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What Items are Negotiated in a Parcel Agreement?

December 15, 2021
5 min read
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Inadequate preparation is of one the biggest mistakes logistics and supply chain managers make when negotiating a custom parcel agreement.  One of the best things you can do to prepare as a manager is to understand what is negotiable in a parcel carrier agreement.

Why a Parcel Agreement?

If your business has transitioned from simply shipping a few packages a month to hundreds or even thousands, with growth, then you understand the significant difference in the time it takes to process, and most importantly, how much it costs.  Although parcel carrier contracts outline special rates that allow you to maximize your shipping efficacy, they can be confusing.

Negotiating is not just an option for shippers who are newly expanding. Remember that your contract has to align with your current company volume as well as projected growth over time. One way to avoid mistakes when negotiating your parcel agreement is to know what is negotiable. Being aware of red flags and areas of flexibility will allow you to negotiate a deal that works best for you and your organization.

The Fine Print

We have all seen the legal commercials when the narrator speeds up over the fine print. If you do not understand the fine print in your agreement the next step would be to find someone who specializes in contract terminology. The last thing you want to be responsible for is locking your company into an agreement that does not ideally serve your organization. Seeking consultation simply protects you and your organization from an agreement that could jeopardize your growth and success.

Base Incentive Discounts

Base incentive cuts are a flat percentage discount for each package. Although rarely included in the contract, shippers can ask for them. They are an excellent way to save your company money and are negotiable with your potential carrier partner.

Late Payment Penalties

Unexpected fees and penalties are also negotiable during the agreement but are often overlooked. Remember that you are building a partnership. Your carrier is interested in creating a long-term relationship. Because of this, your parcel carrier may be willing to offer discounts on penalties or take them off the table completely.

Frequency and Extent of General Rate Increases

Rate increases are a regular part of business growth. Ensure that your organization will remain unaffected by increasing costs by adding a clause in your agreement if it’s not already there. Stay proactive and diligent by checking your carrier’s website often to renegotiate if necessary.

The experts at Amware are well-versed in the fine print of parcel agreements and can consult with your organization to ensure you’re receiving the best available rates. Click below to contact.

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