Using Freight Data to Increase Negotiating Power

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The application of freight data holds immense potential. Logistics data is valuable to shippers, freight forwarders, logistics brokers, supply chain partners, third-party logistics providers, customers, and everyone else in the supply chain. Moreover, logistics data is an immensely complex arena of information. It includes shipment status, expected time of arrival, the likelihood of disruptions or delays, costs, information relating to potential damage, and much more. In a sense, freight data is the most important resource within your entire operation, second only to the value of your products themselves. As a result, shippers can use freight data to increase negotiating power and secure better rates, not to mention boost customer service levels.

Why Do Shippers Overlook Freight Data During Negotiations?

A leading problem with freight data is the ability to overlook it. Unfortunately, shippers forget freight data is valuable for negotiations. Think about it. Negotiations are the process by which you hold carriers accountable and exert your willingness to go with a carrier’s competitor, especially when carriers failed to live up to their obligations. In addition, shippers overlook the real benefit of negotiations, securing better service. As explained by Logistics Bureau, it is much more than just determining the price per unit and ensuring you get the best deal. It involves getting the best while still getting the best service, i.e., value, for that price.

Using Various Freight Tactics to Reduce Costs & Streamline Management

Freight Data Enables Better Negotiations

Logistics data enables better negotiations. As explained by the Houston Chronicle:

“A contract with a freight carrier is a necessity if you plan to get products to your customers in a timely and cost-efficient manner. This is especially true for a small businesses [which rely on parcel shipping in great detail] that need to build a customer base while expending as little capital as possible. In-depth knowledge of your company’s needs and the benefits of different carrier companies is required to negotiate the best freight contract for your business.

Determine the transportation needs of your business by gathering data and speaking with employees. Identify the types of transportation your business depends on and the prices the company is willing to pay. Consider the geographical areas to which you need to ship, as well as the weight of typical shipments and the extent to which lost or damaged products can negatively affect your business.”

Wait, did you catch that mention of data? Your organization needs more information, and freight data provides the source. Meanwhile, shippers have a tendency to believe contracted freight rates are the best way to secure the best service and value. However, there will be times when spot rates are more lucrative and service-filled then contracted rates. Yes, a blending of contracted and spot rate shipments is necessary to achieve balance within the supply chain. 

Also, the pairing of these two rates helps to safeguard against the uncertainty and manage risks. During negotiations, a diligent investigation into freight data and internal information will provide a means of holding carriers and supply chain partners accountable for their actions. Ultimately, logistics data is your bargaining chip.

How to Collect and Leverage Logistics Data During Negotiations

There are countless ways to collect and apply freight and carrier data to improve bargaining leverage. Shippers should take a full inventory of what carriers do during negotiations, including:

  • Recognizing that discounted rates are not necessarily going to save any money, especially for areas that you rarely shipped to.
  • Improperly structured discount rates and tiers that will never derive any real value.
  • Waivers that negate discounted rates during blackout periods and peak-volume seasons.
  • Carriers know your freight data, and unless you know it, they will use your own data against you.

So, what does it mean? It is simple. Shippers should take these additional steps to collect and leverage freight data during negotiations:

  1. Know your needs with benchmarking and real-time access to information about your operation.
  2. Assess the services provided versus the services needed, which helps you determine service versus value.
  3. Consider drafting additional requests for proposal prior to negotiations, so your organization can immediately disapprove carrier claims that are getting the best service with that particular carrier.
  4. Analyze carrier data to understand what the carrier did and did not do correctly over the prior service.
  5. Be specific about successes and failures, including on-time delivery percentages, rates of missed deliveries, lost or damaged cargo claims, and more.
  6. Consider working with a third-party logistics provider expert.
  7. Don’t give up all your chips it the negotiating table.

Bring More to the Negotiating Table With the Arsenal of Freight Data

Supply chain shipping negotiations is a high-stakes poker game, and your organization cannot afford to lose. Amazon, Alibaba, Wish, Walmart, Target, Kohl’s, and every other shipper in the world is in some way working to take part in your customers away from your business. However, you can fight back by lowering your logistics spend and delivering superior customer experience. However, it all begins with using the right freight data to get the best transportation deal possible.

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