Shipping rates can take a significant bite out of small business profits. While many businesses accept listed rates as non-negotiable, carriers like UPS, FedEx, and DHL often offer discounted pricing based on volume, shipment characteristics, and long-term relationships. Learning how to negotiate better shipping rates can drastically lower your logistics costs and improve your bottom line. Here’s how to approach it strategically.
Understand Your Shipping Profile Before Negotiating
Before reaching out to carriers, understand your business’s shipping profile. Gather data on your average package weight and size, shipping destinations, monthly shipment volume, and preferred service levels (ground, express, international). Having this information ready demonstrates that you are a serious client and gives you leverage during rate negotiations.
Shop Around and Compare Carrier Programs
Do not limit yourself to a single carrier. Get quotes from multiple providers like UPS, FedEx, DHL, and even regional carriers such as OnTrac. Comparing services helps you find the best fit for your shipping needs and gives you bargaining power when negotiating your final agreement.
Highlight Your Projected Growth
Carriers are willing to invest in relationships that will generate ongoing revenue. When discussing rates, highlight your projected growth, peak season volume expectations, and any new sales channels you are expanding into. Showing potential for higher future volume can lead to deeper initial discounts.
Bundle Additional Services for Greater Savings
Negotiating only shipping rates leaves money on the table. Ask about bundling additional services like pickup scheduling, insurance, returns processing, and international shipping into your agreement. Carriers often offer better overall discounts when multiple services are committed together.
Ask for Discounts Based on Shipment Characteristics
Many carriers offer specialized discounts based on shipment size, weight, and frequency. For example, FedEx and UPS provide incentives for businesses shipping lightweight packages or using specific service tiers like UPS Ground or FedEx Home Delivery. Tailoring your shipping practices to align with these programs can unlock additional savings.
Leverage Third-Party Shipping Platforms
If direct negotiation feels daunting, you can access discounted rates through third-party platforms like ShipStation, Shippo, or EasyPost. These platforms have pre-negotiated rates with major carriers, allowing smaller businesses to benefit from enterprise-level pricing without negotiating individually.
Monitor Carrier Surcharges and Fee Changes
Even after securing a discount, carriers can apply surcharges for fuel, residential delivery, address corrections, or oversized packages. Stay vigilant by reviewing your invoices regularly and monitoring changes to surcharge policies on carrier websites. Resources like the UPS Surcharge Overview or FedEx Surcharge Details are helpful for staying informed.
Request an Annual Rate Review
Negotiated agreements should not be static. As your shipping volume grows, request an annual rate review with your carrier representative. Providing updated shipping data and demonstrating growth can help you renegotiate for deeper discounts year over year.
Negotiating better shipping rates is not just for large corporations. Small businesses that understand their shipping profiles, compare carrier options, highlight growth potential, and leverage third-party platforms can achieve substantial savings. Taking a proactive, data-driven approach ensures you optimize logistics costs and strengthen your business’s profitability as you scale.
