At Reveel, we spend most of our time thinking about how shippers can get the most out of their carriers — the best service, the lowest rates, alongside high-quality relationships.
But it’s essential that shippers occasionally look in the mirror and examine how carriers see them within the shipping industry. Carriers are constantly monitoring brand credibility. They have a sense of which companies are consistent, which are tough negotiators and which can be flaky. And that impacts who they decide to work with.
When it comes to your company’s perception and reputation, try to take the long view. You can renegotiate your contract every year. But clarity, consistency and sincerity in those negotiations set your company up for success in the long run.
This is especially important when you’re evaluating competing shipping company proposals. Not only are you considering what carriers have to offer; they’re also evaluating you. Is your brand credible, with carriers and customers alike? If you accept an offer from FedEx, how likely is it that you’ll simply revert to UPS when they make a counter-offer?
This is a business question as well as an integrity question. And it’s possible to answer both of them correctly.
Resource: Your Guide to Negotiating Better Shipping Rates
Your Brand and Your End-Line Customers
Strong brands have reliable customer bases. These brands inspire confidence and loyalty, which means customers keep buying products from them. Sometimes those purchases are regular and continue for years, as is the case with running shoes; for other companies, the key might be getting a customer to buy one product, then a whole suite of products, as is the case with cookware.
Carriers care about this because a steady stream of business for shippers means a steady stream of business for carriers. Customers of strong brands become brand advocates. When they push friends and family to buy from those brands too, that’s even more business for their carrier.
Further, alignment with a brand-name shipper is strategic for carriers building out their client lists. If shippers have high levels of credibility — think about the loyalty Northeasterners feel toward L.L. Bean, for instance — that credibility extends to their carrier. In other words, a customer might think: “If this brand I trust works with UPS, then UPS must be trustworthy too.”
From a brand perspective, the carrier-shipper relationship is synergistic. They serve each other by becoming vendors and referrals to one another. Carriers can help brands promote deals — free shipping for Memorial Day weekend sales — while brands continue to drive volume for carriers to ship.
Your Brand and Your Reputation With Carriers
Shipping in the U.S. is still essentially a zero-sum game for UPS and FedEx: Most companies work with one carrier or the other, but they seldom work with both. That means FedEx and UPS are constantly competing to win business away from one another shipping company.
When carriers look at their existing clients, they must consider the competitive risk of losing those accounts. When they look at their competitor’s clients, they weigh the risk of engaging with them as potential new accounts.
Dealing With Your Incumbent Carrier
Your current carrier is seeking to retain your business. In this case, pricing managers look most closely at logistics like rate structure, contracts and terms and conditions. They also consider your negotiation history: How many years have you worked with them? Have you ever threatened to leave? Have you ever switched carriers?
The more ingrained your business is with your carrier, the less likely you are to switch. Your carrier may feel like they don’t have to work very hard to keep you, so they may not offer you the kinds of perks they offer to other clients.
But if your company has made many empty threats to switch carriers, or if you’ve switched many times, you may have sacrificed your credibility with your carrier. Why should they work with you on discounts if you could break the contract at any time?
Managing your relationship with your incumbent carrier is all about walking this line. A carrier should see you as a reliable partner worth investing in, but they should know that you are passively evaluating their competitors too.
Dealing With Your Non-Incumbent Carrier
First and foremost, remember that it’s a risky move for your non-incumbent carrier to engage with you at all. If you want to stay with your current carrier, don’t reciprocate. Approaching a non-incumbent carrier but not signing a contract with them makes your brand less credible in the long run — especially if you do so more than once.
If you are genuinely considering leaving your incumbent carrier, engage with the non-incumbent company in good faith. If they make you an offer, will you switch? Make up your mind early.
Often, a client will walk away from their incumbent carrier’s “last and best offer” and switch carriers — only to receive a better offer from their incumbent carrier trying to win them back.
If you decide to switch back to your incumbent, it shows both carriers that your threats to ship with someone else aren’t serious and your negotiation efforts may not be sincere. If your incumbent carrier raises rates a year later and you try to switch again, both will remember your actions.
Remember, contract negotiations can be rewritten at any time. Your brand credibility can’t.
So, You Made a Mistake
We wouldn’t be writing about this situation if it didn’t happen all the time, across shipping-adjacent industries. Many companies have made this mistake.
To rebuild your credibility with carriers and put yourself in a better position in the industry for the future, resolve to be consistent and transparent in all dealings with your incumbent carrier. Approach your contract as a partnership. Start by trying to set up a deal for your customers, with your carrier’s help.
At the same time, explain the reasons for your decision to your non-incumbent carrier. Maintain a relationship with them going forward — but consider waiting a few years before entering into shipment negotiations again.
If you want help navigating contracts from multiple carriers, contact Reveel. Our consultants can help you evaluate proposals and choose which one best suits your company. We can also help you prepare for logistics negotiations — not only to secure what you want from a contract, but to support your decision to stick to it.