A Real Estate Agent for your Parcel Carrier Contract

by | Aug 24, 2015

4 min read


According to Realtor.org, the median existing-home price for all housing types in June was $236,400. Home buyers never want to pay too much, and sellers don’t want to leave money on the table. So, what to do? In the words of real estate professionals, you “pull some comps.”

How do you “pull some comps” on your parcel carrier contract? Benchmarking. For any process or cost improvement project, benchmarking is a core component. You analyze your company’s internal key performance indicators and compare the data vs. competitors and best-in-class companies with which you want to benchmark. You then compile the data to identify gaps between actual and industry leaders. Gaps become opportunities to improve rates and optimize your shipping health. All that data is easily available for a home purchase of $236,400, but that data is painfully difficult to acquire when negotiating, or operating under a carrier contract where your annual spend can dwarf the purchase of a home.

Compiling Data:

In the real estate world, REALTORS® have spent millions of dollars to develop Multiple Listing Services (MLS) and other real estate technology that make transactions more efficient and compiles data points on real estate transactions all across the county.

Today, through MLS, brokers share information on properties they have listed while cooperating with other brokers working with their customers to buy or sell homes. Without the collaboration the MLS provides, brokers would create their own separate systems of cooperation, fragmenting rather than consolidating property information such as historical purchase prices.

Your Parcel Comparables:

The ability to benchmark your parcel shipping rates is a powerful force for competition. A parcel contract has hundreds of negotiable attributes that have to be negotiated to fit your shipping profile and optimized specifically for you. A carrier agreement could have over 600 negotiable attributes, each impacting your spend in a different way. Benchmarking (pulling comps) levels the playing field so even the smallest shipper can compete vs. the biggest, enabling savings now while providing the data to plan for future growth within their shipping profile.

How does one compile the data? There is no such thing as an MLS for the parcel shipping industry, but what does exist is data-science driven parcel auditing technology that can compare your attributes with thousands of other companies, determine how you compare, and make appropriate recommendations. Put another way, that data-science driven parcel auditing technology can provide you with the comps you need to make an informed carrier contract “buying” decision.

Negotiating Parcel Carrier Contracts:

When you went to purchase a home, your real estate agent advised you on a maximum price to offer for a home based on home style, square footage, number of bathrooms, geographic area, school district, finishes, etc. What if you, as the shipper, knew items such as the maximum incentives, service types, air/ground percentages and specific accessorial discounts to target? How do you get that information today? Some financial and transportation leaders take the risk of resting on their limited (read: no MLS access) parcel contract negotiation experience, which typically ends up leaving major savings on the table for their organization. Others—enabled with parcel intelligence via benchmarking—go the MLS route by engaging a proven parcel intelligence company to advise them.

“Absent the data science, the power is with the carriers. There is no shortage of data to be leveraged within the parcel shipping industry. What data science brings to the table is a suite of problem solving methodologies, combined with technology, that tips the balance back into the hands of the shippers at the negotiation table,” said Travis Rhoades, the Director of Data Science at VeriShip.

Monitoring your Success:

While some partners may offer benchmarking, make certain they are not relying on stale information learned many moons ago, or through too small of a sample size to be considered valuable benchmarking you can actually use in your negotiations. Look for partners who use real-time benchmarking vs. thousands of companies. This is not a one-time event, so after successfully negotiating your carrier contract make certain you are armed with technology that can continuously benchmark and monitor the results and quantify the savings. Finally, a parcel contract is not a 30 year mortgage. You can renegotiate a carrier contract with 30 days’ notice at any point. A good partner provides that ongoing monitoring and benchmarking, and alerts you when any of the 600 negotiable components of a carrier contract are not “best in class.”

The era of data-science driven carrier benchmarking is here, and finance and logistics decisions makers are embracing it rapidly. Are you?

Topics: Carrier Invoice Auditing, Contract Negotiation, Data Science