delivery stops for
the carrier and usually shorter runs. Before the creation of e-tailers,
less than 5% residential shipping was considered ideal. Today, 19%
of parcel shipments are delivered to residencies, which is up from
16% last year, according to a survey by Parcel Shipping &
Distribution magazine.
From
Postal World 10/27/2003. Copyright 2003, UCG, Inc. Reproduced by permission,
further reproduction or electronic redistribution/storage prohibited.
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For
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