Last updated on Aug 13, 2024

How do you negotiate with your shipping provider to get the best rates and service quality?

Negotiating with your shipping provider can be a daunting task, especially if you are dealing with international shipping. You want to get the best rates and service quality for your business, but you also need to understand the terms and conditions of your contract, the shipping modes and methods, and the risks and responsibilities involved. In this article, we will share some tips on how to negotiate with your shipping provider to achieve your goals and avoid common pitfalls.

1 Know your shipping needs

Before you start negotiating with your shipping provider, you need to have a clear idea of your shipping needs. This includes the volume, frequency, weight, dimensions, value, and destination of your shipments, as well as the delivery time and service level you require. You also need to consider the type of goods you are shipping, such as perishable, fragile, hazardous, or regulated items, and the packaging and labeling requirements. Knowing your shipping needs will help you compare different options and find the best fit for your business.

Add your perspective

Captain Zarir Iràni

Maritime Entrepreneur | Cyberpreneur | Dy Registrar, Antigua & Barbuda Maritime Flag Administration | Ambassador @Baltic Expert Witness Assoc | IIMS-UK Board Member | Founding Member of Maritime Law Asso, UAE
Report contribution
Negotiating with shipping providers involves more than just haggling over prices. Start by understanding your own shipping needs and the current market rates. Building a good relationship with your provider can also set the stage for better terms. Don’t just focus on cost—consider the overall value, including service quality and reliability. Obtain multiple quotes to strengthen your bargaining position and be ready to commit during off-peak times for potentially lower rates. Remember, effective negotiation is about compromise and maintaining flexibility. Always formalize agreements in writing and revisit them regularly to ensure they still meet your business needs as conditions change.

Like
Alik Zuganov

Global Freight Forwarding: FCL, LCL, Air, Special Goods, Bulk, Personal Import & Export, Vehicle Import, Drop Shipping | Logistics Solutions | Expert At Smiling When Meeting People | Your Strategic Freight Partner
Report contribution
Negotiating with your shipping provider for the best rates and service quality involves several key strategies. First, understand your shipping needs and research multiple providers to compare rates and services. Leverage high shipping volumes for discounts, and consider long-term contracts for better rates. Offer flexible scheduling and consolidate smaller shipments to qualify for lower FCL rates. Negotiate value-added services and build a strong relationship with your provider for better service and priority handling. Review contracts carefully and stay informed about industry trends to negotiate effectively. At AetherWays, we ensure transparent and beneficial negotiations for cost-effective and reliable shipping solutions.

Like
Yusuf GUMUS, LL.M.
Report contribution
Understanding your shipping needs entails more than just logistics. It's about comprehensively assessing your business requirements to streamline operations and enhance customer satisfaction. Besides volume and frequency, evaluating inventory turnover and seasonal demand patterns can refine your strategy. Additionally, integrating tracking and return policies can bolster customer trust. By incorporating sustainability practices and exploring cost-saving measures like bulk shipping, you can optimize efficiency and minimize environmental impact. Overall, a holistic approach to shipping needs ensures competitiveness and adaptability in an ever-evolving market landscape.

Like

2 Understand the shipping terms and incoterms

Shipping terms and incoterms are the rules and standards that define the roles and responsibilities of the seller and the buyer in international shipping. They specify who pays for the transportation, insurance, customs clearance, and other costs, and who bears the risk of loss or damage during transit. You need to understand the shipping terms and incoterms that your shipping provider offers and uses, and how they affect your costs and liabilities. For example, FOB (Free on Board) means that the seller pays for the transportation and delivery of the goods to the port of origin, and the buyer pays for the rest. DDP (Delivered Duty Paid) means that the seller pays for everything, including the customs duties and taxes at the destination.

Add your perspective

Yusuf GUMUS, LL.M.
Report contribution
Shipping terms and Incoterms govern international trade by defining obligations between buyers and sellers. FOB implies the seller delivers goods to the port of origin, while DDP entails the seller covering all costs, including customs duties. CIF (Cost, Insurance, and Freight) necessitates the seller to cover transportation and insurance until the goods reach the destination port. Ex Works (EXW) transfers the least responsibility to the buyer, who handles all aspects from the seller's premises. Understanding these terms aids in negotiating contracts and mitigating risks associated with international commerce.

Like

3 Compare different shipping modes and methods

Depending on your shipping needs, you can choose from different shipping modes and methods, such as air, sea, road, rail, or multimodal. Each mode and method has its own advantages and disadvantages, such as speed, cost, reliability, capacity, and environmental impact. You need to compare different shipping modes and methods based on your criteria and priorities, and negotiate with your shipping provider for the best combination. For example, if you need to ship urgent or high-value goods, you may opt for air freight, which is faster but more expensive. If you need to ship large or heavy goods, you may opt for sea freight, which is cheaper but slower.

Add your perspective

Alik Zuganov

Global Freight Forwarding: FCL, LCL, Air, Special Goods, Bulk, Personal Import & Export, Vehicle Import, Drop Shipping | Logistics Solutions | Expert At Smiling When Meeting People | Your Strategic Freight Partner
Report contribution
Choosing the right shipping method depends on your needs. **Ocean Freight** offers cost-efficiency for large shipments (FCL) and smaller shipments (LCL), though LCL involves more handling and longer transit times. **Air Freight** is fastest for urgent or high-value goods but is more expensive. **Rail Transport** balances cost and speed, suitable for large volumes over long distances with a lower environmental impact. **Road Transport** is highly flexible for short to medium distances, offering door-to-door service but is subject to traffic delays. At AetherWays, we provide tailored solutions across all modes to ensure efficiency, reliability, and cost-effectiveness.

Like

4 Ask for discounts and incentives

One of the ways to negotiate with your shipping provider for better rates and service quality is to ask for discounts and incentives. You can leverage your bargaining power by showing your loyalty, volume, frequency, or referrals. You can also look for seasonal or promotional offers, or join a membership or loyalty program. You can also ask for incentives such as free or upgraded services, such as tracking, insurance, or express delivery. However, you need to be careful not to compromise on the quality or reliability of the service, or to incur hidden or extra charges.

Add your perspective

5 Review the contract and service level agreement

Before you sign a contract or a service level agreement (SLA) with your shipping provider, you need to review it carefully and make sure you understand and agree with all the terms and conditions. You need to check the details such as the rates, fees, surcharges, taxes, penalties, liabilities, claims, and disputes. You also need to check the service level agreement, which defines the expectations and obligations of both parties, such as the delivery time, performance, quality, and customer service. You need to negotiate for any changes or amendments that you want, and get them in writing.

Add your perspective

6 Monitor and evaluate the service quality

After you start working with your shipping provider, you need to monitor and evaluate the service quality regularly. You need to track and measure the key performance indicators (KPIs), such as the delivery time, accuracy, damage, loss, customer satisfaction, and feedback. You need to communicate with your shipping provider and give them feedback and suggestions for improvement. You also need to review your contract and SLA periodically and renegotiate if necessary. You need to maintain a good relationship with your shipping provider and resolve any issues or problems amicably.

Add your perspective