How to Negotiate FedEx, UPS and USPS Shipping Costs

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Finding cost-effective shipping rates is a must for all retailers in ecommerce. In order to meet the competition and keep customers happy, online businesses need to do their research to find the FedEx® vs. UPS® vs. USPS® shipping mix that is best for them.

One of the ways high-volume shippers can receive affordable rates is to negotiate the prices themselves with FedEx, UPS and USPS. Here are some tips for negotiation and how the process differs between private carriers and the USPS.

What are negotiated rates?

Shipping carriers are willing to cut rates for companies that have high shipping volumes. These carriers want your business and are willing to give some companies lower prices if it means they will ship more packages with them.

How can my business negotiate rates with FedEx and UPS?

Establish a relationship with the account manager at one or more of the major shipping carriers. Negotiating your shipping rates is as simple as asking this manager if you can discuss a discounted shipping rate for your account.

Since there are no published volume threshold rates for FedEx or UPS, negotiations for discounts work on a case-by-case basis. If you aren’t considered a high-volume company yet, UPS and FedEx may extend a three-month grace period if you’re projecting a significant increase in sales as you grow your business. This will allow you take advantage of those lower prices now, but you will lose your low rate if the sales goals aren’t met. Make sure to give accurate predictions to ensure that this doesn’t happen.

How can my business negotiate rates with USPS?

USPS offers a Commercial Plus Pricing program that is based on shipping volume. Each threshold corresponds to a USPS mail class and requires a specified number of shipments per year. Each threshold is based on your business’ number of shipments from the preceding calendar year, except for Priority Mail Express®.

How has Commercial Plus Pricing changed with the 2016 USPS price change?

The U.S. Postal Service® plans to eliminate Commercial Plus Pricing in 2017 to become more in line with the industry standard of only publishing one set of commercial rate tables. However, since Commercial Plus Pricing is continuing into 2016, the thresholds are not changing.

Negotiating deeper discounts with the USPS

You can also negotiate deeper discounts with the USPS. Request a Negotiated Service Agreement (NSA) from your account manager. In these situations, like the private carriers, the USPS determines rates on a case-by-case basis.

If you are a high-volume shipper, you’ll want to work closely with your account managers to make sure you’re getting the best pricing for your online business. For more information about what’s different with the recent price change, read our blog post on the new 2016 USPS shipping prices.

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