There is certainly something to be said about consolidating the number of freight carriers a company utilizes. This is becoming more and more evident each day as companies attempt to reduce their overall transportation costs by putting all their freight on one carrier’s trucks. This is especially true when it comes to a shipper’s small parcel as well as their LTL business. In this case the shipper really only has two choices, UPS or FedEx.

While conceptually we have no problem with “single sourcing”, we strongly recommend that the shipper perform its own due diligence to make sure the rates the shipper obtains for single sourcing its business is the best rate level for each service had it been priced separately. You never want to rob Peter to pay Paul. If the shipper cannot make that assessment it should go back to the drawing board and thoroughly research all of the competition. Shippers should not be lulled into a false sense of security that just because they consolidated all of their shipping activity with one of the major transportation companies that they in fact have the best deal either operationally or financially.

We would also like to point out that shippers should not give up any of their rights when they single source their business. We are talking specifically about refunds for Guaranteed Service Failures. As we all know UPS and FedEx guarantee many of their services and will pay refunds for these service failures ONLY if they are claimed by the shipper or the shipper’s representative. Why then do shippers cave in when signing these agreements and agree to waive their rights to file for these refunds?

It is true that both carriers have a 98% on time record, however, what company can afford to give up 2% of their parcel carrier spend by agreeing to waive their right to filing for refunds? On another note, we have heard reports recently that some sales representatives of these carriers are refusing to work with independent consultants who are contracted by the shippers to help improve their parcel spend. This is absolutely not the case. In addition some representatives of these carriers are telling shippers that certain services and fees are not able to be discounted. Again, this may not be true. Everyone already knows that UPS and FedEx are two of the largest and most successful transportation companies in the nation. They did not get there because they are ripping off the shipping public. What we are saying however is “Caveat Emptor” which means “Let the buyer beware”. Every shipper has the right to retain business consultants to work as intermediaries on the shipper’s behalf and they should never be intimidated by the carriers not to use such consultants.

Tony Nuzio