Issue Date: July 2010 e-news, Posted On: 7/21/2010
New Parcel Carriers’ Stance on Industry Changes By John Stitz, Senior Managing Partner, enVista
In tough economic times, the opportunity for self-evaluation and continuous process improvement seems to be a common initiative. Your transport carriers are no different. In recent months we have seen UPS and FedEx take a very controversial position as it relates to negotiating with shippers who use a consultant to assist them with data analytics, as well as with actual contract negotiation. With DHL's departure as a domestic carrier service provider, UPS and FedEx have taken a stand against pricing wars and are focused more on protecting their bottom lines. As some of the articles in this newsletter discuss, there are a number of strategies and tactics that have been recently implemented by the carriers.
Does anyone else find it interesting that in these tough economic times that carriers are reporting significant increases to their bottom-line profitability, on a quarterly basis? Shippers need to beware of some of the strategies and tactics that are being implemented by UPS and FedEx. For starters, have you tried to negotiate your service agreement lately? Both UPS and FedEx have made a policy against negotiating service agreements for shippers when the shipper has engaged a third party consultant. We have seen situations where the carrier sales representative has informed the shipper that they would not present pricing if the shipper was using a third party to help them negotiate. We have seen situations where the carrier has gone as far as to require the shipper to sign a very strict Mutual Non-Disclosure Agreement (MNDA) with terms that prohibit the shipper from sharing the pricing proposal with anyone outside their company. Is that not like telling someone that they cannot use an attorney to represent them in a legal matter?
Now, more than ever•Shippers need to stand tall with their carrier negotiations and not allow the carriers to push them into significantly reducing their negotiation abilities and their ability to leverage expert negotiators. It is more important than ever that shippers have access to their data and analyze it correctly, so that they have as much information as the carriers about their own freight spend.
Ask yourself this. If one of your suppliers found out you were charging them more than the going market price, what would they do? Your carriers are banking on the fact that you will do nothing and continue shipping with them as usual. The real question is... What are you going to do?
What are the carriers’ really telling shippers by deploying this type of strategy? I’ll state the obvious…they are saying that shippers who utilize a third party consultant have been getting better pricing than shippers that negotiate agreements on their own.
FedEx reserves the right to unilaterally modify, amend or supplement the rates, features of service, services, terms and conditions, and tariff in the FedEx Service Guide applicable to all customers without notice.
The FedEx Ground Pick-Up Record, other parts of the FedEx Service Guide and the FedEx Ground information at Fedex.com are incorporated by reference.
Limitations on Legal Actions
You agree that you will not sue FedEx Ground as a class plaintiff or class representative,join as a class member, or participate as an adverse party in any way in a class-action lawsuit against FedEx Ground. Nothing in this paragraph, however, limits your rights to bring a lawsuit as an individual plaintiff. We have lost a lot more when we let terms and conditions like this apply, I wonder when we will burn books? Education can so messy.
Thursday, July 22, 2010 11:16:38 AM by Anonymous
Hmm, never had this problem with USPS. Just saying. Atleast I know what I get.
Thursday, July 22, 2010 1:41:54 PM by Anonymous
Are they also saying we can't share the rates with our freight payment and auditor? Yes...
Are they saying they want to keep the industry in the dark ages? Yes...
Are they saying they want to keep abusing the medium size shippers? Yes...
My response was to my current provider is come and sue me.
Thursday, July 22, 2010 11:16:33 PM by Anonymous
This is all about competition, or lack thereof, plain and simple.
You don't/won't see this aggressive of a move in the LTL/TL market, becuase there is plenty of competitive pressure.
Isn't it a bit odd that what Brown has done over the last 10-15 years, Purple follows...and yes...what Purple does...Brown follows...hmmm.
Friday, July 23, 2010 10:02:54 AM by Anonymous
Time for a class-action lawsuit against Purple and Brown, don't everybody agree?
Friday, July 23, 2010 4:31:13 PM by Anonymous
While DHL's strategy in the US marketplace proved to be untenable, it was a welcome wake-up call for UPS and FedEx regarding small-to-medium businesses. It is unfortunate that DHL was not able to maintain a domestic presence. It seems to me analgous to politics in the US. Your choice? The lesser of 2 evils.
Monday, July 26, 2010 9:00:12 AM by Anonymous
Carriers SHOULD divorce themselves from these (supposed) "3rd Party" charlatans. Most just beat the carriers up for leveraged pricing without any return commitments or ethical considerations. Is there any doubt that FedEx and UPS will succeed without the "3PLS"? Shippers will eventually discover the 3PLs will be a memory...most provide nothing but cheap pricing, extorted from carriers.
Monday, July 26, 2010 10:15:34 AM by Anonymous
Does a plantiff attend court without a lawyer? Maybe in small-claims court...
Does a big league hitter not a have a hitting coach? Even the great ones do...
Wednesday, July 28, 2010 1:14:47 PM by Anonymous
It was working too well being in the industry and have closed many big clients. The ones that had the third party always got the best deal. Funny thing most of the 3rd party companies are made up of former sales reps and execs from all three major Parcel companies. DHL/Airborne was the company that kept things real. When UPS went into Air it could have charged but $6.00 for an overnight letter and made its profit margin. It was forced to charge $14.00 to avoid antitrust with FEDEX. Airborne came in leveled the playing field. DHL buying Airborne did not fully understand they were buying a union and lost many good managers and leaders who understood and could operate in that element. We need another palyer to come in and level the playing field.
Wednesday, July 28, 2010 6:28:59 PM by Anonymous
Negotiating an agreement with UPS is not the same as going to court. I think that is a terrible analogy, and if you buy into it, shame on you. The cost to serve a company is sends out 100 legal documents a week is different from a company who sends out 50 boxes a day weighing 40 lbs and have the box size of 10x10x10. To assume that each company gets the same discount as the guy next door is foolish. If I shipped out 50 boxes a day weighing 40lbs each, I don't want a 50% discount off my NDA envelopes. I don't send out 100 NDA envelopes every day. Transportation costs is an item that needs to be monitored, but so does my Customer Retention rate, Product availability & replinishment rate, Inventory turnover, and Inventory accuracy. Just to name a few. If I am not measuring and monitoring all of my costs, expediting the collection of my accounts receivables, and marketing and advertising my business to generate more sales, it is a cop out for me to beat up on my UPS sales rep to save money. C'mon - that's too easy.
