Properly managing the UPS/FedEx service provider relationship has always been a challenge, but more so today than ever before. The dynamic pricing environment and COVID-driven supply chain disruptions are a handful to manage for all parties involved with both B2B and B2C parcel shipping transactions.
However, it is not just the businesses that ship products across America feeling the pain right now. UPS and FedEx are having to manage through unplanned growth, resulting in capacity constraints. Additionally, while the two mega-carriers are experiencing unbridled growth, that growth is in the lowest margin segment of their business: the residential delivery.
UPS and FedEx do an amazing job shipping nearly 40 million packages every day, and in general, provide excellent service on the ground and in the air. However, their operations and employees are realizing considerable stress in trying to provide the best service possible under difficult circumstances.
For shippers and merchants, forging a close working partnership with UPS/FedEx is crucial for managing during these challenging times. Here are some suggestions for keeping the carrier relationship strong, while at the same time, holding them accountable.
- Put expectations in writing: Carrier representatives are the face of UPS/FedEx and it is up to the customer to take the lead in negotiating guidelines for maintaining open lines of communication between the two parties and setting expectations. To prevent misunderstandings, it is a good idea to put those communication guidelines and carrier expectations in writing.
- Treat your sales professional with respect: It is not an easy job representing UPS or FedEx, and in most cases, your carrier representative is not directly responsible for bad things that happen. Give the carrier representative the required time to fix a bad situation, and to explain what is driving a bad result. Carrier representatives are more likely to provide excellent customer support if they are respected and treated professionally.
- Embrace electronic interface with carrier representatives: The carrier representative position can be an overly demanding job, so returning calls to the customer in a timely fashion can be a challenge. I recommend using e-mail and texting to communicate less urgent matters with the rep and embracing Zoom-like teleconferencing platforms for discussion and review of critical matters. While the face-to-face visit is not dead, it may be on life-support thanks to client interface behavioral changes driven by the pandemic.
- Use online problem-solving tools: Save the critical issues for the carrier representatives and use web-based, problem-solving tools for resolving issues of lesser importance.
- Avoid accepting gifts from the carrier: Historically, the carriers have curried favor with customers via gifts and entertainment. This should be avoided as carrier performance, pricing and effective representation should be the primary factors considered when assessing the carrier relationships. Business lunches paid for by the carrier are still an effective communication platform for both parties.
- Commit to periodic performance reviews: Require quarterly business reviews to go over carrier performance, shipping cost and carrier news/policy changes with the carrier representative.
- Respect your negotiated pick-up time: UPS and FedEx measure the seconds between stops, and it is critical to carrier operations that drivers/parcel loads return to the terminal on time. Respect this carrier requirement by having your shipments ready for pick-up at the scheduled time.
- Understand the rate negotiation process: Expect this process to be drawn out and be prepared to quantify your claims and positions with the carrier representative. Hold the carrier responsible for meeting progress deadlines during the negotiation process.
- Do not share pricing proposals across the two carriers: Consider how important a solid, long-term relationship is with both carriers as there are no other integrated carrier options beyond UPS and FedEx. Mutual trust earned with a carrier can be destroyed by directly sharing a carrier pricing proposal with the competing carrier. Additionally, carrier agreements prohibit a customer from engaging in such practices.
- Understand carrier fiduciary responsibility to shareholders: UPS and FedEx rates are a direct result of balancing what the carriers believe their customers will pay for their overall value propositions against required profit margins to support return on shareholder equity.
Having said all this, the shipper must evaluate the entire carrier value proposition, which is a combination of price, representation, and service, when determining the carrier of choice.
About the author
Contributing editor Dean Maciuba is Managing Partner of Last Mile Experts, an e-commerce last mile CEP consultancy. He advises clients on e-commerce, last mile, and courier express & parcel matters in the US and Canada.