FREIGHT RATE NEGOTIATION STRATEGIES

Large consulting firms and purchasing groups offer freight rate negotiation services, but they have the same process for negotiating pens as freight. It’s not the same. Successful rate negotiation requires detailed modeling, extensive benchmarking and an in-depth knowledge of the transportation mode.

At Trans-Solutions, we take the time required to do a fact-based, numbers-driven analysis of your freight in order to deliver precise recommendations you can trust. It starts with an accurate baseline built from a representative sample of your shipments. Once the baseline is established, we re-rate the freight with the carrier’s proposed pricing and ancillary charges so we can see exactly where, when, and why prices improve and don’t improve. From this analysis you will know, quantifiably, how much you are gaining or losing and where to address our attention during negotiation. It’s an exacting approach that takes more time. But having a detailed understanding of all the pricing elements that make up your freight rates significantly strengthens your negotiating position and ensures you won’t gain in one area and lose in another.

Common misperceptions in freight rate negotiation

• Freight rate reductions are not linear. An additional 10% discount doesn’t necessarily mean your freight bill is reduced by 10%. Accessorial charges, minimum charge thresholds and other factors may eliminate or offset the discount. Still, most shippers use averages and aggregate numbers when analyzing carrier proposals.
• A better rate isn’t necessarily a good rate. You can’t know if you’re getting competitive freight rates unless you know what other shippers are paying. Because Trans-Solutions does small parcel rate negotiation for many companies, we maintain an extensive rate database. If your rates do not compare favorably, we use this knowledge as leverage on your behalf.
• To carriers, all freight is not the same. Knowing what freight the carriers want can earn you an additional 10%-20% rate reduction. Sales incentives change regularly and Trans-Solutions makes it our business to understand the type of freight certain carriers seek. When a carrier does not bid on your business, this could be the reason. Often it makes sense to split your freight across multiple carriers to gain the very best rate and service.
• Bundling all your freight with one carrier doesn’t ensure the best pricing. This is a common misconception with consultants that negotiate freight. Because they think negotiating freight is like negotiating pencils, they miss the nuances of the commodity and leave money on the table.

Need a shipping consultant who is an expert in freight rate negotiation?

Contact us to discuss your needs in more detail.