In our last post we discussed the problems shippers face when they rely on 3PLs that settle for blanket pricing from their carriers. You can read that post here.
In this article we’ll provide you with specific steps you can take when negotiating with 3PLs to ensure you are getting the best possible rates and service.
It starts by making sure the 3PLs you are talking to have a very clear picture of your business and shipping needs. The blanket pricing we discussed before is intended to ‘cover’ what an average shipper needs and not take into account the specific details of an individual company’s requirements.
Having the ability to present the actual shipment characteristics of your freight to potential carriers is the key first step. That and leveraging the 3PL’s total spend with carriers will ensure you get the best pricing.
Account specific pricing is possible when you have an understanding of your own business, such as the following:
- Shipping volume and weights by lane
- Product classification(s)
- Special delivery requirements (ie. lift gate, inside delivery, appointment setting, etc.)
- Liability coverage requirements
If this information is not readily available through a TMS, it can be requested from your current service providers. Or, worst case, it can be compiled from past freight invoices. This can be a lot of work but even pulling together data for a month’s worth of shipments will help.
Another trick for negotiating better LTL rates is to request an ‘FAK’ or Freight All Kinds tariff. This allows multiple classes of freight to be shipped under one class. With an FAK tariff, shipment rating is simplified and 3PLs are often able to negotiate overall lower rates.
The most important point is that the more information your 3PL has about your business, the better solution they can create. And, the better rates they can negotiate on your behalf. The result for you will be lower, more stable, and predictable pricing.
To see how this strategy could work for you and reduce your bottom line, I have developed a simple 3 step process that can quickly identify your savings potential with very little effort on your part. Contact me, Mike Rogers, and together we can determine how you can implement this strategy into your Supply Chain game plan. I can be reached at miker@4way.com
