The Art of Negotiation: Carrier Freight Rate Edition

Shipping freight is an expensive, time-consuming process—especially if logistics teams haven’t negotiated carrier freight rates to their advantage. Without key insights about average freight costs and carrier performance, logistics leaders could enter a negotiation unprepared—and end up with overpayments that hurt the bottom line.

Whether you want to initiate a relationship with a new carrier or renew a contract with an existing partner, knowing how to settle on a competitive rate is essential. Here are some tips to strengthen your freight rate negotiation strategy.

Evaluate budget and benchmarking data

Before any negotiation, shippers need a clear understanding of their operating costs and budget. Some critical questions include:

  • What are our monthly operating costs?
  • Where is it beneficial to save?
  • How can we leverage data to make accurate freight cost projections?

The next step after evaluating the budget is benchmarking. It helps logistics teams assess regular shipping costs and compare them against their competitors. This insight can help teams understand whether there’s been an overpayment or their supply chain isn’t working as efficiently as their peers.

Understand freight rate volatility

Carrier freight rates constantly change depending on supply and demand, port activity, unexpected route alterations, and many other factors. It’s especially true amid unprecedented supply chain disruptions.

Now more than ever, logistics teams need to be aware of carrier price fluctuations. However, there may be protection from price volatility with existing contracts in some cases. For example, fixed pricing guarantees with specific carriers are protection. Another protection could be a defined process in the contracts with suppliers about managing surcharges.

Be attentive to carrier freight rates fluctuations in periods of uncertainty and disruption. Don’t assume a carrier rate is competitive because the market is volatile—do the research. It will make all the difference down the line and help shippers avoid complicated, costly clauses in their contracts.

Compare carrier performance

It’s difficult to know whether a proposed rate is competitive without exploring the field. Take some time to weigh the pros and cons of different carriers before signing any contracts. If one carrier seems like a good partner but offers a less competitive rate than others, logistics managers may propose a different rate or amendments to the contract.

With a tool like CTSI-Global’s Honeybee TMS™, logistics teams can easily compare carrier performance with the carrier report card feature. For example, the analytics dashboard allows logistics teams to see whether a carrier has charged high accessorial fees in the past or how rigid they are about adjusting rates in the contract. Logistics managers can then leverage these findings in the negotiation process to reach a better rate.

Make data your partner

Negotiation with carriers can be complex. But with data as your partner, shippers can make more informed decisions about which carrier aligns with their financial goals—and who will carry them to success in the future.

With support from CTSI-Global, shippers gain access to a wealth of resources—from contract experience and modeling capacity to industry benchmarking and an expansive network of carriers. This data, paired with CTSI-Global’s experience, is invaluable to the negotiation process.

Get what you need to negotiate the best freight rate and cut shipping costs. Contact us to get started.