Remember:
· All freight is negotiable.
· Carriers use high pricing and then discount heavily.
· A low volume shipper generally receives a minimum 60-72% discount.
· Larger shippers (1M+) should be in the 85-90% discount range.
Know your carriers and what motivates them to gain more of your business. N2TMS will aid you in providing data for your carrier to increase your discounting.
Develop a relationship with your carrier so you work to improve your discounts. Carriers are willing to improve their discounts if they can prove that the amount of business will warrant an increase in tariffs.
Carriers need to see shipments and usage by other carriers to increase their discounting for your company. Use the report from the N2TMS program to show carrier percentages.
Each year, carriers have a GRI (general rate increase) which is a percentage increase amongst all lanes which they service. In the last few years, this increase has been 6-8%. This is why negotiating discount increases throughout the year is imperative.
Apply the effective date from your tariff to ensure you know when your tariff was last modified. Meetings should be set with carriers on a three month basis or sooner.
Understanding Tariffs
Tariffs are broken down into three parts:
By origination/destination
· Outbound
· Inbound
· Third Party
In each part, discounts may also be applied using the two methods:
· Weight Discounts – this is generally applied when you have a standard product which is easily handled.
· State by State discounts: Choose the states that each discount applies. Many carriers are trending toward this method to secure regional areas and lessen the distance their drivers have to return within an area. It is broken into:
o Interstate Discount
o Intrastate Discount - Within home state (If applicable) discount
Classification Structures
Understand your class structures. If you are using several classes, it may be necessary build a classification sheet to have your classes and weights consolidated for the N2TMS system. This helps in ensuring that each person completing freight follows the same classification system for your company and ensures that all billing can easily and quickly verified using either NMFC (National Motor Freight Classification system) or reclassed items using FAKS (Freight of All Kinds).
Volume Quotes
Classes 150+ are generally volume quoted when the number of pallets is greater than 5.
Most carriers use 7,500 lbs as the break for which a volume quote should be applied. Some carriers can use lesser weights. Know what the minimum weight to call for volumes. This saves money.
Minimum Charges
Minimum Charges – AMC also known as Absolute Minimum Charge. The minimum amount a carrier will charge for a shipment. This may also apply to an accessorial charge called single shipment for shipments under 300 lbs.
Managing Accessorials
Accessorials are special needs applied to your freight to ensure shipping; these include but are not limited to notifications fees, marking and tagging, single shipments, sort and segregating, etc.
Waived Accessorials (Special Needs Rates) – shippers who have higher volume and recurring accessorials such as notification fees should have certain fess waived.
Negotiating Fuel Surcharges
With the rising price of Fuel, many carriers have applied FSC charts to compensate for changes in the price of diesel. Fuel surcharges can be used as a negotiable point when carriers are unable or unwilling to provide lower discounted rates.
Using N2TMS makes your decisions simpler by providing immediate pricing for all of your routes. Designed with shippers goals in mind of controlling their process and to maximize pricing strength while ensuring timeliness, quality of the carrier and keeping claims to a minimum.
