What is a Shipping Contract Negotiation Team?

Typically freight rates and shipping contract negotiations are conducted by the traffic or shipping department management. This practice has been in place for a long time. However, it may be advantageous to start thinking outside the box. Let’s be honest… most traffic managers have not been trained to be contract and freight rate negotiators or mediators. The disadvantage with having your traffic or shipping department doing the rate negotiations is that they have to work the carriers on a daily basis. Most shipping managers have built long standing relationships with their logistics service providers. These relationships are what make the supply chain tick. You want to preserve your shipper-carrier relationships.

Best-in-Class companies are now creating specialized teams to negotiate shipping contracts and renegotiate freight rates. A negotiation team provides a cushion between shipping departments and logistics service providers. Shipping contract negotiations often involve numerous meetings, documentation, and information sharing, sometimes across a global landscape. A negotiation team allows your shipping department to concentrate on monitoring supply chain activities without being unhinged from their daily activities.

Who should be on your Shipping Contract Negotiation Team?
A well-balanced Shipping Contract Negotiation team would consist of employees and consultants. The shipping contract negotiation team should be headed by a consultant specializing in logistics management and supply chain dispute mediation. A trained neutral mediator/negotiator with expertise in logistics rate contracts and supply chain management is the ideal candidate. The term ‘neutral’ is the key to successful negotiations as this person can play both roles as the ‘bad guy’ and the ‘good guy’ both internally within the company and externally with the logistics service providers to achieve the shipping contract or freight rate renegotiations objectives. A trained consultant reporting to the CEO or CFO given the proper authority backing will be able to weave a successful path. Most shipping contract negotiations get bogged down by internal company politics and lack of negotiating clarity. Employee run shipping contract negotiations never achieve their ‘true’ objectives and take on a ‘biased’ perspective. Realistically, no shipping manager is willing to bruise feathers, wants to be held accountable, or jeopardize their position to go after the ‘best deal’. The ‘old school’ method of forming internal employee groups or councils is both unproductive and very costly when you factor in the workplace distractions. New thought is rarely achieved, discovered or created internally. Another important consideration to successful shipping contract negotiations is follow-through and follow-up. A critical part of all shipping contract negotiation and freight rate renegotiation is the follow-through and follow-up to make sure what was agreed to is actually accomplished. The ‘neutral’ consultant is the ‘go-to’ guy when things don’t go as planned and when disputes need to be mediated.