WHO IS LOOKING AT YOUR CONTRACTS?

So Who is Looking Over Your Transportation Agreements?

If you don’t think you need to have an expert watching out for you, read this!

A client of ours recently completed a contract negotiation session with its primary parcel carrier.  They also took it upon themselves to invite one of their parcel carrier’s competitors to bid on their business as well.  They had not used a competitive bid process in quite some time and thought it would add great value to the negotiation process.  Upon completion of the competitive bid and contract negotiation process, (which by the way took approximately 8 weeks to complete), our client made the decision to stay with the incumbent carrier by re-negotiating their current contract.

The carrier provided written details of the changes it would  make to the contract which our client accepted as the “final” deal.  The competitor also provided written documentation as to what pricing provisions and contract terms and conditions they would agree to as well.  However after analyzing both proposals, the incumbent carrier clearly fought hard to maintain the business, as their proposal was much more favorable.

After the negotiations were completed, the client asked us to review the new contract agreement the carrier submitted for signature to make sure that everything the incumbent carrier agreed to publish was in fact published correctly.  After reviewing the new agreement, and comparing it to the offer the carrier had committed to, you won’t believe what we found.

  1. The discount for air shipments was now lower than the carrier’s initial commitment
  1. The carrier reduced some zone specific discounts which would increase our client’s proposed rates by 16%
  1. The Dimensional Weight Divisor the carrier agreed to publish, which was better than the standard divisor, was suddenly different from what the carrier committed to publishing
  1. Discounts for certain Accessorial Fees the carrier had agreed to publish were also different from what was now published in the contract
  1. And, to add insult to injury, the carrier published a waiver in the contract, precluding our client from filing claims for refunds for late delivered packages, which too was not part of the agreed to pricing

This could merely be lack of communication within the carrier organization by publishing provisions different from what was actually agreed to as part of a contract negotiation process.  Or, it could have been a deliberate attempt by the carrier to slip one by its customer in the hopes they would never recognize the differences.  We don’t know so we won’t speculate.  What we will say is that every shipper entering into a contract negotiation with any freight carrier or logistics service provider should thoroughly analyze the contract agreement, and compare it to the pricing proposal before signing it to make sure it is exactly what the shipper and carrier agreed to as part of the negotiation process.

And, if you’re unsure, why not seek the advice of an independent third party to review the agreement before signing.  It would certainly be a worthwhile effort as evidenced by our client’s experience.

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