As the global freight landscape continually shifts, shippers’ ability to fulfill fast, high-quality, and cost-effective deliveries depends on strong, flexible relationships—and careful carrier contract negotiations. After all, one wrong step in this critical process can leave shippers at the mercy of undue costs, pricing fluctuations from changing market conditions, compliance issues due to evolving regulations, and other risks.
Effective negotiations can be challenging, requiring full transparency into opaque contract terms and clauses as well as knowledge about competitive carrier rates that singular shippers may lack. With a transportation management system (TMS), shippers gain the tools and insights needed to effectively navigate the entire negotiation process with an eye to boosting agility, highlighting savings, and obtaining the best possible terms.
Uncover the current state of freight and carrier markets
Before shippers begin negotiating a carrier contract, it’s useful to understand the freight and carrier markets they’re stepping into. Freight is highly cyclical; when capacity is high, pricing is low. This is often a good time for shippers to negotiate, as carriers will be more willing to make pricing concessions to win business—as is the case in June 2024. But the reverse can also be true; when capacity is low, pricing tends to go up.
Factors other than capacity may also impact negotiation strategies. Unexpected or ongoing supply chain disruptions and shifting fuel costs can lead carriers to impose surcharges and draft non-fixed contracts that expose shippers to price fluctuations. Driver shortages are expected to surpass 160,000 drivers by 2030, so in the future, carriers may raise parcel and contract rates to compensate for lower delivery fulfillment capacity.
The list of influences goes on. The more shippers know about the current environment, the better prepared they will be to negotiate a favorable contract.
Choose the right carriers
The first step in the carrier contract negotiation process is to select a suitable carrier. If a shipper has had positive experiences with a carrier before, they may choose to work with them again, eliminating what can be a lengthy vetting process. But if they don’t have experience with a quality carrier, it can be difficult to know which one to choose. How can a shipper determine which carrier offers the most competitive price if they don’t know what that price is?
And it’s not just rates that influence carrier selections—other important contract factors include:
- Delivery times
- Shipping zones
- Equipment availability
- Freight sizing
- Guidelines unique to specific services like less-than-truckload shipping
TMS providers can connect shippers with a pre-vetted network of high-quality carrier partners and help shippers determine which carrier best matches their goals and offers the best terms. Once a contract is signed and shipping operations are underway, TMS providers can even tap back-up carriers from their network to mitigate any unexpected operational issues or delays.
Compare proposed contract rates with the competition
Once a shipper selects a carrier and completes initial negotiations, they can compare the carrier’s offered rate against the rates other shippers have negotiated with carriers. In doing so, they may discover unnecessary charges built into their contracts—as well as discount opportunities to pursue. This intel can help businesses calculate their potential overall spend if they sign the contract and determine whether now is a good time to negotiate, as market price increases can make staying with existing contracts the better option.
CTSI-Global’s Honeybee TMS can load a carrier’s proposed rate and terms into its modeling engine to predict how contract changes will impact factors like the shipper’s final spend and the contract’s pricing rigidity in ways shippers may not expect. It then compares these results to rates from CTSI-Global partners—as well as other rates available on the market—to help shippers quickly select the ideal carrier.
The right insights optimize carrier contract negotiations
In today’s rapidly evolving freight and carrier markets, successful carrier contract negotiations demand a tech-forward approach and a partner that helps shippers craft the most beneficial terms.
CTSI-Global is staffed with experts who’ve overseen carrier contract negotiations for leading carriers around the globe. A partnership with CTSI-Global provides shippers with insights into the latest carrier negotiation strategies, full transparency into need-to-know contract terms, and access to our thousands-strong carrier partner network. We work directly with carriers to help shippers access the most competitive rates on the fairest contracts.
What’s more, Honeybee TMS offers shippers:
- Carrier success and efficiency report cards that logistics teams can check at a glance
- Protocol and functionality updates to help mitigate contract compliance risks
- The latest automation tools to ease the negotiation process, from initial vetting to post-contracting
Reduce contracting costs and gain access to quality carriers. Contact CTSI-Global to tackle carrier negotiation challenges with a robust transportation management system and trusted partner.
