Parcel BI is a powerful business intelligence tool built to help companies that ship often. Our platform holds many resources for these businesses to manage their parcel spend by identifying opportunities, exposing errors, and reducing costs.
In today's blog, we are discussing a Parcel BI client who was looking to negotiate a better rate with their carrier. Since this client saw such a huge spike in ground sales, they wanted to contract a better rate.
This client went to their carrier and was very happy to hear that their rep was able to give them a 4% discount on their ground shipping rates! That sounded like a huge win for their business and should have saved them $400,000.
However, in reality it was only going to save them about $27,000, which is still big, but not what they thought they had agreed to based on how the carrier rep made it sound. What happened?
In a Word: Minimums
The discounts only take your shipping costs so far. Every service has a minimum charge that every package will be billed at, regardless of the discount.
In the case of this client, 80% of his packages were already hitting this minimum charge, so only 20% of his packages were going to be impacted by this additional 4%, and many of those would continue to hit the minimum.
A lot of shippers don't really understand the impact that minimums have, and they think that a 4% discount means a 4% savings. Unfortunately, that is not the case. Our clients are able to use our negotiation tool, Contract Edge, to expose how much they will actually save with new rates and discounts.
By using Contract Edge to leverage your contract negotiations, you will be better equipped to discuss a new rate or discount.
If you are looking to manage your parcel spend, especially now that the holidays are fast approaching, contact us today at Parcel BI to learn more about how we can help you identify opportunities, expose errors, and reduce costs.
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