Carriers are notorious for general rate increases (GRI), crazy surcharges, and just about any other way they can think of to hit shippers with additional charges. Now more than ever, it is essential to ensure that you are maintaining market-competitive rates with the carriers, and one of the best ways to do that is to take your parcel services out to bid with an RFP. 

IDS recently conducted our annual RFP with carriers, and here are some key takeaways you can benefit from!

Carrier Willingness

This year more than previous years, it is noticeable that the carriers are more apt than ever to provide improved pricing. FedEx has worked hard to enhance its network from setbacks in service levels that happened during 2020 and 2021. This has forced them to get aggressive on pricing to bring back business that was lost during this time to competitors. 

Mail consolidators such as DHL eCommerce, OSM, UPS MailInnovation, and others have seen increased competition forcing pricing to come down. Margins for these consolidators are tight, but they are all showing a willingness to work to earn additional volumes by aggressive pricing.

Target Pricing

One of the best things you can do when sending out an RFP to the carriers is to provide target pricing. Giving them targets to hit can help you maximize the discounts as a shipper. The key is knowing where these targets should be, and this is not always simple. Talk to other shippers and get an understanding of the market. Understand where your volumes are and where your volumes are going to be, and don’t be afraid to get aggressive on the targets.  

Understand Pricing

Standard rate tables are generally calculated the same between carriers, but as you dig deeper, the way carriers calculate surcharges and fuel can differ. Make sure you understand all the surcharges that apply to your packages and how the carriers are applying those surcharges. 

Specifically, the way UPS and FedEx calculate peak surcharge is one area to focus on. With mail consolidators, understanding how they calculate fuel surcharge can vary greatly between the carriers.

For shippers, 2023 is a great year to explore your shipping options and run a carrier RFP. 

Carriers are more willing than ever to get aggressive with pricing. If you are able to provide aggressive targets and understand the pricing calculations to get an apples-to-apples comparison, there is potential for real savings out there. 

If you have questions on how how you can save money on your shipping and more, contact IDS Fulfillment today!