Negotiated Rates
Also known as: Contract Rates, Discounted Rates, Volume Rates
Definition
Negotiated rates are custom shipping prices that carriers offer to businesses based on their shipping volume, spend, and relationship. These rates can be significantly lower than the published retail rates available to occasional shippers.
Retail vs. Negotiated Rates
| Rate Type | Who Gets It | Typical Discount |
|---|---|---|
| Retail/Published | Walk-in customers | 0% |
| Online discount | Online account users | 5-15% |
| Small business | Low volume shippers | 15-30% |
| Negotiated | Medium volume | 30-50% |
| Enterprise | High volume | 50-70%+ |
How to Get Negotiated Rates
Qualify Based on Volume
- Minimum ~$10,000-$20,000 annual spend
- Regular, consistent shipping
- Growth potential
Request Pricing
- Contact carrier business development
- Provide shipping profile (volume, destinations, weights)
- Share current rates from other carriers
- Negotiate terms
What Affects Your Rate
- Annual shipping spend
- Weekly/monthly volume
- Average package characteristics
- Destination mix (zones)
- Service level mix
- Payment terms
- Competitor rates
Negotiation Strategies
Before Negotiating
- Know your shipping data
- Understand your costs
- Get competing quotes
- Identify leverage points
During Negotiation
- Start with your ideal discount
- Focus on total cost, not just base rates
- Negotiate surcharges too (DAS, residential, fuel)
- Ask for surcharge caps
- Request accessorial discounts
Key Areas to Negotiate
- Base transportation rates
- Fuel surcharge percentage
- Residential surcharge
- Delivery area surcharges
- Additional handling fees
- Dimensional weight divisor
- Minimum charge waiver
Typical Discount Structure
Small Business (~$25K/year)
- Base rate: 20-30% off
- Fuel: Standard
- Surcharges: Limited discounts
Mid-Size (~$100K/year)
- Base rate: 35-50% off
- Fuel: May negotiate cap
- Surcharges: 15-25% off
Large ($500K+/year)
- Base rate: 50-65%+ off
- Fuel: Capped or reduced
- Surcharges: 30-50% off
Rate Agreement Components
Typical contract includes:
- Discount percentages by service
- Surcharge rates
- Minimum charge
- Term length (usually 1-3 years)
- Volume commitments
- Rate increase caps
Using Negotiated Rates
Shipping Software
- Enter account credentials
- Rates calculate automatically
- Works with multi-carrier systems
API Integration
- Connect via carrier API
- Real-time rate calculation
- Seamless checkout experience
Manual Shipping
- Log into carrier account
- Rates apply when logged in
- Use carrier shipping tools
Reviewing and Renegotiating
Annual review:
- Compare actual vs. projected volume
- Calculate effective discount
- Benchmark against market
- Identify new negotiation points
Renegotiation triggers:
- Volume increase
- Contract expiration
- Carrier rate increases
- Better competitor offer
- Business changes
Common Mistakes
- Only negotiating base rates - Surcharges add up fast
- Not comparing carriers - Use competition as leverage
- Accepting first offer - Carriers expect negotiation
- Ignoring DIM factor - Can save significantly
- Forgetting accessorials - Negotiate all fees
- Not reviewing annually - Rates should improve with volume
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