Shipping costs often take up a big part of a major supply chain, it is here where rate negotiations take place to try and lower these costs. But when are clients taking negotiations too far and when to know when to stop and accept the terms.
A recent study conducted by freight rate data agency Xeneta found that roughly 40% of shippers tend to go about rate negotiations with their freight agency on a monthly basis and 30% of shippers would negotiate their rates on a quarterly basis.
The most important thing to remember when negotiating the rate contract is to be open with the freight agent. Always be upfront with exactly the type of service you expect from them. It is here where the client also needs to disclose the type of products that will be shipped as well as the expected time frame.
In the case where the client is looking at more than one freight agent, disclose this information with both parties, as it is a freight negotiation, companies can often try and cut down certain costs to come in below the opposing freight agent.
A crucial detail to never forget is to always make sure to read the entire contract. That includes the fine print. Here additional service charges or additional terms are often added, leaving a less than desirable mark-up upon receiving an invoice.
It is always understood that companies will try their best to cut down on shipping and other costs in the manufacturing or purchase of items, how flexible the freight agent is to accommodate a rate negotiation and cut down on costs is a clear indicator of how good and attentive they will be in the long run.