How to Negotiate Shipping Rates with FedEx or UPS
If you’re a high-volume shipper, it’s important to know how to negotiate shipping rates with FedEx or UPS to get the best possible pricing you can for your packages. With a bit of preparation and an understanding of the FedEx vs. UPS vs. USPS shipping rates, you can make room for yourself at the negotiating table.
We pulled together a few tips to make sure you know what to look for during the negotiation process. Here’s our top advice for how to negotiate shipping rates with FedEx or UPS.
Build a Relationship with Your Account Manager
You’ll usually need an account manager at FedEx or UPS to negotiate your shipping rates. Once you’ve been assigned an account manager, make sure you keep in touch with them. Look for ways you can make their job easier, by giving them a heads up when you know a spike or dip in shipments is on the horizon.
And, remember they’re human, too. Take the time to get to know them, and they may be more likely to remember you when it comes time to negotiate.
Let the Data do the Talking
Above all else, you need to have a compelling story to tell, and that’s where your data comes in. It’s easy to see your past shipments using Shippo. Visit our new Shipping Analytics tab in to see your shipment history and access past data.
Even if you don’t have the threshold you want to negotiate, FedEx and UPS will typically offer you a grace period of a few months to meet your sales goals. That way, if you’ve been scaling quickly, you can reap the benefits of those lower prices by promising higher volume soon. However, if you don’t meet your sales goals, you will lose your discounted rates, so make sure you’re reporting and projecting accurately.
Also, look for trends in your data to prove your value to the carriers. Do you ship exclusively with one service level, or do most of your packages travel along the same route? Are you a subscription seller with all of your packages delivered on one day? Find ways to show that you’re valuable to FedEx or UPS, and if possible, ways you can work with the carrier to optimize your shipping needs with their routes.
Know the Types of Discounts Available with FedEx and UPS
There are two different types of discounts available, so make sure you know which one is included in your contract. The most common is volume-based discounts, which you’ll receive if you ship a certain number of packages. With volume-based discounts, the more package you ship, the better discounts you’ll receive.
There are also guaranteed discounts, which you’ll get no matter how many packages you ship. This can be nice if your volume fluctuates, but you’ll still need to ship a lot of packages to negotiate for this one.
Watch out For Hidden Fees or Surcharges
You will be signing a contract, so make sure you read it carefully to ensure you’re not agreeing to any hidden clauses. First, keep an eye out for spending minimums. For example, you may have a package that costs $10 to ship, but since you negotiated for a 50 percent discount, you’d expect to pay only $5. However, they might include in your contract a spending minimum—let’s say $7, for example. No matter what your discount is, you’ll have to pay at least that shipping minimum for every package. With this example, that would mean you’re paying $7 instead of $5.
FedEx and UPS have surcharges for delivering to residential addresses. You won’t see these charges until you receive your invoice at the end of the month, so make sure to look at your invoice closely to help you plan your negotiations appropriately.
Ship with Multiple Carriers Before You Negotiate Shipping Rates
Using other carriers gives you the upper hand when it comes to negotiating rates. The carriers already know you can take your volume to other carriers instead, and knowing what rates the other carriers will charge will help you determine what rates you should be aiming for.
You’ll automatically get discounted rates for USPS and DHL with a Shippo account. You can also connect your account for carriers like UPS and FedEx, so you’re able to compare rates for your packages in real time.
Shippo is a multi-carrier API and web app that helps retailers, marketplaces and platforms connect to a global network of carriers. Businesses use Shippo to get real-time rates, print labels, automate international paperwork, track packages and facilitate returns. Shippo provides the tools to help businesses succeed through shipping.