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UPS and FedEx agreements are designed to ensure that all the volume and revenue is not given to another carrier. Secondly, pull historical invoice data or ask your carrier for a 52-week report showing gross spend. Make sure that this is a representative view of your shipping footprint. This will help quantify how much volume you may be able to move to a regional carrier without incurring increased costs with your primary carrier. Making the Move Once you have determined out how many shipments would be eligible for a regional carrier, put together a representative data file and provide it to the regional carriers for a bid response. This way, they will respond with a proposal that is tailored specifically to your shipment characteristics: weight, zone distribution, dimensions, residential/ commercial mix, etc. Be sure to identify if you are a seasonal shipper in your data sample as well. Many shippers,

especially heavy peak season shippers, ran into capacity limits in 2020 Q4. Major carriers were overwhelmed with packages and put volume restrictions in place. This forced many shippers to look to regional carriers to pick up the packages that were over the limits set by their primary carrier. After you implement a regional carrier agreement, you need to ensure that you have the necessary automation to create a guide for least cost routing. Consider all of the factors when setting rules for your TMS. Are you comparing the fully landed costs, including the shipment cost and all surcharges? Be sure to use a final billed weight based on dimensions and not just actual weight. Also update the cost tables to include any peak surcharges that were previously not in place. Think of transit times and how fast your package needs to get to its destination. Will it get there faster with your primary or regional carrier? Least cost routing rules will also need to include limitations like location, package size/weight, and

peak shipment quantities. Additionally, some customers can override these rules if they have preferences for one carrier over the other. Bringing in regional carriers can help improve service performance, lower shipping costs, and give you additional package capacity during your peak season. If you can’t make this solution work with your current carrier agreement, it may be time to re-evaluate your current agreements and negotiate a new agreement that will give you the flexibility to realize the benefits of a multi-carrier solution up front.

For the last 13 years, Stephanie Martin has been a senior analyst for Navigo Consulting Group. Her data driven approach has provided shippers with a keen understanding of their requirements and costs, and has given them opportunities to save and optimize millions of dollars in excess shipping costs. Stephanie can be reached at Stephanie@NavigoInc.com.

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