Whether you are a big company with thousands of shipments per month or run a small business with few shipments occasionally, efficient freight negotiation with shipping companies is crucial to your bottom line. If done right, it is the simplest way to drive cost savings every time you ship.
Being in control of how much you pay for your shipments and using the right tools to negotiate better can help you make a significant difference to your business. In this article, let’s look at how you can ensure that you negotiate rates efficiently and secure competitive rates for all your shipments.
Win with the right approach
Managing your freight rates well despite uncertainty is a skill. The way you approach your negotiation directly affects the rates you procure, and the relationships you develop with your vendors.
When you start negotiating, try your best to arrive at a deal that mutually benefits business relationships. Another thing to keep in mind is that securing the cheapest rates may not ensure the best value. The idea of a good deal varies from shipper to shipper depending on the service and goals he has in mind.
At the end of the day, it’s how your company approaches negotiations that makes all the difference to your bottom line. When your business involves ocean freight procurement, your golden rule is to research well, benchmark rates and make data-driven decisions.
Know the basics of your freight negotiation:
Before you start your freight negotiation, do your research and get a solid idea of the numbers that are likely to come up in the process. Be sure about where your estimated rates stand within the price range for your shipment.
You can go through your freight rate history or simply use a freight management system that automatically accumulates and analyses your past data. This will help you ensure that you aren’t overpaying for your shipment.
Coping with freight rate volatility
The biggest downside to ocean freight procurement is rate volatility. Have you ever wondered what the reason behind continued rate volatility in this industry is? The most basic reason is that the shipping industry is closely associated with seasons.
Depending on your business’s nature, the peak and lean seasons will vary, and the freight prices will reflect the supply-demand dynamics at that point.
Another nuance to freight rate negotiation is, does higher rate translate to outstanding service? Does quality and speed matter to your shipment more than price? These are questions you need to ponder over before you start negotiating.
Study your routes and carrier service pattern
When you have to get a shipment from one place to another, make it a point to study the freight market and service patterns of different shipping lines covering that route. Shortlist the best carriers and determine the best possible route.
You cannot infer what kind of carrier rate negotiation you need to enter into without understanding the market. With knowledge about a carrier’s operations, you will have nothing to lose and everything to gain. It will help you secure a deal that benefits you and the shipping line; remember negotiating rates is a two-way street.
Who are your competitors?
You must map out who are your main competitors, which routes do they use, what are their volumes like and how often do they ship, etc.
This is another critical aspect of carrying out shipping rate negotiations with your carrier. The chances are that your competition could be shipping freight with the same carrier as you. In this case, having an idea of the rates your competitor is paying can help you negotiate better.
Seek expert help when needed
There are consultancies and teams leading Freight Management Programs who can help you determine the right ocean transportation rates for both contract and spot rates shipments.
You can seek their help to manage better freight rates, optimise routes, plan well, and ultimately drive significant cost savings. A collaborative approach will help you gain competitive prices each time you ship. The key is to ask the right questions and partner with a reliable third party.
Investing in a user-friendly, competent negotiation tool will deliver exceptional results and enhance your overall rate procurement process.
Smart way of freight negotiation with shipping companies
Gone are the days when you would pick up your phone and make endless calls or write several emails to negotiate rates. Today, innovative solutions are rapidly transforming the way rates are procured, making the process faster, easier and more efficient.
Learn how GoComet’s platform allows you to secure competitive rates for both contract and spot based shipments through its unique Recursive Rate Reduction system. The system will enable you to benchmark rates and leverage real-time data analytics on carrier and vendor performance. To find out more about GoComet’s multi-modal logistics platform for international freight, reach us here.