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How Do Small Businesses Save with Parcel Contract Negotiation?

Author : Karishma Shikalgar | Published On : 02 May 2024

Did it ever occur to you that even though you are a small business, your shipping volume can still bring down your shipping cost? The data show that small to mid-size companies are 13%-15% more likely to overspend on shipping. However, you don’t have to be in that 15%. 

Small parcel contract negotiation enables businesses to effectively utilize their purchasing power. While contract optimization seems daunting, with the right approach and expertise you can achieve significant savings. 

Suppose Sarah runs a thriving online bakery. Her delectable cookies and cakes are a hit, but rising parcel shipping costs threaten to chip away at her profit margin. With each box sent, a sizable chunk goes towards shipping fees, leaving Sarah wondering if there's a way to optimize her costs.  

Sarah's worries aren't unique. Many businesses mistakenly believe there’s no point in negotiating with the giant carriers, which eats into their margin. This article debunks that myth and empowers you, the small business owner, to unlock significant savings on your parcel shipping.  

The negotiating power is in the numbers  

In small business operations, every cent counts, and every penny saved adds to the revenue. Negotiating a favorable parcel shipping contract is independent of your company's size but not your shipping volume.   

Small parcel contract optimization involves scrutinizing existing agreements, identifying inefficiencies, and strategically renegotiating terms that align with your business objectives. This approach goes beyond mere cost-cutting, encompassing service levels, transit times, and accessorial charges.  

 Navigating the landscape of small business parcel contracts  

Small parcel shipping – packages under 150 lbs. – is the lifeblood of countless online businesses. Yet, many settle for standard carrier rates, overlooking the potential for optimization through contract negotiations. However, delving into the realm of contract negotiations unveils various possibilities. Businesses can unlock hidden savings and streamline shipping processes by optimizing their small parcel contracts. 

How does parcel contract negotiation unlock savings?  

For starters, skillful parcel contract negotiation utilizes your shipping profile for a strategic approach to negotiation, which can result in significant savings. There are, however, some extra challenges for small businesses without large shipping operations.    

Multiple carriers offer a variety of services with layered pricing structures. These structures reward high-volume shippers with discounted rates. However, even as a small business, you hold more negotiating power than you realize.   

By aggregating their shipping volume, even small businesses can leverage parcel contract negotiation services to:  

  • Secure discounted rates: Negotiated contracts often offer significant reductions on base shipping rates, which can translate to substantial cost savings.  

  • Minimize surcharges: Fuel surcharges and other accessorial fees can inflate shipping costs. A skillfully negotiated contract can minimize these surcharges or even eliminate them entirely.  

  • Gain flexibility: Negotiate for customized service options that better meet your business needs. This could include extended pickup windows, weekend deliveries, or discounted returns processing.  

  • Improve service levels: Your contracts can be structured to incentivize carriers to prioritize your shipments, leading to faster delivery times and improved customer satisfaction.  

The strength is in the numbers, so know them!  

Preparation is critical to a successful parcel contract optimization, so here's how you can get started:  

  • Gather your shipping data: Analyze your past year's shipping data, including parcel volume, weight distribution, destination zones, and chosen service levels. Combined, this information clearly shows your shipping habits and helps carriers tailor a cost-effective solution.  

  • Benchmark your rates: Learn about the average shipping costs for your industry and parcel size/weight ranges. This will empower you to negotiate with a clear understanding of the market value.  

  • Consider your needs: Identify your priorities. Do you prioritize speed, affordability, or a combination of both? Clearly stating your requirements helps you find accurate services, and you can optimize the contract accordingly.  

Master the art of negotiation with these 5 tips  

After you have analyzed your numbers and armed yourself with data, it's time to leverage it! Here are five effective tactics for small business parcel contract negotiations:  

  • Project confidence: Approach negotiations with a positive and professional attitude. Highlight your business's growth potential and commitment to increasing shipping volume.  

  • Focus on a win-win: Remember, the goal is establishing a long-term, mutually beneficial relationship with the carrier. Tailor your requests to their needs as well.  

  • Play your cards right: Leverage quotes from competing carriers to demonstrate your options. This friendly competition can incentivize the existing carrier to offer better rates.  

  • Don't be afraid to walk away: If the contract offered doesn't significantly improve your current situation, be prepared to walk away and consider other options. Remember, your business is valuable.  

  • Seek expert help: Consider partnering with a reputable parcel contract negotiation service. These professionals have in-depth industry knowledge and established relationships with carriers, potentially resulting in even more significant savings.  

Hunting for the expertise: Finding the best parcel contract negotiators  

Partnering with a reputable parcel contract negotiation service provider like TransImpact is a wise investment, considering the financial benefits you can garner, not to mention the operational efficiencies. TransImpact, for instance, has a proven track record of success in securing significant savings for small businesses. Here are some vital qualities to look out for:  

  • Industry experience: Choose a provider with a deep understanding of the parcel shipping industry, including current market trends and carrier pricing structures. TransImpact has more than 15 years of experience.  

  • Negotiation expertise: Look for a team with a strong track record of successful negotiations across various business sizes and shipping needs. Our experts have a combined experience of 800+ years.  

  • Technology-driven approach: TransImpact leverages its proprietary technology for data analysis and contract management, which provides a more efficient and cost-effective negotiation process.  

  • Transparent communication: Clear communication throughout the process is crucial. Choose a service that keeps you informed and involved at every step.  

The takeaway: Don't leave savings on the table  

Small parcel contract negotiation empowers businesses to unlock significant savings on their most crucial operational expense – parcel shipping. By equipping yourself with the right tools and strategies, you can confidently approach negotiations and secure a contract that optimizes your bottom line and fuels your business growth.   

Remember, the treasure lies within your existing agreement. With a proactive approach, you can transform your small business parcel contract from an overlooked expense into a wellspring of savings. Contact TransImpact today!