st louis parcel negotiating 2012

Negotiating Parcel Contracts

IN CONFUSIONTHERE IS PROFIT

YOU GET WHAT YOU NEGOTIATE.

You don’t get

what you deserve,

WHATS NEGOTIABLE?EVERYTHING!

Great News for shippers

• FedEx Express Standard List Rates

• Effective Jan. 7, 2013 FedEx Express package

and freight rates will increase an average of 5.9% for U.S., U.S. export and U.S. import services.

• The shipping rate increase will be partially offset by adjusting the fuel price at which the fuel surcharge begins, reducing the fuel surcharge by 2 percentage points. (REALLY?)

• FedEx Express U.S. rates to Puerto Rico will change. • FedEx International Premium® rates will change. • Minimum rates for FedEx Express® services will change.

•

The carriers cant afford to loose your shipments

And will fight to take your shipments from a competitor

2012 Rate Change Information

• Effective January 2, 2012, the published rates have increased;

• Package• Ground services increased a net 4.9%

through a combination of a 5.9% increase in rates and a 1 percentage point reduction in the UPS Ground fuel surcharge.

Lets fact check that fuel surcharge

UPS 1/3/2011 5.50% 9.00% FedEx 1/3/2011 5.50% 9.00%UPS 2/7/2011 6.00% 10.00% FedEx 2/7/2011 6.00% 10.00%UPS 3/7/2011 6.50% 11.00% FedEx 3/7/2011 6.50% 11.00%UPS 4/4/2011 7.50% 13.00% FedEx 4/4/2011 7.50% 13.00%UPS 5/2/2011 8.50% 15.50% FedEx 5/2/2011 8.50% 15.50%UPS 6/6/2011 9.50% 16.00% FedEx 6/6/2011 9.50% 16.50%UPS 7/4/2011 9.50% 14.50% FedEx 7/4/2011 9.50% 15.00%UPS 8/1/2011 9.00% 14.50% FedEx 8/1/2011 9.00% 15.00%UPS 9/5/2011 8.50% 15.00% FedEx 9/5/2011 8,5% 15.50%UPS 10/3/2011 8.50% 14.00% FedEx 10/3/2011 8.50% 14.50%UPS 11/7/2011 8.50% 14.00% FedEx 11/7/2011 8.50% 14.00%UPS 12/5/2011 8.50% 14.00% FedEx 12/5/2011 8.50% 14.00%UPS 1/2/2012 8.00% 12.50% FedEx 1/2/2012 8.00% 13.00%UPS 2/6/2012 7.50% 11.50% FedEx 2/6/2012 7.50% 11.50%UPS 3/5/2012 7.50% 11.50% FedEx 3/5/2012 7.50% 13.00%UPS 4/2/2012 8.00% 14.00% FedEx 4/2/2012 8.00% 14.00%UPS 5/2/2012 8.50% 14.50% FedEx 5/2/2012 8.50% 14.50%UPS 6/4/2012 8.50% 14.50% FedEx 6/4/2012 8.50% 14.50%UPS 7/2/2012 8.00% 12.00% FedEx 7/2/2012 8.00% 12.00%UPS 8/6/2012 7.00% 10.00% FedEx 8/6/2012 7.00% 10.00%UPS 9/3/2012 7.00% 11.50% FedEx 9/3/2012 7.00% 11.50%UPS 10/1/2012 8.00% 13.50% FedEx 9/3/2012 8.00% 13.50%

How is AVERAGE calculated?

Carrier Year Carrier Year

Service Level 1 Service Level 1

0.00 0.00

Fuel Surchare: 0.00% Fuel Surchare: 0.00%

Weight Discounts Zone 2 Zone 3 Zone 4 Zone 5 Zone 6 Zone 7 Zone 8 Weight Discounts Zone 2 Zone 3 Zone 4 Zone 5 Zone 6 Zone 7 Zone 8Letter 0.00% 17.85 21.25 24.50 26.35 26.55 29.25 29.70 Letter 0.00% 18.75 22.35 26.10 28.10 28.30 31.20 31.65

1 0.00% 21.30 28.60 36.50 40.55 44.00 47.05 48.35 1 0.00% 22.40 30.05 38.75 43.05 46.75 49.95 51.352 0.00% 21.75 30.90 41.15 44.85 49.75 51.85 53.95 2 0.00% 22.85 32.45 43.70 47.65 52.85 55.05 57.303 0.00% 24.50 33.05 45.55 49.70 55.15 57.00 59.00 3 0.00% 25.75 34.75 48.35 52.80 58.55 60.55 62.654 0.00% 26.40 34.65 49.40 54.40 60.20 62.05 64.50 4 0.00% 27.75 36.60 52.45 57.80 63.95 65.90 68.505 0.00% 26.70 36.10 54.00 59.50 65.30 67.20 69.60 5 0.00% 28.10 37.95 57.35 63.20 67.95 71.40 72.406 0.00% 29.55 38.10 58.45 64.15 70.70 71.95 75.05 6 0.00% 31.05 40.05 62.10 68.15 73.55 76.40 79.707 0.00% 30.95 40.05 62.50 68.90 75.70 77.50 80.15 7 0.00% 32.50 42.35 66.40 73.20 78.75 82.30 85.158 0.00% 31.20 42.00 66.50 73.35 80.80 82.90 85.30 8 0.00% 32.80 44.40 70.65 77.90 85.85 88.05 90.609 0.00% 31.60 43.55 70.30 78.05 85.85 88.35 90.75 9 0.00% 33.20 45.75 74.65 82.90 89.30 93.85 96.4010 0.00% 31.65 43.60 73.55 82.15 85.90 88.40 93.15 10 0.00% 33.25 45.80 76.50 85.45 89.35 93.90 96.9011 0.00% 34.95 47.80 77.40 86.60 95.95 99.00 101.35 11 0.00% 36.70 50.50 82.20 92.00 101.90 105.15 107.65

Minimum Charge: Minimum Charge:

Average Model

SHIPMENTSIf "#VALUE!" occur, try this button.

Zone 2 Zone 3 Zone 4 Zone 5 Zone 6 Zone 7 Zone 8Letter 1 1 1 1 1 1 1

1 1 1 1 1 1 1 12 1 1 1 1 1 1 13 1 1 1 1 1 1 14 1 1 1 1 1 1 15 1 1 1 1 1 1 16 1 1 1 1 1 1 17 1 1 1 1 1 1 18 1 1 1 1 1 1 19 1 1 1 1 1 1 110 1 1 1 1 1 1 1

Remove Space

EVEN AS A PEDDLER• I did not know all the concessions my peers

were getting form my own pricing department (nor were they telling)

• I as a peddler did not tell shippers all the discounts and waivers and concessions they could get.

UNLESS• You work for all three carriers (4 if you count the

USPS) in the pricing department, TODAY, you don’t know what the best deal is or the lowest price or incentives or concessions are.

• I WILL TRY TO FACILITATE THE NEXT BEST THING

The basics

HAVE You (or your employer)

EVER NEGOTIATED

ReducedAddress correction

Residential Surcharge

Delivery Area Surcharge

COD Fee

Dim Rule

Fuel Surcharge

Minimum charge

Insurance Minimum

HAVE You EVER NEGOTIATED

WaivedAddress correction

Residential Surcharge

Delivery Area Surcharge

Oversize Rule

Din Rule

Fuel Surcharge

COD Fee

Minimum charge

Insurance Minimum

HAVE You EVER NEGOTIATED

Revenue Thresholds

Percentage’s off

Flat $ amount off

Flat rates

Start Up incentive

Per shipment pricing

Ramp up period

Quarterly incentive

Lock in the base year tariff & rules

Yearly incentive

Fuel SurchargesCaveat Emptor

Note to self: Are fuel surcharges Negotiable?

Can you tell your carrier

“the contract I sign now are the rates I want to pay for the duration of the contract and you will not honor any additional charges for the length of the contract.”

Currently the air fuel surcharge is 13.5% (example Jan 11 = 9%)(going to 14% Nov 5)

But the carriers have moved 2% of the fuel surcharge into the base tariff every year for the last 6 years

So with compounding its about 13% of the fuel surcharge formula that’s already baked into the base rate. They did this in anticipation of fuel coming down so they did not have to forfeit all of it back to shippers

Do you have to agree that your discount is off of the base tariff in effect at the time of shipment

• Or would it be prudent to tell the carrier• “the base tariff in effect on the day we sign the

contract is the base tariff that will stay in effect for the duration of the agreement”?

• Nothing prevents the carrier from taking up the base tariff all they want.

DOES YOUR CONTRACT PREVENT YOUR CARRIERS

FROM DOING THIS?

• Dimensional Weight Replaces Oversize in 2007 Effective January 1, 2007, Oversize charges for large packages shipped via UPS Ground services will be replaced with a simpler rate calculation based on dimensional weight.

Dimensional weight rates are applicable only to UPS Ground packages that are three cubic feet (5,184 cubic inches) or larger. Billable weight will be based on actual package weight or the dimensional weight, whichever is greater. Packages smaller than three cubic feet will be billed based on actual weight

• FedEx Ground Dimensional Weight Rate Calculation (effective February 5, 2007)

• For FedEx Ground shipments, a rate calculation based on dimensional weight will replace oversize charges for packages that are 3 cubic feet (5,184 cubic inches) or larger. These packages will be billed based on dimensional weight unless actual weight is greater. Packages smaller than 3 cubic feet will be billed based on actual weight.

Some shippers still enjoy the old girth rule

194 166 139

• Both FedEx and UPS changed • in January 2011• the divisor on air and ground domestic

shipments from 194 to 166, • the factor used to determine whether a

package is subject to higher Dimensional or cubic rates

Can they change this at will?• Dimensional Weight• Express. Dimensional weight is calculated by multiplying the length by width by height• of each package in inches and dividing the total by 166 (for shipments within the U.S. and• shipments between the U.S. and Puerto Rico) or 139 (for U.S. export and U.S. import-rated• international shipments). If the dimensional weight exceeds the actual weight, charges• may be assessed based on the dimensional weight. Dimensions of one-half inch or greater• are rounded up to the next whole number; dimensions less than one-half inch are rounded• down. The final calculation is rounded up to the next whole pound. Dimensional weight• applies per package or per shipment to all FedEx Express U.S. shipments in customer• packaging, and per shipment to all international shipments and U.S.-to-Puerto Rico• shipments in customer packaging. Shipments in FedEx packaging may be subject to• dimensional-weight pricing.

• Ground. Dimensional weight may apply to FedEx Ground packages that are 3 cubic feet

• (5,184 cubic inches) or larger. Multiply the length by width by height of each package in• inches. If the total is 5,184 or greater, calculate dimensional weight by dividing by 166• (for shipments within the U.S.) or 139 (for shipments to Canada). If the dimensional weight• exceeds the actual weight, charges may be assessed based on the dimensional weight.• If the chargeable weight exceeds 150 lbs., a prorated per-pound rate will be used.• Dimensions of one-half inch or greater are rounded up to the next whole number;• dimensions less than one-half inch are rounded down. The final calculation is rounded• up to the next whole pound. If the package measures less than 5,184 cubic inches,• dimensional weight does not apply and charges will be assessed based on actual weight.

Might the next move to be to 139 ?

MIKE GLENNEVP FEDEX

OCT 10, 2012

UPS Store franchisee files suit

against UPS

• According to the complaint, franchisees weigh and measure customer packages in their stores, and charge customers accordingly. They then ship the package to UPS, where the company re-measures the package and charges the store owners for the difference.

• Perhaps here is a flaw in some of the shipments you tender for which they charge you dimensional weight

• Can you negotiate out those defects?

DO YOU KNOW ?

• The USPS is able to negotiate with you a competitive, shipper specific rate for – Priority Mail; & Express Mail

• They are extremely competitive in the lighter weights

• Have no delivery area surcharge, no residential surcharge, no address correction fee and no fuel surcharge

• Do you know that these products FLY on the FedEx & UPS networks when moving over 300 miles?

DO YOU REALLY HAVE A “CONTRACT”?• You can ask carriers, including incumbents, for bids

any time you like– Unless you agreed to one, there is no penalty– You can drop your carrier at any time– Their recourse is only to diminish your discount over time

• Your contract says they can drop your discount at any time.

• You are not compelled to give all your freight to one carrier– Unless you signed up for same

• They are not compelled to give you service.– Do they pay you a penalty if they go on strike

or miss a pick up?

DO YOU REALLY HAVE A “CONTRACT”

• What you really have is an “at will” agreement that says

• “If you give a carrier “x” amount of business (shipments/revenue/both)”

• They “will extend to you discount “y” as a dollar amount, or percentage off a tariff, or both.”

• Or some have hard wired cell by cell rates

50% Off Of What ?

Carrier Year Carrier Year

Service Level 1 Service Level 1

0.00 0.00

Fuel Surchare: 0.00% Fuel Surchare: 0.00%

Weight Discounts Zone 2 Zone 3 Zone 4 Zone 5 Zone 6 Zone 7 Zone 8 Weight Discounts Zone 2 Zone 3 Zone 4 Zone 5 Zone 6 Zone 7 Zone 8Letter 0.00% Letter 0.00% 11.40 11.65 12.10 13.65 16.90 17.60 17.75

1 50.00% 6.05 6.20 6.43 7.28 9.18 9.60 9.73 1 50.00% 5.83 5.95 6.18 7.00 8.83 9.23 9.352 50.00% 6.15 6.33 6.58 7.75 10.13 11.03 11.53 2 50.00% 5.93 6.08 6.33 7.45 9.73 10.60 11.083 50.00% 6.18 6.53 6.95 8.53 11.65 12.80 13.23 3 50.00% 5.95 6.28 6.68 8.20 11.20 12.30 12.704 50.00% 6.35 6.73 7.50 9.95 13.45 14.60 15.05 4 50.00% 6.10 6.48 7.20 9.55 12.93 14.03 14.455 50.00% 6.55 6.98 8.18 11.03 15.00 16.23 17.13 5 50.00% 6.30 6.70 7.85 10.60 14.40 15.58 16.456 50.00% 6.83 7.23 8.90 12.05 16.70 18.05 18.78 6 50.00% 6.55 6.95 8.55 11.58 16.05 17.35 18.037 50.00% 7.10 7.93 9.65 13.18 18.78 20.00 20.65 7 50.00% 6.83 7.63 9.28 12.65 18.03 19.20 19.838 50.00% 7.40 8.65 10.33 14.35 20.75 22.05 22.73 8 50.00% 7.13 8.33 9.93 13.78 19.93 21.18 21.839 50.00% 7.80 9.03 11.15 15.40 22.58 24.18 24.95 9 50.00% 7.50 8.68 10.73 14.80 21.68 23.23 23.9510 50.00% 8.15 9.60 12.00 16.45 24.10 26.30 26.98 10 50.00% 7.83 9.23 11.53 15.80 23.15 25.25 25.90

Minimum Charge: Minimum Charge:

MOST ASSUME THE BASE PRICE IS THE SAME

Afghanistan

DHL Scale L

FedEx Scale O

UPS ?????

Albania

DHL Scale E

FedEx ?????

UPS Scale 407

Pricing is More complex with international

MINIMUM CREEP

YEARMinimum Charge Y/O/Y Increase %

2005 $3.62 2006 $3.80 4.97%2007 $4.00 5.26%2008 $4.20 5.00%2009 $4.57 8.81%2010 $4.84 5.91%2011 $5.17 6.81%2012 $5.49 6.19%

42.95%

Many contracts are set so that no discounts

will drop below the rate of a

Zone 2, 1 LB charge

Minimums

Do I really have a discount at all?

Note to self: Ask for no minimum or lower minimum

WeightDiscounts Zone 2 Zone 3 Zone 4 Zone 5 Zone 6 Zone 7 Zone 8

Letter 0.00% 1 30.00% 3.84 4.08 4.16 4.34 4.54 4.61 4.682 30.00% 4.09 4.35 4.72 4.82 5.08 5.19 5.363 30.00% 4.15 4.54 4.96 5.11 5.38 5.53 5.924 30.00% 4.25 4.68 5.21 5.45 5.65 5.89 6.345 30.00% 4.38 4.74 5.43 5.66 5.87 6.15 6.686 30.00% 4.49 4.88 5.51 5.80 5.96 6.33 6.837 30.00% 4.71 5.02 5.61 5.94 6.14 6.49 7.058 30.00% 4.90 5.15 5.76 6.06 6.33 6.78 7.469 30.00% 5.00 5.29 5.85 6.18 6.45 7.13 7.92

10 30.00% 5.16 5.31 5.96 6.36 6.73 7.62 8.44

Current Minimum is $5.49 before the fuel surcharge

Many contracts are set so that no discounts will drop below the rate of a package below the Zone

2, 1 LB charge

Example: Given a 30% discount, the red cells

below would not receive the entire

discount level

Minimums

Do I really have a discount at all?

Note to self: Ask for no minimum or lower minimum

WeightDiscounts Zone 2 Zone 3 Zone 4 Zone 5 Zone 6 Zone 7 Zone 8

Letter 0 130.00% $5.49 $5.49 $5.49 $5.49 $5.49 $5.49 $5.49230.00% $5.49 $5.49 $5.49 $5.49 $5.49 $5.49 $5.49330.00% $5.49 $5.49 $5.49 $5.49 $5.49 $5.53 $5.92430.00% $5.49 $5.49 $5.49 $5.49 $5.65 $5.89 $6.34530.00% $5.49 $5.49 $5.49 $5.66 $5.87 $6.15 $6.68630.00% $5.49 $5.49 $5.51 $5.80 $5.96 $6.33 $6.83730.00% $5.49 $5.49 $5.61 $5.94 $6.14 $6.49 $7.05830.00% $5.49 $5.49 $5.76 $6.06 $6.33 $6.78 $7.46930.00% $5.49 $5.49 $5.85 $6.18 $6.45 $7.13 $7.92

1030.00% $5.49 $5.49 $5.96 $6.36 $6.73 $7.62 $8.44

• BUNDLED PRICE HAS 200 LB MINIMUM FROM ONE SHIPPER TO ONE CONSIGNEE

• BUNDLED PRICE HAS MINIMUM CHARGES

• BUNDLED PRICE USES AVERAGE 15 LB PIECES

Shipment Pricing

NEW AND IMPROVED WAYS TO ENHANCE YEILD

Its not always apples-to-apples

AT THE MOMENT UNIQUE TO UPS

INSURANCE01.76%

ADDRESS09.18%

COD7.97%

DAS19.79%

SAT DDL17.29%

FUEL26.32%

SAT P/UP1.88%

DIM19.32%

Accessorial charges can account for as

much as 40% of total spend!

Note to self: Do I know the impact to my

business

Accessorial Charges Analysis

Delivery Area Surcharges (DAS)Delivery Area Surcharges (DAS)

Over 25% of the US population now lives in a DAS zip

23,427 DAS zips out of a total of about 43000 or 53% of all zips

16,826 or 83% of the Commercial Delivery Area zip codes carry an Extended Commercial Surcharge.

Declared ValueDeclared Value

• UPS and FedEx $0.80• $2.40 minimum• Check to see if your employer is self insured

or has a cargo rider on its corporate insurance policy

• Look into PIP www.pipinsure.com • U-PIC www.u-pic.com • Shipsurance www.shipsurance.com

Never ever buy carrier provided insurance.

Going up again in 2013

Parcel Contract Negotiations

RetentionRetention

PenetrationPenetration

ConversionConversion

PenetrationPenetration Selling for the Selling for the CarriersCarriers::

They have some of your business and They have some of your business and

are pursuing more.are pursuing more.

Ground, Air, InternationalGround, Air, International

ConversionConversion Selling for the Selling for the Carriers:Carriers:

They have NONE of your business:They have NONE of your business:

•Expect Aggressive DiscountsExpect Aggressive Discounts

•Make sure all service concerns are coveredMake sure all service concerns are covered

•Test for smooth operational transitionTest for smooth operational transition

•Expect your incumbent carrier back in a Expect your incumbent carrier back in a

few few

months with a “Conversion Quality” months with a “Conversion Quality”

contractcontractNote to self: Note to self: ConversionConversion status gets the best pricing! status gets the best pricing!

Is this news?• A District Sales Manager has more pricing latitude than a

sales rep• A Regional Sales Manager has more pricing latitude than a

Sales Manager• An Area VP has more pricing latitude than a Regional Sales

manager• A Senior VP has more latitude than an Area VP• An Executive VP has more latitude than a Sr VP• The President has more latitude than an EVP• And whomever you get involved wants to win and would

hate to be blamed for loosing a deal

Note to self: Note to self: Get my deal up the food chain as high as I canGet my deal up the food chain as high as I can!!

UPS Says the same folks make the decisions for all the products

Note to self: Note to self: Promote ALL the biz to get the best pricingPromote ALL the biz to get the best pricing!!

UPS says the sales folks are commissioned more for inbound collect. Therefore you can get a better deal by holding out the inbound you can control

The complexityOf Earned Discounts with package or revenue thresholds

IN CONFUSION THERE IS PROFIT

They do this, because they can

Company 4 1DA LTR 1DA PKG 1DP LTR 1DP PKG 2DA LTR 2DA PKG 3DS PKG GR COM GR RESBand ($$ per week)$0 - $26,399 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%$26,400 - $37,719 6.4% 14.2% 7.4% 8.8% 2.5% 14.6% 0.0% 6.9% 1.5%$37,720 - $48,499 9.1% 20.3% 10.5% 12.6% 3.5% 20.9% 0.0% 9.8% 2.1%$48,500 - $59,279 13.0% 29.0% 15.0% 18.0% 5.0% 29.9% 0.0% 14.0% 3.0%$59,280 - $70,059 13.7% 30.5% 15.8% 18.9% 5.5% 31.4% 0.0% 14.7% 3.5%$70,060 + 14.4% 32.0% 16.6% 19.8% 6.0% 33.0% 0.0% 15.4% 4.0%

Band ($$ per week)$0 - $969 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%$970 - $1399 22.3% 26.5% 24.7% 26.8% 13.0% 18.0% 0.0% 4.9% 0.0%$1400 - $1749 31.9% 37.8% 35.3% 38.3% 18.5% 25.7% 0.0% 7.0% 0.0%$1750 - $2139 45.5% 54.0% 50.4% 54.7% 26.4% 36.7% 0.0% 10.0% 0.0%$2140 - $2519 47.8% 56.7% 52.9% 57.4% 27.7% 38.5% 0.0% 10.5% 0.0%$2520 + 50.2% 59.5% 55.5% 60.3% 29.1% 40.4% 0.0% 11.0% 0.0%

Company 8 1DA LTR 1DA PKG 1DP LTR 1DP PKG 2DA LTR 2DA PKG 3DS PKG GR COM GR RESBand ($$ per week)$0 - $8,030 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%$8,030 - $11,250 15.3% 17.5% 12.5% 12.0% 6.7% 16.9% 9.5% 9.8% 1.5%$11,250 - $14,460 21.8% 25.0% 17.9% 17.1% 9.5% 24.2% 13.5% 14.0% 2.1%$14,460 - $17,680 31.2% 35.7% 25.6% 24.4% 13.6% 34.5% 19.3% 20.0% 3.0%$17,680 - $20,890 32.8% 37.5% 26.9% 25.6% 14.3% 36.2% 20.3% 21.0% 3.5%$20,890 + 34.4% 39.4% 28.2% 26.9% 15.0% 38.0% 21.3% 22.1% 4.0%

EXAMPLE $ PER WEEK

Company 5 1DA LTR 1DA PKG 1DP LTR 1DP PKG 2DA LTR 2DA PKG 3DS PKG GR COM GR RESBand (Pkg per week)0 - 94 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%95 - 134 21.2% 19.7% 23.7% 17.2% 7.9% 0.0% 0.0% 0.0% 0.0%135 - 154 30.3% 28.2% 33.8% 24.5% 11.3% 0.0% 0.0% 0.0% 0.0%155 - 184 43.3% 40.3% 48.3% 35.0% 16.1% 0.0% 0.0% 0.0% 0.0%185 - 214 45.5% 42.3% 50.7% 36.8% 16.9% 0.0% 0.0% 0.0% 0.0%215 + 47.8% 44.4% 53.2% 38.6% 17.7% 0.0% 0.0% 0.0% 0.0%

EXAMPLE PKGS PER WEEK

4 BANDS OF REVENUE• Band 1: 0%-49.9% of target revenue• Band 2: 50%-89.9% of target revenue • Band 3: 90%-109.9% of target revenue• Band 4: 110%+ of target revenue

Company 3 1DA LTR 1DA PKG 1DP LTR 1DP PKG 2DA LTR 2DA PKG 3DS PKG GR COM GR RESBand ($$ per week)$0 - $339 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%$340 - $619 20.8% 20.8% 20.8% 8.2% 0.0% 17.1% 0.0% 3.4% 0.0%$620 - $759 29.7% 24.7% 29.7% 11.7% 0.0% 24.5% 0.0% 4.9% 0.0%$760 + 31.2% 31.2% 31.2% 12.3% 0.0% 25.7% 0.0% 5.4% 0.0%

4 BANDS OF INCENTIVES

• Band 1: 0% of target incentive• Band 2: 70% of target incentive• Band 3: 100% of target incentive• Band 4: 110% of target incentive




4 TIER DISCOUNT STRUCTURE

TARGET

They can price specifically to your shipment distribution by weight and zoneCell by Cell / Matrix Incentives

•

Make sure they count all the Make sure they count all the revenuerevenue

Agreement Page - 42 ServicesAgreement Page - 42 Services

Note to self: Have I asked for a discount on all the services, all the sites and all the billing types!

All Services

Commercial

Residential

Inbound

Outbound

Third Party

Make sure all sites and account numbers are included

Anybody can get 44% off on air and 19% off on ground

They know the tricks

WHAT SHIPPER

KNOWS WHAT THEY ARE PAYINGKNOWS WHAT THEY ARE PAYING

AND AND

HOW WILL A SHIPPER EVER COMPARE HOW WILL A SHIPPER EVER COMPARE WHAT THEY ARE PAYING TO ANOTHER WHAT THEY ARE PAYING TO ANOTHER CARRIERS OFFERCARRIERS OFFER

Parcel Magazine & Morgan Stanley SURVEY RESULTS PARCEL TRENDS REVEALEDRate Your CarriersPart 1: Results of the Annual Best Practices Survey:Over 250 Respondants, Over 90 million parcels

• 11 percent of survey respondents use consultants to negotiate rates.

• Consultants negotiate more favorable rates, driving discounts 49% lower than if the company negotiates.

WHAT MIGHT BE NEGOTIABLE

• EVERYTHING!!!• RATES

• DISCOUNTS

• ACCESSORIALS

• DELIVERY COMMITMENTS AND GUARANTEES

• FUEL SURCHARGES

• CLAIMS RATIO’S

Presenting yourPresenting yourFreight CharacteristicsFreight CharacteristicsWhat's attractive to the carriersWhat's attractive to the carriers

Note to self: Note to self: Package my book of business to maximize the Package my book of business to maximize the appeal to the carrierappeal to the carrier

Attribute Good Bad

Number of locations Few Many

Number of shipments Lots Few

Weight High Low

Commercial v residential High Low

Pick up density High Low

Delivery density High Low

Ground distance Long Short

Air Distance Short Long

International v Domestic High Low

Multi piece shipments Many Few

Liability Low claims exposure High Claims

Seasonality Year round Seasonal peak

WHATS POSSIBLE• MONTHLY, QUARTERLY, YEARLY

INCENTIVE PROGRAMS– BASED ON REVENUE OR SHIPMENTS

OR BOTH

• AUTOMATION INCENTIVES• START UP INCENTIVES• RAMP UP/IMPLEMENTATION PERIODS

Pay Attentionmoney is wasted on selecting air services where next day is guaranteed via ground and or second day ground where 2 day air is being used.

Note to self: Ask for a service agnostic tariff

Service GuaranteeLets cut to the chase

• In the event Brown, Purple or Yellow Carrier fails to attempt delivery within the time published on the Brown, Purple or Yellow Carrier website, or as

• provided when 1-800-PICK-Brown, Purple or Yellow Carrier is called, Brown, Purple or Yellow Carrier, at its option, will either credit or refund the

• transportation charges for each such package to the payer only, upon request, subject to the

• following conditions. This is the sole remedy available under the Brown, Purple or Yellow Carrier Service Guarantee.

• (a) Brown, Purple or Yellow Carrier’s guaranteed delivery schedule has been obtained by referencing Brown, Purple or Yellow Carrier’s website or

• contacting a Brown, Purple or Yellow Carrier Customer Service office. "On-time" means, subject to the terms of this Brown, Purple or Yellow Carrier

• Service Guarantee, delivery is attempted within the Brown, Purple or Yellow Carrier guaranteed delivery schedule.

• (b) Each package is properly recorded on a Brown, Purple or Yellow Carrier source document or in a Brown, Purple or Yellow Carrier automated

• shipping system.• (c) Each package in a shipment bears the appropriate

Brown, Purple or Yellow Carrier tracking label and an address label, or

• a combined label generated by a Brown, Purple or Yellow Carrier automated shipping system, showing the consignee’s

• correct name, deliverable address (Brown, Purple or Yellow Carrier does not provide delivery to a P.O. box) and ZIP Code

• (or postal code for international shipments). In addition, Brown, Purple or Yellow Carrier reserves the right, in its sole

• discretion, to refuse to honor a request for a credit or refund of transportation charges for a

• package when that package is not accompanied by a smart label and timely Package Level Detail

• (PLD) information, as defined in the Brown, Purple or Yellow Carrier Tariff, at the time the package is tendered to Brown, Purple or Yellow Carrier.

• (d) Each Brown, Purple or Yellow Carrier 2nd Day Air A.M. package is addressed to a commercial, not residential, address.

• A residential delivery is defined as provided in the Brown, Purple or Yellow Carrier Tariff and in this service guide.

• (e) Each package in a shipment bears a Brown, Purple or Yellow Carrier Saturday Delivery routing label when optional

• Saturday service is requested and available.• (f) Each package in a shipment is tendered to Brown, Purple or

Yellow Carrier during Brown, Purple or Yellow Carrier’s published business hours.

• Packages received from or destined to certain locations may require earlier pick up times

• (available at the Brown, Purple or Yellow Carrier website) to meet delivery time commitments.

• (g) Brown, Purple or Yellow Carrier is notified in writing or by telephone of a service failure within fifteen (15) calendar

• days from the date of scheduled delivery and is advised of the consignee’s name and address,

• date of shipment, package weight and Brown, Purple or Yellow Carrier tracking number.

• (h) For Brown, Purple or Yellow Carrier Worldwide Expedited shipments, the guarantee shall apply only to shipments

• originating in, or destined for, the United States, and when the billed party is resident in the

• United States and is responsible for all shipping charges.

Waive the service guarantee• All carriers fail• All the guarantee means is that is the carrier fails, you can

apply for your money back• So the failures require work on your part to find them and file

for them• Or for a third party to do, with whom you are now going to split

some of that savings• So why not figure out what percentage of your bill is saved by

filing for service failures• Then say to the carrier that you will waive the right to file

service claims and that the carrier just reduce the tariff by that amount

• Or send you a refund for a percentage at the end of the month.

It’s the win-win• You don’t have to research them and file

them• You don’t have to split the savings with an

audit firm• The carrier does not have to research them

for validity• And you get the savings you deserve

inherent in the service guarantee

PREpurchased Options• FedEx Express® Prepaid Stamps• These prepaid shipping labels for FedEx Express® shipments

take the place of airbills, allowing you to allocate shipping costs — and specify a FedEx® delivery service — upfront. FedEx Express Prepaid Stamps are nonrefundable and nontransferable. FedEx reserves the right to bill an additional amount for packages that exceed standard acceptance limits or require special handling.

• Service DescriptionDelivery AreaAvailable for FedEx Priority Overnight®, FedEx Standard Overnight® and FedEx 2Day® delivery throughout the contiguous U.S.Instructions

• To order, call 1.901.397.3650 or download our online order form. • If you have questions, please

download FedEx Express Prepaid Stamps FAQs . • Minimum order is 10 prepaid stamps. • You must specify a shipment weight and FedEx Express

delivery service. • Contact your FedEx account executive for more information. • Exceptions• FedEx SameDay®, FedEx First Overnight®, FedEx Express

Saver® and FedEx Express® Freight services are not available. • No additional service options, such as Saturday delivery or

Hold at FedEx Location, are available. • Special FeesA $4 fee may apply for courier pickup if the

shipper does not have regular scheduled FedEx pickup.

• USPS• Has a menu of flat

rate priced options

Carrier Agreements

Important to Review RIGHT NOW:• Revenue commitments• Locations included• Discounts offered• Terms and conditions• Addendum’s• Rate charts• Portfolio Services

Note to self: Have things changed and what's negotiable?

If you liked what you heard• Jerry Hempstead• 1724 Buckhorn Pl• Orlando Fl 32825• 407-342-3825• [email protected]

Notes to Self

Note to self: Note to self: ConversionConversion status gets the best pricing!status gets the best pricing!

Note to self: Note to self: Get my deal up the food chain ad high as I canGet my deal up the food chain ad high as I can!!

Note to self: Note to self: Package my book of business to maximize the favorable and Package my book of business to maximize the favorable and downplay the unfavorabledownplay the unfavorable!!

Note to self: Note to self: My LTL is eventually going to be a big carrot to the parcel My LTL is eventually going to be a big carrot to the parcel carrierscarriers!!

Note to self: Note to self: Promote ALL the biz to get the best pricingPromote ALL the biz to get the best pricing

Note to self: Note to self: Start contract during highest volume or have the carrier start you Start contract during highest volume or have the carrier start you off got a guaranteed time with the highest discount!off got a guaranteed time with the highest discount!

Note to self: Have I asked for a discount on all the services, for all my sites Note to self: Have I asked for a discount on all the services, for all my sites and all the billing typesand all the billing types

Note to self: Have things changed and what's negotiable?Note to self: Have things changed and what's negotiable?

Note to self: Consultants can get you a 49% better discount than you can Note to self: Consultants can get you a 49% better discount than you can achieve on your ownachieve on your own

st louis parcel negotiating 2012

Business

fedex express services

weightdiscounts zone

fuel surchare

minimum rates

fuel price

fuel surchargeups1320115

air fuel surcharge

fuel surcharges negotiable