Parcel 101 Video Series:Carrier Contract Strategy

What is the most important thing to consider in your carrier contract strategy? What tools or analysis is vital in the RFP process? Green Mountain Technology's Director of Strategic Solutions, Rick Miller shares his thoughts.
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Full transcript: "So, the most important thing to consider when going into a contract-- and I’m assuming this is the start of a contract, or you’re thinking about an upcoming contract-- is really your carrier flexibility. What can you do? From an operations and IT perspective, can your systems change, can your IT department change, if your primary carrier changes? Even though our statistics would show that most of the time, when a shipper goes through a bid event, they end up sticking with their primary carrier, it’s important to have that ability and know what it would either cost, from a monetary perspective, and timing to make that change, if, at the end of your RFP event, the best choice for you, both from a cost perspective and an engagement perspective, would be to switch and go to the other carrier. So, your most important tool-- there is not magic tool out there, besides maybe Green Mountain Technology. But other than that, there’s no magic tool out there. Your best tool, and what is really vital in the middle of going through this RFP event, is to know what the results of that are going to be. So the analysis itself is the most important tool: being able to model this out. And that’s something that we can definitely help you with, but it’s so important. Gone are the days of looking at your current rate card, comparing it to the proposed rate card that the carrier gave you, and say, “Ah, it looks like it’s about a five-percent change,” or something like that. It doesn’t work that way. With all the dimensional charges, like I was mentioning, and other fees that can be attached with it, you really have to model it down to the package level. It just doesn’t work out right if you take averages, and just look at it at a more high level. So it needs to be a very granular model of what it would look like. And that’s so important in the middle of the process so you know. You get a contract proposal in from one carrier, you model it out, and you know exactly what it’s going to look like, compared to your baseline. You get your proposal from the other carrier, you do the same thing, and then you can compare those two results. So it’s super, super important that you’re able to do that."