UPS Package and FedEx Ground have adopted a policy of not working with 3PC (Third Party Consultants) and 3PN (Third Party Negotiators) The Changing Relationship Between Carriers and Shippers.     For all practical purposes, UPS and FedEx are a duopoly and can exert signifiant pressure in the marketplace.  Third Parties have evolved into the equation simply because both FedEx and UPS have continued to increase the complexity of their pricing schemes.  It takes an expert to understand the various base charges, tiers, incentives and the more than 90 surcharges applied to ship.  Third parties also can be effective at benchmarking.  In other words, they know what leverage shippers can exert based on the amount of shipping they do.

Because the Third Parties are effective at reducing shipping costs through contract negotiations, both UPS and FedEx are saying that isn’t fair and we don’t want to allow this.  Did anyone put a gun to their head in the negotiation?  As I see it, UPS or FedEx can negotiate and simply not agree to terms and conditions they don’t like.  No one is forcing them to do anything.  It’s absolutely absurd and there are ways to work around this if the legal challenges don’t fix this.  I have an idea how to fix this.  How about making your pricing simpler, less confusing and with fewer surcharges.

I help companies negotiate with LTL carriers.  Fortunately, the market has over 100 providers so the dynamics wouldn’t allow for any one or two carriers to stop negotiating with third parties.  However, if they really wanted to make me extinct, make your pricing simpler.  Quit offering meaningless discounts off obscure tariffs, shelve commodity classifications, don’t use interline pricing, get rid of most accessorial charges, build fuel into your base rates and ultimately get your pricing to fit on a single sheet of paper!

Of course I know that will never happen so I have job security.  In fact, I keep preaching to companies that negotiating with LTL carriers without the right tools is like going to a gunfight equipped with a pocket knife.