On-Demand Webinar: How to Negotiate a Better Deal. White Paper: Become a better negotiator by learningabout cost modeling carrier agreements.
Check back for future installments of "Carrier Agreements: Understanding the Fine Print." For questions about GSRs in carrier agreements and how you can maximize your refunds, give us a call at 888.797.0929 or send us an email at Worksheet: Shipping Self Evaluation. In other words, refer back to the carriers' minimum charges that might have anegative, below-the-surfaceimpact on what they're offering. If carriers entice you towaive your rights in exchange for an additional package rate discount, make sure you understand the true value of the discount percentage being offered.
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Thus, in our example, a 97% on-time rate allows the shipperto file for 1% refund rather than a full 3%.Regardless of thecarrier, it's always important to keep an eye on the GSR language within the fine print and to remember that it's not necessary to waive GSR rights. Even then, GSR rights are only applicable for the difference between 98% and the actual on-timerate. In that case, theshipperisonly eligible for refunds if UPS’s on-time rate is below that percentage. Other than an all-out waiver, it's also common to see “threshold” language that stipulates if UPS hits a certain on-time delivery rate-for example, 98%-then the shipperwaives itsGSR rights. If that's the case, UPS will slip a waiver clause into the agreement as a hedge against the discounts being sought. UPSWith UPS, shipperstypically won’t see anything about GSRs, unless they'reseeking aggressive discounts. As a practical tip, when FedEx makes this offer to shippers who happen to be experiencednegotiators, they willusually honor that additional 2% while allowing the shipper to retain GSR rights. In this case, choosing between GSRs and a pseudo-2% becomes a crap-shoot since shipperscan’t estimate future carrier performance and other GSR opportunities with adequate precision. Before salivating over that 2%, it's important toremember that this percentage discount probably won’t equal 2% because of the minimum package charges mentioned in Part 1. In a section labeled “Money-Back Guarantees and Other Provisions,” there will be some variation of the phrase, “Customer is entitled to request refund pursuant to the money-back guarantee.” However,when shippers get aggressive in seeking discounts, FedEx will change that clause to say, “Customer waives the right to file for refunds pursuant to the money-back guarantee.” With FedEx, shippers need to pay close attention to this because it can get slipped into the agreement, and giving away your GSR rights maycost your company 1-5% of its entire parcel spend.In other cases, FedEx will sometimes offer-for example-an additional 2% package rate discount as long as theshipperwaives GSR rights. Part 1: Minimum Package Charges Part 3: Surcharges Part 4: Early Termination and Minimum Commitment Language FedEx and GSRsFedEx almost always includes Guaranteed Service Refund (GSR) language in fine print, and there are two ways they typically bring it into the agreement. To read parts one, three and four visit the links below. In this installment, we discuss guaranteed service refunds (GSRs) and how FedEx and UPS can limit the value of your parcel audit software.
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The end game here is that UPS and FedEx are using the LTL and truckload fuel surcharge as the high watermark for the industry and will continue to adjust their tables until they are within striking distance of the trucking fuel surcharges.By Shaun Rothwell and Carl Hutchinson Welcome to part 2 of our series on “Understanding Fine Print” for carrier contract negotiation. UPS is not acting alone as it is anticipated FedEx will also follow shortly. It is effectively like doing small rate increase throughout the course of the year multiple times so that the end of the year they have really applied two increases within one calendar year. The market largely misunderstands that fuel table changes have little to do with fuel prices, and when table changes are made the carrier simply updates their website, erasing the previous table change history and posts the new table. This is unprecedented in the industry and is evidence of UPS leveraging shippers to their advantage. This is on top of the November 15th increase that already took place, totaling four increases now in the course of a year. On top of the recently announced UPS general rate increase which included a 1% increase in the fuel surcharge table across all thresholds, UPS has just announced another bump of 1%, effective January 3rd, 2022.
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