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Find Real Savings with Our Parcel Contract Negotiations

Over the years, we've learned that parcel contract negotiations are a precise blend of science and art. The equation's science side includes knowledge of the carrier's costs, profits, and ranking of your parcel metrics. Without this data, you'll never know if you're paying too much.
The art comes from creating proper, carrier-specific RFQ's, while appealing to the appropriate people with the carrier's organization. It also includes knowing when to press for the deal. Without all of this knowledge, you can't maximize negotiations. That's where we come in at DMG.
We liken the process to buying a car. At one time, all we knew was the vehicle's MSRP. Now we have immense resources to gather pricing details and benchmark a dealer's offer across the nation. We can easily find out who to negotiate with, what his bottomline is and when to act.
Knowledge is power, and DMG can arm you with the ammunition you need to level the playing field and negotiate world-class carrier deals.

Shipper and Carrier KPI and Metrics Example:

View Actual Client's Parcel KPI's/Metrics
Our service does not require upfront hidden fees or costs. We do not take payment unless we produce verifiable cost savings for you. Likewise, your company will not be required to expend more than 4 to 5 hours over the 6 to 8 week carrier negotiation. We handle the work ourselves. As such, DMG acts as an expert back-office addition to your team that handles all the heavy lifting, which ensures world-class results for your company.

Our Recognized Primary Areas of Savings Opportunities:

  • Base Discounts by Service
  • Earned Discount (Tier) / Revenue Threshold Incentives
  • Minimum Per Package Thresholds
  • Custom Dimensional Weight Factors
  • Accessorial Concessions
  • Fuel Surcharge Allowances
  • Payment Terms
  • General Rate Increase Mitigation

DMG's Process Flow:

Step 1: Client Discovery
  • Secure contracts, addendums, proposals, fuel indexes, & accessorial charge concessions in place.
  • Secure representative snapshot of client's carrier invoice detail (to be annualized).
Step 2: Define Client's Parcel Profile/Environment
  • Upload Client's contract and carrier invoice detail to DMG's analytics system.
  • Glean Client's shipping, parcel, and delivery characteristics from data.
  • Define Client's KPI's from the carrier's pricing perspective.
Step 3: Define Carrier's 'Cost to Serve' Client
  • Using Client's KPI's, DMG reverse engineers the metrics to define the carrier's cost to service Client.
  • DMG ranks the favorability (cost-effectiveness) of the Client's KPI's from a carrier's vantage point.
Step 4: Define Carrier's Current Profit Margins on Client Account(s)
  • By comparing the client's carrier cost drivers to the carrier contracts, DMG identifies carrier profit margins.
  • The margins are identified within every carrier service, weight break, zone, and accessorial.
Step 5: Industry Benchmarking
  • Benchmark client's profile against similar shippers.
  • Benchmarking also measures the pulse of the transportation market and defines the client's value to carriers.
Step 6: Carrier and Network Optimization
  • Throughout its intensive analysis, DMG seeks optimization opportunities to present and collaborate with clients on the optimal number of carriers and services to use in each country and region. Are zone skipping or parcel consolidation viable opportunities?
Step 7: Finalize Action Plan and Carrier RFQ's
  • Propose optimal carrier and network structure to client and collaborate on final action plan.
  • Build carrier-specific RFQ's with rates and terms to distribute to current and/or alternative carriers.
  • Compare incoming proposals to client's historical data to quantify value.
Step 8: Implement, Verify, and Continuously Monitor and Improve
  • Execute award-winning bid(s).
  • Audit every parcel to ensure adherence to new rates.
  • Continuously monitor client's activity and facilitate quarterly QBR's to determine carrier satisfaction and new opportunities.

FAQs

Q: What makes DMG better than similar companies? A: DMG's unmatched experience in the shipper and carrier industries allows us to apply a unique perspective to your business. For example, we know firsthand that operational change inflicted by changing carriers can be painful and expensive; whereas, many of our competitors are comprised purely of ex-carrier personnel, whose knee-jerk reaction is to recommend that clients switch carriers. Also, we help identify simple, operational improvements that can benefit the carrier by driving down its cost-to-serve and improve yor ability to improve rates.
Q: How much does DMG save its clients? A: DMG's clients' savings range from 13% - 49% of their total parcel spend. Savings depend on several factors (e.g., service mix, weight, zonal distribution, package dimensions, delivery densities, etc.). However, DMG's current client savings average 19.6%, plus mitigation of future carrier increases.
Q: How do I know DMG can save me money? A: DMG will perform a free analysis of your carrier contract and invoice data to determine probable savings opportunities. We pull no punches and are honest and upfront regarding our findings. If we don't feel significant savings opportunities exist, we won't waste your time or ours. After all, we are only compensated if we are successful in saving you money.
Q: How much will it cost me? A: DMG service is performance-based, and we are only compensated by a percentage of your hard, verified savings for each package. No savings – No payment. We accept all of the risks.
Q: How much time will it take? A: It will take about 4 to 5 hours of your time in providing carrier data and communicating with DMG and your carrier(s) throughout the process. That's it – we handle the rest. Negotiations usually last six to eight weeks.
Q: How can DMG possibly be better at negotiating our rates than us? A: You know your business best; however, very few shippers possess personnel with the knowledge of carrier cost structures, technology to produce key analytics, the ability to benchmark your rates against thousands of shippers, or the inside knowledge of current market trends. This is our core competency, and if we can't negotiate better rates, nothing is lost, and you walk away with third-party validation that you have best-in-class parcel pricing and terms.
Q: Will this impact my carrier relationships? A: No. We work behind the scenes, and the carriers don't know we're involved. You maintain direct contact with your carrier, while DMG provides guidance and supplies RFQ's, proposal vetting, and answers to carrier questions from beginning to end.
Q: Can I stay with my current carrier(s)? A: Yes. We strive to command optimal savings with your current carrier(s) and no necessary operational change. We recommend a change if we uncover significant opportunities to improve pricing and/or service via alternative carriers, but it's your choice to use whatever carriers you wish. All your contracts remain between you and your carriers, and you will continue to be invoiced directly by your carriers.
Q: Is it ever too soon to renegotiate a carrier contract? A: No. Shippers are not obligated to wait for agreements to expire. Carriers increase rates every year, at least, so why shouldn't you address deficiencies in your agreements? Carriers are used to shippers requesting renegotiations before the expiration of an agreement, especially if your business needs and/or parcel profile have changed.
Q: Our rates are already low, so how can you still save us money? A: We've walked a mile in your shoes as a shipper, and we thought we'd negotiated the best possible rates. Unfortunately, that was rarely the case. We all like to believe we're master negotiators but we can't know if we have optimal rates if we don't have carrier insight, benchmarking capabilities, and market knowledge.
Q: What if we engage with DMG, but the results are not there? A: Again, we will not proceed unless we are highly confident we can facilitate significant savings; therefore, this is highly unlikely. To be honest, DMG has never performed this service and failed to achieve double-digit savings. If, by chance, savings don't meet our expectations, you only pay for the savings achieved.
Contact us today to learn more about how we can help you attain the most effective carrier contracts.
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