Have you ever wondered how FedEx and UPS can sign an agreement with you that states the following?
“FedEx agrees to provide Services to Customer at the pricing and on the terms as set forth in the applicable pricing attachments.”
“UPS will provide the pickup and delivery services (“Services”) as set forth below subject to the terms of this Agreement. These Services will be provided with the incentives (“Incentives”) as also set forth below.”
And then, without warning or justification other than that which they choose to provide, the carriers can increase rates and fees during the year outside of the contractually agreed upon terms.
Here are a couple of examples.
In June of 2020, both UPS and FedEx implemented new pricing for temporary peak surcharges. This change to pricing cost many of my clients hundreds of thousands and even millions of dollars in some cases.
In 2019, both UPS and FedEx completely changed how the large package fee was calculated – this also cost our clients millions.
We find it strange that a virtual duopoly implements very similar increases at nearly the same time – but that’s an article for another time.
Again, I’ll ask the question: Have you ever asked yourself how they can do this?
Simply put, it’s because their contracts are extremely one-sided with language in the contracts that essentially allows them to make whatever changes they like.
Here are some examples of the one-sided nature of these contracts . . .
FedEx:
“Both FedEx and Customer agree that the terms of this Agreement, including the pricing, are confidential and shall be held in strict confidence by both parties and may not be disclosed unless required by law. Customer agrees not to post or publicly display the terms or the pricing. FedEx and Customer also agree that any discussions or negotiations regarding the pricing or any changes thereto (including but not limited to future pricing offerings) are also confidential and are subject to this provision of confidentiality.”
“Notwithstanding the foregoing, disclosure by FedEx to any of its subsidiaries, affiliates, related entities, subcontractors, agents and/or representatives is permitted without notice or consent. Furthermore, disclosure by Customer of this Agreement or any terms to any third party . . . shall be considered a breach by Customer.”
In other words, FedEx has put themselves in a position where they can’t possibly commit breach but the client is sworn to secrecy – a secrecy that FedEx makes clear provides them with a cause for legal action.
UPS:
“All Services provided by UPS shall be pursuant to the UPS Rate and Service Guide and UPS Tariff/Terms and Conditions of Service in effect at the time of shipping, each of which are incorporated herein by reference and which may be subject to change without prior notice.”
Paraphrasing, ‘We can change the rates to which we and our client have contractually agreed anytime we want.’
One may ask why a client would agree to such terms. The answer is simple: Either agree to the terms or don’t get your products to market. FedEx and UPS are in a superior bargaining position, they know it, and they leverage it as much as possible.
So how does a client of these carriers level the playing field and mitigate the impact of surprise rate and fee increases? One answer is to get the absolute pricing possible. And the best way to do that is to work with a firm that knows what pricing is appropriate for companies of various shapes and sizes.
If you’re interested in learning more about how your company can secure the best pricing possible, reach out to us. We specialize in doing to FedEx and UPS what they do to clients all year long: Cost them millions in the form of getting our clients the rates they deserve, not the rates the carriers tell our clients they deserve.
ParcelLogix is a small parcel rate benchmarking, negotiation and business intelligence that prides themselves on offering the best service, rates, and results in the industry.
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