A Shipper’s Right

Rant on blogger, rant on along
Rant on buddy till the day is through
Rant on brother, sister too
Rant on momma like I asked you to do
And rant on fellow blogger, rant on (Rant On!)

Today’s guest post is from Leigh Merz, a Project Analyst at Source One Management Services, LLC.

In late 2009, both UPS and FedEx announced a change in policy when working with third party consultants, basically negating any future negotiations or direct communications with these service providers. This mandate limited shippers to only work with either FedEx or UPS directly as the carriers did not want their so-called proprietary information shared.

UPS and FedEx claimed this change would be in the best interest of both themselves and shippers. In 2010, a parcel consulting firm, AFMS, LLC (“AFMS”), began its fight against this new policy. They argued that both suppliers “colluded to avoid revenue dilution”. In addition, they discussed other antitrust violations that would impact shipper’s abilities to compete its business including:

  1. Suppressed competition among and between FedEx and UPS
  2. Diminished freedom of choice for shippers
  3. Suppressed competition among and between third party consultants
  4. Shippers are forced to pay higher prices

Let’s take a step back. Third party consultants work as an extension of a customer’s purchasing team and do not share any information pricing or other terms with the marketplace. Businesses look to these professionals for market intelligence, assistance in negotiations, to determine if the offer being presented is competitive and fair, and to manage their logistics spend overall. They are not used to ‘beat up’ incumbents or play suppliers against each other and are able to bring the facts to the table.

How long will UPS and FedEx continue to exclude third party consultants? They are positioning themselves as squelching the small parcel consulting and negotiation services market. Also, their unwillingness to play nice only gives leverage to regional players and potential growth opportunities for competitors like USPS. These companies understand businesses needs and rights to engage the experts in negotiations. They are willing to participate in RFX processes and work with whomever the client assigns as their spokesperson. The result is usually an increase in revenue and a commitment for a long-term relationship. UPS and FedEx are encouraging a decline in revenue and potential relationship termination.

Third party consultants are willing to work with UPS and FedEx and will allow them to compete for business fairly and without bias. They will offer insightful information into the customer’s spend profile without sharing confidential information or asking for unrealistic pricing and terms.

On a side bar, AFMS continues to stand its ground waiting for the projected trial in 2013 for a jury to hear its complaint.

Thanks, Leigh.