Parcel - March/April 2009 - (Page 10) TRANSPORTATION ABCs with Mitch Felts The Devil Is in the Details! If I didn’t know better, I would swear the author of this popular idiom was referring to small parcel contract negotiations. The days of simplified, five-page parcel contracts are over, and today’s 40-pagers are chock full of seemingly innocuous variables that can make or break your freight budget. As carrier contracts and pricing have become increasingly cumbersome, we’ve identified several areas that are frequently overlooked or not given sufficient attention — Minimum Package Charges, Package Types and Revenue Threshold Calculations. Minimum Package Charges Present in all parcel agreements are “Minimum Package Charges” (MPC) for all services. The default MPC for all services is the published rate corresponding to the lowest zone and weight for that service. For instance, the MPC for UPS’ Ground Commercial service is $4.57. Regardless of your contractual discounts, you will pay no less than $4.57 for that package. Many shippers fail to realize that the MPCs are negotiable. Recognizing and reducing your MPCs will go a long way. You should also be aware that most shippers are more negatively affected by the increase in MPCs each year than by any other aspect of the annual GRIs. The MPC for UPS’ Ground Commercial service has increased more than 26% over the last five years. Shippers that negotiate GRI caps need to be expressly aware of how the caps will affect the MPCs. It is often assumed that your rate per weight and zone will simply increase no more than your contractual GRI cap; however, that is almost never the case. I recommend that shippers negotiate a specific dollar amount for future MPCs throughout the life of the contract rather than depending on GRI percentage caps. Also, don’t assume MPCs apply to ground 10 MARCH 2009 | www.PARCELindustry.com http://adsionline.com/ROImenu.html http://adsionline.com/ROImenu.html http://www.PARCELindustry.com
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