4 Ways to Effectively Renegotiate Your Parcel Contracts
The surge in e-commerce demand has significantly impacted relationships between businesses and carriers. More parcels are being shipped every day and world events such as the Covid-19 pandemic of 2020 have pushed this trend even further. Even if you were happy with your parcel contract before, now may be the time to renegotiate to ensure that you are getting competitive rates.
When you enter into a contract with a parcel carrier, generally both parties will be at least partially satisfied with the agreement. However, as time goes by, things can change. You may be in a position where you need to change some of the terms in your contract.
In these situations, it’s important to have a game plan for how to negotiate or even renegotiate rates with your carrier.
In this article, we will outline 10 tips to effectively renegotiate your parcel contracts.
The Four Best Parcel Contract Renegotiation Techniques
This advice is in no particular order but is all of equal importance. The main things to keep in mind are to keep your needs clear and to respect everyone involved in the negotiations. Keep your cool, keep your thoughts in order, and you’ll come out on the other side of the negotiations relatively unscathed.
Know Exactly What Your Business Needs
If you’re considering renegotiating your contract, you probably realize that there is something wrong with the existing terms of the contract. But specificity is important when updating your terms.
You should be clear and confident in what you need and make sure that your carrier understands exactly what you’re looking for. If either party is uncomfortable with changing the terms after this preliminary discussion, it may be time for you to seek out a new carrier.
Respect Your Carrier’s Needs
It is important to remember that your business is not the only entity involved in these renegotiations. The carrier’s concerns are equally important. It’s good practice in all areas of business relationships to avoid burning any bridges.
Depending on what your reasons are for beginning the discussion of renegotiating, you may determine that you can incentivize the carrier in another way. This will help both parties get something out of the new contract and won’t make your carrier feel like you are trying to take advantage of them.
Hope for the Best, But Prepare for the Worst
It’s very possible that this renegotiation discussion could go exactly how you want it; both you and the carrier are satisfied and in a better relationship than you were with the old terms in place.
However, it’s equally possible that your renegotiation plans could fail spectacularly. This is something to be avoided at all costs. You want to ensure that your carrier will complete all in-progress business, even if you decide to go with a new carrier later on. If not, you may find yourself scrambling to find a new carrier and may have to enter into an even worse contract than you had before in your desperation to keep your business afloat.
Remember that there is only a finite number of carriers out in the field, and you don’t want to develop a reputation as “hard to work with.” Otherwise, your contract terms won’t be your only concern.
Know What Your Competitors are Paying
If your main issue with your carrier is cost, you should have an idea of what the others in your field are paying. If you are way over-paying, make sure that you articulate that concern to your carrier as one of your primary reasons for wanting a change.
Do some research and see where you stack up against those similar businesses in your field. Every business should be treated fairly by its carrier.
It would be great if you could stay in the same contract with the same carrier forever. Things would be so much simpler if all parties were in a perfectly happy agreement. Unfortunately, this is simply not how that relationship works. Unforeseeable events such as the pandemic of 2020, greed on the part of the carrier (or the business), and changing market trends all factor into the need to renegotiate a parcel contract.
If you find yourself in a situation where you are no longer satisfied with your current contract, take a deep breath, remember the four tips listed above, and go confidently into your renegotiation discussions.