All freight shipping contracts are not created equal. When a carrier negotiates a contract with a business, the goal of the carrier is to negotiate the best deal possible. For the business in the process of negotiation, there is little opportunity to compare prices and contract terms to see if the deal is reasonable, except by considering what their previous carrier had offered. Variables that are involved in a shipping contract from a carrier like UPS include the following:
- Accessorial Charge
- Carrier Tariff
- Shipping Schedules
- Service Incentives
- Deferred Incentives
- Minimum Net Charges
- Carrier Surcharges
If a company wanted to know the most favorable rates and terms for any one of these costs, it would have a difficult time determining that kind of information on its own. A freight and parcel auditor specializes in evaluating and comparing these charges. Because the auditors perform numerous analyses of carrier contracts, they can leverage these data findings to help give businesses an advantage when conducting Freight Shipping Contract Negotiation.
Kicking off the process can include a freight bill audit. The Parcel Audit involves evaluating existing logistics charges and identifying where overpayments and errors in logistics by the carriers are occurring. The audit is good for small parcel carriers like UPS and FedEx, but also for larger freight lines. Once the information is compiled, it can be used to negotiate a more favorable contract, because the performance of the carrier will be well documented. Many Freight Audit Services are so confident that the freight bill audit will result in a business saving money and streamlining its shipping processes that they do not charge for the audit up front, waiting instead for a reduction in overall costs before taking a fee, which is often based on the percentage of reduction.
Working with better information during a contract negotiation (provided by the performance of an audit prior to negotiation) has been proven to reduce shipping costs for many companies. A reduction in carrier fees during negotiation will save money every time a parcel is shipped. An audit of deliveries and payments will expose overpayments and return money that was spent, creating an impetus to identify future areas of shipping practices that can be improved.