Contract negotiations with freight forwarders are more important today than ever. Rob Glover, Vice President of Sales at OSM worldwideexplains why.
With so many new entrants to the transportation market and a plethora of options available to shippers, negotiating transportation contracts is a top priority, says Glover. Brands and retailers strive to meet consumer expectations, and one way to do that is by choosing the right carrier for the job. “This is critical to maintaining and controlling costs,” he says.
The balance of power between shippers and carriers is constantly changing in line with changing economic trends and fluctuations in supply. In recent years, shippers have been in the driver’s seat as shippers competed for a limited amount of capacity at high prices. As the pandemic subsides and consumer demand slacks, the market is softening in favor of shippers.
Regardless of the market dynamics at any given time, shippers must pay close attention to contracting. The first step, says Glover, is to provide carriers with the necessary data. “To be successful in contract negotiations, you need to be prepared – to get information about what you’re shipping.” Crucial data includes estimated volume, weight, box dimensions, destinations, and service requirements.
Shippers also need to understand how carrier pricing has changed in recent years. Today they are more likely to be hit with higher rates, including additional fees, surcharges and penalties for bidding more or less volume than promised. “The more accurate you can be with your forecasts,” says Glover, “the more you limit the carrier’s risk.”
However, it is now easier to exit contracts when the carrier realizes they can get a better deal elsewhere. However, it is wiser to use multiple carriers first, reducing the likelihood of disruption if one carrier cannot handle the business.
