How 3PL’s Negotiate Exceptional Rates and Contracts for Their Clients
3PL’s provide multiple supply chain functions for their
valued clients. But with each customer interaction and new service offering
they provide, value is arguably the most important attribute they seek to achieve.
A few of the leading perks of working with an experienced third-party logistics
company are the phenomenal shipping rates and customer-friendly contracts they
can offer. In the next few paragraphs, we’ll explore some of the reasons why
3PL’s are able to negotiate exceptional shipping rates and create shipping
contracts for their clients that are fair, affordable, and always benefit the
Understanding How 3PL’s
Create Customized Solutions for their Shipping Clients
In order to provide anyone with value in any service industry, it’s first vital to understand how their business operates. When it comes to how a third party logistics company serves their shipping clients, it all begins with discovery. An experienced 3PL will start the discovery process with a thorough review of your shipping data, analyze the shipping trends, weights & classifications, and supply chain lanes used in transportation of their commodities and supplies. After reviewing all shipping related data, they are able to then compile this data into a full bid package and send it out to their extensive carrier network.
There are five specific steps that help 3PL’s determine the
best rates for your shipping needs:
- Collecting the Data: Not all data is identical – even in similar industries. Each business has a unique platform, customer base, and individual shipping needs. An experienced 3PL understands this reality and often collects data from multiple systems and vendors. They complete all the leg work for you to ensure the shipping data is consolidated, accurate, robust, yet simplified – for expedited, low-cost estimates.
- Personalized Bidding to the Carrier Network: One of the biggest reasons why some 3PL’s are better than others is the personalized relationships they maintain with carriers. Instead of sending bulk emails through multiple random carriers, the most professional 3PL’s contact national and regional carriers directly, prep them on all bidding requires and offer any information to ensure the bids are competitive.
- Leveraging their Portfolio: Carriers love working with 3PL ’s because they bring them millions of dollars in business each year. The best 3PL’s maintain a portfolio of qualified carriers that specialize in different shipping services, are regionally and nationally based, and operate with exceptional safety and service records. The 3PL often has redundant carriers on standby which increases competition and ensures the customer receives maximum shipping savings.
- Establish Savings Programs: Smart shippers understand the reality that the freight estimate process never ends. 3PL’s discover shipping discounts, minimums, and accessorials into account and update freight shipping costs when they are beneficial to their clients.
- Handling the Shipping Process: Shippers understand the frustration that typically comes with trying to take on the shipping process. The most experienced and value-based 3PL’s are able to become an extension of their supply chain. They can handle administrative work such as freight bill auditing, customer service, and even store and ship all of your products.
The key is working with a 3PL that has a proven record of working with multiple regional and national carriers that provide a plethora of shipping solutions from flat-bed, FTL, cold storage and more. It’s also helpful when that 3PL manages over $50mm worth of LTL freight each year.
After those bids for shipping rates have been sent, and estimates
are received from the carriers, the 3PL will scrub through all that data to
find the best savings plan and rates for each individual customer. They’ll also
factor your personal preferences when it comes to the movement of freight. Some
of the common factors they’ll consider include:
- What is your most important attribute – cost-savings, efficient shipping, on-time delivery, or a mixture of all?
- Are you looking for regional, national or a blend of both types of carriers?
- What communication or shipping tracking does your business require?
Whatever your preferences, the best 3PL’s create a carrier portfolios and gain estimates from companies that fit your required preferences that is best suited for your individual business type. By entrusting a proven 3PL to manage your freight estimation and contract negotiations, you’ll have peace of mind knowing that you’re getting the best shipping rates so you can focus on your people, driving sales, and improving bottom profits.