protect their employer. So, for example, if your residential customers each receive two packages per shipment, it’s important to communicate that; it practically doubles the carrier’s assumed delivery density, dramatically lowering the delivery costs for the carrier. How do you know what the carriers want? You know what you have; the key is linking that to what the carriers want. If the majority of the below list describes your shipping profile, congratulations on being a unicorn. But even if it doesn’t, highlight what you’ve got. These characteristics are almost universally valued: 1. Shorter zones. 2. Commercial deliveries. 3. Multi-piece deliveries. 4. Weights between 10 and 20 pounds. 5. Dense and securely packaged products. 6. Urban and suburban pickups and deliveries.
7. Steady volume throughout the year, or at least off-peak spikes to help smooth network demand. 8. Small- to medium-sized business (strong margins, tomorrow’s large businesses). If you really want to go the extra mile to understand the carriers, listen to their quarterly earnings call. But, if you take this step, keep in mind that much of what you learn might be spun to show the carrier in the best possible light as they work to meet, beat, or set investor expectations. Also, many regional carriers and other good options are still privately held and may not offer the same insight into their operations. Another excellent option is to work with third-party shipping experts, since they can provide you with an unbiased view of the carriers and how they operate. While your drivers and sales reps will often work very hard to do their best for you, they are ultimately employed by the carriers.
Thriving in the Current Environment It’s true that carriers have rare advantages in the current environment, but things are not hopeless. Be proactive and take these steps to ensure a successful pricing negotiation: 1. Maintain a long-term focus as you build relationships with your drivers, operations contacts, and sales representatives. 2. Know who you are as a shipper and make sure you communicate that to your carrier reps. 3. Understand how your shipping profile matches what the carriers are looking for and highlight those strengths.
Adi Karamcheti is Consultant, Professional Services at Shipware, LLC, a San Diego-based parcel consulting ﬁrm that specializes in cost reduction and recovery services. He, along with his colleagues Rob Martinez, Trevor Outman, and David Sullivan, will be speaking more on this topic on Tuesday, September 14 at this year’s PARCEL Forum.
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PARCEL September/October 2021