The Wall Street Journal recently reported a noticeable slowdown in business for United Parcel Service (UPS), a development that may not bode well for the carrier but presents a unique opportunity for businesses reliant on shipping services. In the ebb and flow of commerce, timing is everything, especially when it comes to negotiating contracts. With UPS’s current dip in business activity, the moment could be ripe for renegotiating your carrier agreement. Let’s delve into why and how you should capitalize on this opportune moment.
The Landscape: A Dip in UPS Business
The WSJ article showcases a downturn in UPS’s business, which is attributed to several factors, including reduced demand for shipping due to economic headwinds. More specifically, the decreasing demand for small packages.
This slowdown is not just a reflection of market trends but a signal of changing dynamics in the logistics industry. Here are some highlights from the article that businesses need to be aware of:
- UPS is planning on cutting 12,000 full-time and part-time management positions
- Layoffs are happening in the hopes of saving $1 billion in revenue
- Consolidated revenue for UPS decreased by 9.3% in 2023
- UPS reported a 7.8% decrease in consolidated revenues in Q4 last year
- UPS CEO Carol Tome notes the higher contract costs from labor contract negotiations for drivers
- Advanced technology is set to take the place of laid-off managers
As the world’s largest parcel delivery company, maintaining a volume of shipments is crucial for UPS, and this is where your bargaining power comes into play.
How to take advantage of the UPS dip
Contrary to popular belief, you don’t have to wait for your agreement to expire—you can re-negotiate career agreements at any time. Businesses should take advantage of the current financial downturn facing UPS and start negotiations for their carrier agreement.
Leverage in Numbers
With their business slowing, carriers like UPS are likely more open to negotiation to retain and attract business clients. Even if not massive, your shipping volume becomes more valuable in these unprecedented times. Since the carriers need to keep their network busy and assets utilized to the fullest extent, your business has the leverage it needs to negotiate better rates or service terms.
Timing is Everything
As the old adage goes, “The best time to plant a tree was 20 years ago. The second-best time is now.” The same principle applies to renegotiating carrier agreements. UPS’s current need to bolster business volume could provide you with the perfect window to renegotiate terms that could lead to significant cost savings or improved service levels.
6 Steps to Take in Negotiation Discussions
To manage successful contract negotiations with UPS, consider the following 6 steps.
1. Do Your Homework
Completing your own due diligence on the current market landscape is a crucial first step. Before starting contract negotiations, it’s vital to research and understand current market rates and services offered by competitors.
Do you know how your rate compares to shippers with similar attributes (spend, average billed weight, zone, etc)? With technology like Reveel, you can easily compare your business’s shipping health with other similar shippers. As carriers change rates and the market shifts, a shipping peer comparison tool can help ensure the optimization of your parcel shipping rates.
With UPS’s current state, they will likely experience a massive slowdown in operations, which increases your bargaining power.
2. Define Your Needs
Clearly outline what you need from UPS, and remember to be as specific as possible. Know your priorities before entering discussions, whether it’s better rates, more flexible pickup times, or improved claims processing. Wanting to cut costs by 15% is a great goal, but be even more particular. For example, decreasing 2-day standard annual spending is more definitive than a blanket ‘cut costs’ statement. Remember to factor in transportation costs, fuel surcharges, delivery area surcharges, and other adjustments into your goals before you go to UPS.
3. Quantify Your Value
UPS is lucky to have your business, so be prepared to demonstrate your company’s value to UPS. This could be through consistent shipping volumes, potential growth projections, or your brand’s market influence. Whatever the case may be, ensure that you have the data and projections you need to demonstrate your competitive advantage.
4. Be Prepared to Walk Away
Enter negotiations with a clear understanding of your alternatives. If you can’t come to an agreement with UPS, do you know which other carriers to seek out? This will give you a stronger position and show that you are negotiating in good faith but are not dependent on UPS.
If you already have potential contracts with other carriers, utilizing carrier agreement comparison technology can help you quickly compare contracts side-by-side. Get a 360-degree view of your shipping profile and uncover what to ask for in contract negotiations (and how to ask for it).
5. Seek Win-Win Solutions
Approach negotiations with the perspective of coming to an agreement that benefits both parties. Remember, the goal is to forge a stronger partnership with UPS, not just to get a better deal.
6. Utilize The Right Technology
Contract negotiations can cost you an exorbitant amount of time and money without the right technology. With an automated parcel spend management software, you can quickly uncover and analyze complex shipping data in seconds to help you reach carrier contract negotiations faster.
Safeguarding Your UPS Carrier Agreement
The reported slowdown in UPS’s business is a strategic signal for companies to reassess their shipping contracts. Now is the time to bring your negotiation A-game to the table.
With the right approach, you can turn UPS’s needs to your advantage, securing a carrier agreement that aligns with your logistical needs and budgetary goals. Keep an eye on the horizon and remember that timing can be everything in business, as in life. So don’t waste another second. Get in touch with our team to discover how Reveel’s robust features and automated contract management processes can help optimize your UPS carrier contract.