$1.5M cut across air, ocean and parcel with no change of carrier

Freight Rate Negotiation Parcel Air & ocean Industrial & electronics manufacturing
Carriers:
FedEx UPS and USPS Kuehne & Nagel
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WHO

Business model

A leading provider of printed circuit board assembly, systems assembly and electronics contract manufacturing, with locations in the US and Mexico.

Industry

Electronics contract manufacturing, with a cross-border component.

Paul makes the RFP process seamless and gives you all the information you need to be successful. I recommend working with his team.

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Jassal Rojero Sea Logistics Sales at Kuehne+Nagel

PROBLEM

What they felt

They had been using the same carrier partners for years, without checking pricing or negotiating rate cards. They ran monthly audits, but as a spot rate customer their rate cards adjusted every month and with every market disruption. Cost certainty was elusive, and they did not know where to start bringing the supply chain back to best in class.

What we found

Not all managed transportation providers are the same, nor do all perform equally in all lanes and geographies. This one preferred to maintain current relationships over pushing for new, improved providers. Our benchmarking found:

WHAT WE DID

Prep and analysis

We lined up the shipment profiles, both parcel and air and ocean, against a list of preferred carriers and forwarders for the lanes used and the services required. The cross-border component meant shipments had to move in bond, and the carriers had to be well versed in customs compliance for the client's goods.

Execution and coaching

We negotiated directly with six forwarders to bring the right new providers to the table. The incumbent acknowledged there was an opportunity to improve pricing, and locked rates for 12 months, which gave the cost certainty they needed. Email quoting dropped significantly and the monthly audits ran more smoothly, because pricing became predictable.

Parcel was competitively bid with FedEx, UPS and USPS, which identified rate reduction and surcharge optimization. Service requirements were matched to the appropriate provider, and weight distribution across parcel and freight was evaluated.

We held the line on terms

The final negotiation rounds secured contract protections and terms that hold for the life of the agreement, and tweaked pricing for resiliency across suppliers and for the weight breaks the client actually uses.

RESULTS

What they got

$1.5M saved, 28.7% across all modes, with no vendor change

The negotiations delivered $1,500,000 in total savings, a 28.7% reduction across all modes. The client achieved the simplest outcome of all: lower rates with their incumbent providers. Expectations were exceeded to the point that the C-suite asked, "why won't we sign these contracts now? Why do we need another round?"

Additional opportunity was available through change management, which the client chose not to pursue.

How long it took

Less than 120 days.

How we were paid

Gainshare.

How much are you leaving on the table?

Get an instant calculation of your savings potential. Based on the database of carrier contracts we have audited and negotiated for 600+ clients since 1997, and on current benchmark data showing what companies with your profile pay today.

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