How to Negotiate Better Freight Rates For Improved Competitiveness

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For most businesses engaged in serving global markets, shipping costs are usually a significant cost component. The ability to reduce these expenses without compromising on speed, safety, and security of your cargo can translate to increased competitiveness critical for market share and profitability. You can use the following tips for negotiating better rates with carriers without affecting the quality of service you need:

Know the Volatility of Cargo Rates

As with other things, the demand and supply of shipping affect the rates of freight significantly. Depending on the kind of goods you are shipping and the route; the rates can vary a lot during the year. For example, due to the demand created by the Chinese New Year, the rates climb a lot from mid-January to early February, and rates can go sky-high. By studying the movement of market rates in the route of your interest and your shipping schedule, you will be in a better position to decide whether you will benefit from a guaranteed rated contract or book at the prevailing rates when you want to ship. Typically, if you are a high-volume shipper, you stand to gain with a fixed-rate contract.

Use Group Buying Power

If you are a shipper with large cargo volumes, you will be placed better to negotiate freight rates with carriers; however, small shippers don’t get this advantage. If your shipping volumes are not large, you can think of becoming a member of a group that possesses enough clout to negotiate better rates. You can also hire a freight forwarder who can aggregate full container loads with freight from several small shippers and pass on the benefits to you. Many freight forwarders also move such a large volume of cargo that they enjoy preferential rates from carriers.

Shop for Best Offers

The shipping industry is fiercely competitive, and you should never decide on a carrier without scanning the market for the best rates. It is easy for you to find out online all the details regarding the different rates between two places, cost of insurance, transit requirements, permissible weights and dimensions, accessorial charges, cost of fuel, and more. According to Forbes, most carriers charge insurance based on the value of the cargo. If you come to the negotiation table armed with all information, you are likely to get a better rate. It is especially true if the carrier is convinced that you will go so some competitor. However, the price is not the only factor, as you should calculate the worth of reputation, dependability, and other valuable services.

Conclusion

When negotiating freight contracts, you must make the effort to read the fine print and get clarifications on all the details before you sign on the dotted line. Make it a point to identify charges that you can eliminate and figure out the hidden costs that can make a difference to your bottom line. Ask for specifics on the time frame for pickups and deliveries?” You can also negotiate charges for cargo packing and unpacking. Negotiating a contract that does not force you to pay for things you don’t need is key to success.

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