UPS, which stands for United Parcel Service, is one of the largest package delivery companies in the world. Many customers use UPS to ship and receive packages on a regular basis. When it comes to shipping rates and fees, some people wonder if there is any room for negotiation with UPS, or if the prices are fixed. This article will examine if and how customers can potentially negotiate with UPS to receive discounted shipping rates or other benefits.
Background on UPS Shipping Rates
UPS sets standard shipping rates for all customers based on factors like package weight, distance, and speed of delivery. They offer various shipping services like Next Day Air, 2nd Day Air, Ground, and more. Each service has an established rate table based on details like weight brackets and zone charts. These standard rates are calculated to cover UPS’ operating costs and profits.
For many people, UPS’ set rates may seem non-negotiable. After all, major carriers like UPS ship millions of packages every day and rely on their preset rate tables to run their business efficiently. Unlike shipping one-off items on peer-to-peer platforms like eBay, customers can’t directly negotiate rates on a per-package basis. However, this doesn’t necessarily mean there is absolutely no flexibility with UPS shipping rates.
Negotiating Discounts with UPS
While UPS does stick closely to its standard rate charts, there are some circumstances in which customers may be able to negotiate for lower shipping rates or other discounts:
Frequent shippers
For customers with very high shipping volumes, such as large retailers, manufacturers, and distributors, UPS offers negotiated account rates. These discounts are given to frequent shippers who promise to use UPS for most or all of their shipping needs. Discounts can range from 5-70% off standard daily rates. Customers need to regularly ship several hundred packages per month to qualify for negotiated rates.
Pre-negotiated discounts
Some entities like the U.S. government and universities can receive discounted UPS rates that have already been negotiated at an organizational level. For example, individual government employees shipping packages for work can get discounts by using their agency’s account number. These pre-negotiated organizational discounts mean that not every customer needs to independently negotiate rates.
UPS customer counters
Customers who ship in person from UPS customer counters or service centers can sometimes ask for rate discounts at the clerk’s discretion. This may include waiving certain fees or providing a small discount on that day’s shipments. However, the clerk cannot provide large across-the-board discounts.
Third party discounts
UPS has partnerships with many third parties like shipping management software companies, marketplaces, and booking agents that can offer discounted rates. Companies like ShipStation, eBay, and Shippo can directly integrate with UPS to sell labels at an agreed discounted rate. Checking with third parties is an easy way to find potential savings without directly negotiating with UPS.
Retailer partnerships
Brick-and-mortar retailers like Staples and Best Buy that offer in-store UPS shipping can provide coupons and promotions for discounted rates. For example, Staples offers 10-20% off UPS shipments as periodic coupon promotions. Retail discounts typically only apply when purchasing shipping at the store and not online.
Guaranteed rates
UPS offers guaranteed flat rates called UPS Simple Rate for some ground shipping lanes. These daily rates do not fluctuate based on weight like normal ground rates. While not specifically negotiated, these simple rates can represent significant savings for lightweight shipments going to eligible ZIP codes.
Other waivers and exceptions
Outside of formal discounts, some additional fees imposed by UPS may be negotiable or eligible for waivers, such as:
– Fuel surcharges – Sometimes waivable if oil prices decline
– Address correction fees – Can be waived if the error was minor
– Oversize charges – May be reduced if package is close to maximum size
– Late payment fees – Can call to request waiver for one-time late payments
So in special cases, customers may be able to appeal to UPS and have certain extra fees removed if there are extenuating circumstances.
Negotiation Strategies with UPS
For customers who want to proactively negotiate with UPS, there are some effective strategies to improve your chances:
– Have a UPS account representative – Large shippers are assigned direct sales reps to handle negotiations.
– Highlight shipping volume – Make it clear you ship significant volumes that warrant discounts. Provide data on annual shipping expenditures.
– Get rate quotes from competitors – Demonstrate you have cheaper pricing options from USPS, FedEx, etc. and could take business elsewhere.
– Bundle multiple services – Negotiate discounts if you use UPS for freight, ground, air, and international.
– Commit to a service agreement – Agree to use UPS for a set period of time or percentage of shipments.
– Pay on time – Avoid late payments to maintain negotiating credibility.
– Be persistent yet friendly – Keep following up if initial asks for discounts are rejected.
– Offer off-peak shipping – Commit to shipping more at nights and weekends when UPS has excess capacity.
– Upgrade services – Offer to use more premium (expensive) services in exchange for overall discounts.
Understand that major concessions from UPS may only come after building a sales relationship over time. But using strategies like these can potentially lead to incremental rate discounts.
Limits to Negotiating UPS Rates
While discounts are sometimes possible, there are definite limitations on how far UPS is willing to negotiate rates:
– No per-package negotiations – UPS will not haggle rates on a package-by-package basis. Discounts require a sales agreement.
– No huge discounts for small shippers – Significant discounts (over 15%) are reserved for very high volume shippers sending thousands of packages per month.
– No offline discounts – UPS does not permit shopping around for better rates. Negotiations require interacting directly with UPS sales.
– No guaranteed discounts – Any discounts are subject to UPS discretion. Nothing is guaranteed even for loyal long-term customers.
– No customized pricing – UPS does not allow completely customized pricing plans tailored to a customer’s unique shipping patterns. Standard rates apply at their discretion.
– No competing offers – UPS does not formally match rate quotes from USPS/FedEx. You cannot leverage competing pricing during negotiations.
– No refunds after purchase – Shipping rates cannot be negotiated downwards after purchasing and using a UPS label, only beforehand.
Essentially, UPS holds the cards during any negotiation and will not approve just any discount asked for. Customers have limited bargaining power unless they are high volume shippers that UPS wants to keep happy.
Negotiating Additional UPS Services
Beyond just shipping rate discounts, some other benefits that can be negotiated with UPS include:
– Free or discounted pickups – Getting UPS to pickup your packages for free to save you a trip.
– Waiver of fuel surcharges – Removing these annoying fees when oil prices are low.
– Extended delivery window for ground service – Turning normal 2-day ground shipments into 3-day service for remote areas.
– Additional liability coverage – Increasing maximum declared value amounts for expensive package contents.
– Free packaging supplies – Getting UPS to provide your preferred boxes and labels for free.
– Weekend or evening delivery – Requesting delivery times tailored to your operating hours.
– Volume-based incentives – Earning rewards like gift cards or credits for hitting shipping milestones.
– Billing arrangements – Customizing billing schedule, methods, etc. to your preferences and accounting needs.
– Customer service perks – Getting dedicated service reps and priority phone numbers for support.
– Technology integrations – Access to UPS APIs and software to track, manage, and optimize shipping.
Basically any contractual service terms outside of the core shipping rates themselves may be up for discussion during UPS negotiations. Offering incentives like pre-packaging items or shifting more volume to off-peak periods can help convince UPS to extend perks and benefits beyond just pricing discounts.
Is Negotiating Worth The Effort?
Here are some pros and cons to weigh when considering trying to negotiate with UPS:
Potential benefits of negotiating:
– Lower shipping rates mean increased profits and reduced costs for your business. Even 5% off UPS rates can add up over time.
– Customized shipping arrangements allow you to tailor UPS services to your unique needs.
– Developing a sales partnership with UPS may provide better customer service and problem resolution.
– Meeting shipping milestones can earn you credits and rewards to reinvest in your business.
– Having UPS handle pickups and deliveries can save you time and labor costs.
Downsides to negotiating:
– Negotiations take time and effort that may be better spent growing your sales.
– Unless you ship very high volumes, UPS may only approve small discounts, if any.
– You may need to commit to UPS and lose the ability to cherry pick carriers per package.
– Honoring volume or service commitments prevents you from pivoting strategies quickly.
– Smaller competitors may access UPS rates you helped bring down through negotiations.
Weigh your current and expected shipping volumes, how much time you can dedicate, and your flexibility needs. While negotiating with UPS is certainly possible, very small shippers are likely better off using established rates unless they anticipate rapid growth. The benefits grow as your business scales up.
Third Party UPS Discount Programs
Instead of negotiating UPS rates directly, many businesses turn to third party discount programs for savings. Some popular options include:
UPS Savings Program – Free program provides up to 34% off UPS Ground and up to 50% off UPS air services. Requires UPS account number and minimum monthly shipping charges.
UPS Freight Savings Program – Program offering discounts of 40% or more for LTL freight shipping for qualifying businesses.
UPS Smart Pickup – Discounted same-day on-demand pickup service for next day air shipments. Saves money compared to regular pickup fees.
Rakuten Super Logistics – Third party logistics provider that negotiates UPS discounts of up to 74% for its users. Offer tiered pricing plans.
ShipSaver – Membership program providing access to discounts of 20-40% on UPS services. Requires paying a monthly subscription fee.
Chamber of Commerce – Many local Chambers negotiate discounted UPS rates on behalf of their member businesses. Check with your regional Chamber.
The terms and discounts vary across these types of third party programs. But partnering with an intermediary can unlock UPS deals without directly negotiating yourself. Just be sure to read the fine print before signing up.
Maximizing Negotiation Success
To maximize your chances of successfully negotiating discounts or incentives with UPS, keep these tips in mind:
– Collect several months of shipping data – Analyze volumes, weights, delivery zones, timing, and pain points.
– Organize data professionally – Create tables, charts, and graphs showing your shipping profile and why you deserve custom rates.
– Be reasonable – Asking for 50% off all services across the board will get rejected out of hand. Aim for 5-20% discounts.
– Suggest a trial first – Propose a 3-6 month pilot agreement to test discounted rates before full commitment.
– Offer something in return – Highlight steps you will take like shifting volume away from peak times or pre-packaging.
– Get buy-in from senior management – Negotiations require signoff from top executives at both companies.
– Time negotiations for Q1 or Q2 – UPS sales teams are more motivated before summer and end-of-year holidays.
– Send a formal proposal – Draft a professional negotiation letter on company letterhead clearly laying out requested terms.
– Follow up relentlessly – Be politely persistent if initial requests are rejected. Aim for gradual concession improvements.
– Consider threatening to walk – As a last resort, you can threaten to shift business to FedEx if terms aren’t improved. But only use this tactic carefully.
With preparation, persistence, and reasonable asks, many businesses can slowly negotiate better shipping rates and services with UPS over time. Just have realistic expectations about the potential size of savings.
Conclusion
While UPS publishes fixed rates for all customers, there are still opportunities to negotiate discounts and incentives if you are a frequent, high volume shipper. Large businesses with dedicated account reps stand the best chance of extracting concessions like lower rates. But even smaller businesses can potentially negotiate extras like waived fees or customized delivery services. The key is offering UPS something valuable in return, such as promising tighter delivery windows, off-peak volume, or simplified packaging. Third party discount programs also provide simpler alternatives to direct negotiations in many cases. Just realize that published UPS rates are largely non-negotiable for most low and moderate volume shippers. Be prepared to commit significant time and effort for limited rewards unless your business already ships very large amounts with UPS annually.
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