You can improve the process and results of your LTL carrier negotiations by being as prepared as possible. The best way to do that is by aggregating as much data as you can – about your own freight and shipping lanes as well as the preferred freight and lanes of your carriers. This will ensure that you choose the best LTL carriers to offer the best service for your freight, your customers and your suppliers at a fair market value.
Maximize Your Negotiating Process
As a 3PL or a shipper, there are a number of things that you can do to prepare for carrier negotiations and maximize your desired outcomes, including lower rates, better service and more favorable transit times. The most important thing to remember is that preparation is key, and you must enter each negotiation with the appropriate tools and knowledge.
Here are a few strategies to maximize your results:
Know your own freight: To show the carriers that you truly know your operation, you have to know your own freight data, including shipment status, expected time of arrival, costs, loads per year and more. This helps you develop a clear outline of what you need from carriers and whether an offered discount is in lanes or areas that you rarely ship to and looks good on paper but won’t pay off in the long run. Additionally, when you know your freight and your carriers, you can highlight your attractive freight during negotiations. LTL carrier-friendly freight is dense, small and stackable so that it is efficient to haul and profitable.
Know your carriers: Get to know your carriers by asking questions, listening to them and doing your research. Find out where they struggle or what lanes are most profitable for them and then use that to your advantage. Offer them loads in the lanes that they are profitable in because it will inspire them to offer the best rates. Additionally, you should understand your carriers’ technical capabilities. If they are not digitized, does that negatively impact you or vice versa? Can the carrier work within your transportation management system in terms of tender, rate, tracking and invoicing? Also, don’t be afraid to compare carrier rates and inform your preferred carrier of a lower quote. If the freight is desirable enough, they will likely match the lower rate or offer some other incentive.
Build relationships: By building a solid relationship with your carriers, you will be more likely to receive better terms. To start building a successful relationship, you need to be transparent. Offer visibility into your freight, customers and other carriers. Be honest about your profitable freight but also about your challenging freight. As supply and demand changes, a reliable carrier that trusts your company will support your loads and may offer some protection against price hikes or transit delays in the future.
Use each carrier’s tariff. This is a good strategy because you are agreeing to meet the carrier at their table. This will often result in more aggressive pricing and more discounts for your loads/freight.
Negotiate on charges other than freight rate. Try negotiating on fuel surcharges, accessorial charges or other additional fees. These blanket charges are often overlooked in negotiations, but they are an easy point of cost savings. Additionally, don’t settle for the first discount that the carrier offers. If you have a TMS that allows you to show quotes from all of your carriers on one screen, this will be crucial data to improve your stance in a negotiation.
Are You Prepared to Negotiate with Your LTL Carriers?
As we stated, it is all about the data because numbers don’t lie. The more data you have to negotiate with, the better off you will be. By having access to your own load and freight data, you can use it to leverage your LTL carrier negotiations. However, just as important is that you need to be transparent with that information as well. By sharing your freight and load data with your carriers, you will be offered the best rates possible.
For more information on how to get the best outcome from your contract negotiations, download LTL Carrier Negotiations Guide: How to Maximize Your Results by clicking the button below.