Shipping & Contract Analysis

One of the most effective ways to reduce costs in freight shipping is to negotiate your current small parcel and freight contracts in order to achieve lower rates from FedEx, UPS, and other carriers. It is common knowledge that carriers sell parcel delivery contracts that maximize carrier profit. UPS and FedEx contracts include numerous variables that determine the final small parcel freight shipping cost of a package. Change in an accessorial charge, carrier tariff schedule, minimum net charge, or carrier surcharge can substantially reduce shipping costs associated with freight contracts . Our experts in carrier, shipment and parcel delivery contract pricing use an advanced analytic software and industry knowledge to analyze current FedEx contracts and UPS contracts in order to identify opportunities that will lower your shipping costs.

With us, companies can maximize freight cost savings by utilizing the carrier pricing expertise of former UPS, FedEx, and freight carrier employees combined with our innovative small parcel and freight shipping rate technology. Our extensive knowledge and understanding of the industry’s complex pricing environment (both domestic shipping rates and international shipping rates) enables companies to effectively analyze carrier proposals, which helps result in reduced parcel delivery contract costs for our clients. Simply put, our company knows how to reduce shipping costs.

Our carrier pricing experts will perform an analysis of current shipping contracts to determine small parcel and freight cost reduction opportunities. Carrier pricing analytics, freight pricing knowledge, carrier negotiation expertise, and shipping industry experience enables our team to precisely identify areas of opportunity for improving your existing freight and small parcel contracts for the lowest FedEx and UPS negotiated rates. We develop a customized strategy to optimize shipment contract incentives and structure, and will manage the UPS and FedEx contract negotiation process on your company’s behalf.

Freight cost reduction can be seen after the carrier pricing and negotiation is done, and after the following steps are executed:

Gather customer shipping data and develop a shipping profile

Expert analysis of current freight and small parcel shipping contracts to find opportunities for lower shipping costs

Submit a customized formal Request for Quotation (RFQ) to the shipping carriers.

Freight rate negotiation with freight and small parcel carriers for better rates.

Analyze and compare proposals from UPS, FedEx, and other shipping carriers.

Continued freight contract negotiation with carriers.

Monitor carrier performance and freight contract compliance with new shipment contracts.

Data Report Creation

This is a detailed data file that will communicate your shipping profile and trends to the carrier so they have a starting point from which to base their proposal.

Shipping reports include a number of preconfigured reports created to accommodate the reporting needs of most shipping operations. Among them are the following Shipping Margin reports:

Shipping Margin (All):

Lists the shipping margin for all orders, across all destinations, with one or more shipments within the requested time span. The data is broken down by country. It can also be drilled down by order.

Shipping Margin (Domestic):

Lists the shipping margin for all orders, across only domestic destinations, with one or more shipments within the requested time span. The data is broken down by state and/or city. It can also be drilled down by order or county.

Shipping Margin (International):

Lists the shipping margin for all orders, across international destinations (those received from outside the U.S.), with one or more shipments within the requested time span. The data is broken down by country. It can also be drilled down by order.

Any of these reports can be exported or scheduled to be emailed to you on a recurring basis. There are some limitations, as the columns cannot be edited or rearranged, and the data cannot be previewed before downloading.

When considering UPS data reports, there are six Standard Reports available in the UPS Billing Center:

  • Invoice Summary
  • Invoice Detail
  • Invoice Reference Number Summary
  • Tracking Number Detail
  • Address Correction
  • Reference Number Approved/Unapproved

Data elements can be added and removed from reports to create custom reports. Also, invoice information can be downloaded in CSV format by selecting the Download Invoice Data button.

To view a report in the UPS Billing Center:

  • Select Reporting tab
  • Select Report
  • Select Search criteria
  • Select Submit button

Note: You can only create reports for accounts that reside in the same country as identified at the top of the page. If you would like to create reports for accounts that reside in another country, you first need to change the country on the UPS Billing Center Overview page.

RFP Creation

FreightOptics can create an Request for Proposal (RFP) that is clear and concise. Along with the Data Report (above), there is other detailed information that the carrier will need in order to provide the best rate, terms and conditions relative to your shipping trends.

We may have a contract negotiation service agreement or just a regular freight provider servicing your freight needs. One of the key components of hiring a freight provider should be writing an RFP. This process accomplishes a few things. First, it allows you to review exactly what you need, what you would like to have and what you do not need. It then gives freight companies a clear understanding of not only the requirements, but also freight profile.

It gives the proposers a baseline for further discussions and makes direct comparisons between proposers much easier as they will have identical information and submission format.

What should the RFP include?

  • Background

    Who you are, size of your company, and the reason for your RFP.

  • Overview

    Project contacts, types of products, types of customers, delivery method, delivery range

  • Objective

    What you are trying to achieve, e.g.: next day delivery or nationwide

  • Request for proposal terms

    Whether they are able view pick up/delivery points, to whom questions are directed, timing of the submission, proposal format, variations

  • Definitions

    An explanation of any acronym used within the document

  • Scope

    The what, when, and how

  • Duration of contract

    How long the price is fixed

  • Pricing

    Project contacts, types of products, types of customers, delivery method, delivery range

  • Delivery guarantee

    What guarantee will they provide under various situations

  • Appendices

    History of actual deliveries for at least one cycle, preferably photos of normal deliveries

RFP Analysis & Modeling

Unfortunately, the pricing response that carriers return is not always easy to understand. Evaluating the response can be an overwhelming task. Our software creates a mathematical model of your shipping trends, inputs the RFP response terms for each carrier into the model, and produces a result that shows EXACTLY which carrier pricing is the best for you.

The steps are:

  • Define what you need and what you don’t. For example, do you need door to door nationwide, next day delivery, or same day pickup? Itemize the standards you require to do business.
  • Review the data. The customer profile is different for every company. To give you an accurate proposal, the providers will need accurate data. This can be taken from the history records and desensitized.
  • Put your list of requirements into a document and leave space for the provider to advise as to how they will meet or match each item. They can add their unique details separately.
  • Assemble the history data in a spreadsheet, leaving a column for them to add their cost structure and resulting price. You will be cutting and pasting this into a master for comparison later.

    The next steps are:

    • Put the RFP document together.
    • Have a selection of suppliers you believe may be desirable, but it should be no less than four and probably no more than eight.
    • Call the suppliers, ask them if they would like to participate. If so, send them the complete document.
    • When the proposals are returned, the fun begins. You will now see why the document had areas for the suppliers to complete, as contract negotiation services include aligning all these responses and grading their application to your requirements. Now you have a direct comparison of responses without having to manually dissect the information provided.

Bid management

Our professional services team, consisting of former carrier executives and contract negotiation service professionals, showcases their experience during bid management.We understand that pricing isn’t always the most important factor in awarding a contract. During your final negotiations, we will help to take all “non-price” criteria into account for the best OVERALL proposal. The final choice is up to you.

Due to a revolution in procurement, bid management has become one of the most sought after skills in our industry. Clients have developed an increasingly formal, defined, and auditable approach to procuring contracts. As project owners shift responsibilities to their contractors, the demand for penalties and liquidated damage clauses are rising. And there’s always the risk of bidding too high and losing an opportunity, or undercutting the competition and eating into profits.

With bid management, you can confidently approach the bidding cycle from initial request for proposal through estimate, bid completion, tender submission, and project award, while being able to:

  • Gain complete visibility of the performance of your current portfolio to assess how much risk you’re equipped to take on for each new project
  • Access historical performance to help you prepare new bids accurately and match current opportunities with past projects
  • Accurately forecast the availability of employees and equipment
  • Reduce billing cycles in order to maintain cash flow

Carrier Award/Implementation

Once you approve a carrier, we ensure all new rates, terms and conditions in the new contract are what was agreed upon.

To create shipping options not supported by a provider, we establish a shipping carrier provider. Shipping carrier providers are source code packages providing shipping carriers, which you can add to your cart.

Shipping carriers then enable new shipping options for you.

You can create shipping carrier providers with an off-line cost calculation, which doesn’t need to communicate with other systems (for example: shipping based on weight, customer’s country, and date), or carrier providers with an online cost calculation, which communicate with other systems, typically with APIs of shipping companies (for example: FedEx, USPS, Australia Post).

Carrier providers and contract negotiation services for shipping of this type can then provide a real-time shipping cost calculation or shipping option availability check. You can also combine both approaches to achieve your desired results.

Monitoring and Process Optimization

Once your new contract negotiation services are in place, we will monitor the rates to ensure the carrier fully implements the new rates, terms and conditions. We include full access to your shipping detail through our online Reporting Portal. Then we review and monitor your processes for inefficiencies and send recommendations on how to improve them.

Causes and impact of inadequate monitoring deficiencies in contract monitoring are related to violations of good management principles. Inadequate monitoring is frequently a result of the following:

  • Poorly established criteria for evaluating vendor performance.
  • Perception of oversight as a responsibility to develop a partnership rather than enforce rules, regulations, or contract provisions.
  • Focus on rules and regulations rather than outcomes.
  • Failure to conduct follow-up reviews to ensure that corrective action was taken.
  • Failure to identify the risk and level of review necessary for each vendor.

Good management and supervision requires follow up, feedback, and enough awareness of what is occurring to eliminate surprises. When conducting performance audits and program evaluations, the Department of Audits and Accounts often observes issues with contract monitoring.

Components of an Effective Contract Monitoring System

The components of an effective contract monitoring system can be found in our checklist below. below.

  • Training in Contract Monitoring
  • Written Policies and Procedures
  • Contingency Plans
  • Communicating Clear Expectations to Vendors
  • Contract Administration Plan
  • Organized Contract Files
  • Payments Linked to Satisfactory Performance
  • Regular Program Reports from Vendor
  • On-Site Monitoring
  • Closeout Procedures
  • Access to Records/Right to Audit Clauses
  • Measuring Customer Satisfaction
  • Dispute Resolution Procedures
  • Use of Incentives and Consequences for Poor Performance
  • Post-Contract Review