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Five Important Ways to Negotiate Better Shipping Terms

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Five Important Ways to Negotiate Better Shipping Terms

The final price of your product or service depends on a wide range of factors. Shrewd people in business know there is more to making profits than keeping your buying price low and selling price high. Additional business expenses can reduce your final margin. These include shipping, marketing, storage, and a range of legal expenses.

Negotiating a low price from your manufacturers is just the beginning. Supply chain negotiation training seminars can teach you several ways to gain value before your products reach your customers.

The shipping industry can offer you notable savings opportunities. To identify these, you have to have a keen eye. In this article, we look at five ways you can apply negotiation training skills to obtain better shipping rates.

Understand the Shipping Terms

Global trade has thrived on the back of shipping and logistics companies for hundreds of years. As a result, the shipping industry has developed a unique culture and language. Whether you are dealing with local or multinational shipping companies, there is a range of terms that you should know.

Terms such as CIF (Cost, Insurance, and Freight) and FOB (Free on Board) are used freely in the shipping industry. If you are new to the business, you can learn shipping terms by attending a seminar on the essentials. If you don’t understand the industry’s regular terms, you risk making a deal that can be negative for your business. 

Negotiation training seminars can teach you how to prepare before sitting down to make a deal. You can improve your position by researching the industry before meeting companies. Also, you can carry out mock discussions with shipping company agents. This can give you a feel of the language and questions that may come up during a real negotiation.

Research Possible Hidden Costs

One of the things that can diminish your profits is hidden logistics costs. The final price for your products should factor in all the costs you expect to incur before delivery. Talking to the different authorities that can come into contact with your products in transit can clarify your overall costs. Knowing the factors affecting your shipping rates can help you negotiate to reduce hidden costs.

By working closely with your shipping company, you can identify smart ways to cut down your costs. Many companies have different shipping rates based on weight as well as box dimensions. If you use the standard boxes the shipping company provides, you can save a few dollars on each load.

Develop Your Negotiation Strategy

Once you have understood the market and options available, negotiation training can help you plan your strategy. Writing down your strategy and goals can give you an overview of the entire process. The points listed below are some of the elements taught in negotiations seminars that can help to strengthen your strategy.

Budget

Based on your business model, you should have a price you are not willing to go above. Your strategy should include the ideal and maximum price you are willing to offer for the shipping service.

BATNA

A BATNA is your Best Alternative to a Negotiated Agreement. It refers to a set of alternative options you can take if you cannot reach a viable deal in your negotiations. A well-planned BATNA can help you to recognize a bad deal and give you the confidence to walk away.

Timelines

Time constraints can have a significant impact on your negotiations strategy. The earlier you start discussions with shipping companies, the less pressure you will have to close a deal. Beginning your negotiations early can give you more time to reach a mutually beneficial agreement.

The Urgency of Delivery

Your strategy should state how fast you need the products to be delivered once ordered. Same day deliveries often cost more than two or three days of delivery. The delivery time constraints depend on the nature of your products and promises made to your customers.

Payment Terms

Although one-off payment offers come with attractive discounts, they can also be quite risky. Making payments in installments is safer and keeps the shipping company committed until the final payment. Offer well-balanced payment terms that enable your shipping company to deliver your products on time while limiting your financial risk.

Concessions

Well-trained negotiators plan the concessions they are willing to give before discussions begin. In your research, find concessions that can create value for the shipping company and present them in your meeting. The negotiation process can become very challenging if you are too rigid.

Use Third Party Logistics Providers (3PL)

According to the World Shipping Council, the intermodal shipping network plays a significant role in the cost and rate of service delivery. An intermodal network is made up of ships, airplanes, trucks, and trains. The connection points where cargo is transferred between modes of transport are also part of the network. Many companies depend on intermodal networks for the inland dispersal of cargo from harbors and airports.

Third Party Logistics Providers (3PL) provide a useful service by shipping your cargo via their own intermodal networks. A trusted 3PL provider can save you time and money while allowing you to focus on your core business.

3PLs allow you to negotiate with one service provider who can manage all the regulatory and intermodal networking issues you may face. Further, your 3PL can help you connect and share shipping costs with other dealers in your vicinity.

Negotiate with Other Shipping Companies

Before signing off on a deal, make sure you have exhausted your other options. If you only deal with one shipping company, you may miss a better option. In a comprehensive negotiation seminar, you can learn how to leverage competitive bids to secure better deals.

Additionally, training to negotiate with multiple companies feeds into your research. It teaches you more about the existing challenges in the shipping industry. The knowledge you acquire can help you create value as you deal with the shipping companies.

Round-Up

The shipping industry presents smart people in business with a wide array of chances to negotiate better deals. The techniques in this article are not exhaustive. However, they can set you on the right track and feed into your strategy.

Negotiation training seminars are designed to maximize your potential and spur you into action. However, there is no strict rule book that is applicable in every case. As you grow in business, you can develop your own strategies based on your training and personal preferences.

White House ‘Optimistic’ on Pacific Trade Deal

Los Angeles, CA – The White House is optimistic on the chances that negotiators can forge a strong, comprehensive Trans-Pacific Partnership (TPP) deal that would impact 11 countries and encompass nearly 40 percent of the world economy.

“I’m much more optimistic about us being able to close out an agreement with our TPP partners than I was last year,” said President Barack Obama at a recent meeting of the President’s Export Council.

Confident that the administration could make a “strong case” in Congress for a TPP, Obama added, “It doesn’t mean it’s a done deal, but I think the odds of us being able to get a strong agreement are significantly higher than 50-50.”

According to the Office of the U.S. Trade Representative, the White House has held more than 1,500 meetings with members of Congress on TPP, including sharing negotiating text, and would continue to consult closely.

U.S. Representative Sander Levin of Michigan, the senior Democrat on the House of Representatives Ways and Means Committee, which has jurisdiction over trade, has said there was still a long list of “major issues” impacting the final make-up of the proposed trade pact.

Levin is calling for Congress to have more input into the deal, asserting that workers’ rights, access to medicines in developing countries and the phase-out period for U.S. tariffs on Japanese cars top the list of of major issues still to be resolved.

With the ongoing talks wrapping-up this week in Washington, D.C., negotiators may meet again next month in either the U.S. or Australia.

The 11 countries included in the TPP are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the U.S.

12/16/2014

Economist: India ‘Scuttles’ WTO Trade Talks

Los Angeles, CA – India “has apparently chosen to scuttle the ‘good ship’ WTO-Bali, the first truly multilateral agreement achieved since the founding of the WTO in 1995,” says Dr. Kent Jones, professor of economics at Babson College in Massachusetts.

“This is not the only ship in the WTO fleet, but it is the only one of its kind that has been successfully floated under its multilateral negotiating mandate. It is now taking on water, thereby endangering the entire multilateral trading system,” says Jones, a published author and an acknowledged expert on trade and policy issues who served as a senior economist for trade policy at the US State Department.

India, said Jones, “agreed last December to accept a deal in Bali that combined new rules on trade facilitation with a 2017 timeline on reconciling WTO agricultural rules with India’s food security policies.”

Trade facilitation provisions, he said, “would combine reductions in red tape and improvements in customs logistics with aid for developing countries’ trade infrastructure. The lion’s share of economic welfare gains, estimated at $1 trillion, would flow to developing countries, most of which are not amused at India’s decision to renege on the deal at the last minute.”

India’s system of food subsidies and stockpiling, Jones asserts, “currently runs afoul of WTO agricultural rules, but beyond that requires a wasteful domestic bureaucracy and market distortions that cannot help the poor in a sustainable manner. In addition, it cannot improve agricultural productivity, which is what is really needed for a lasting solution to its food security problem.”

Nonetheless, he adds, “the Bali deal set a moratorium on challenges to such policies until 2017, by which time negotiations on reforming the rules could take place. In the interim, alternatives and compromises could be considered that could allow India’s food security policies to coexist with WTO rules for global markets.”

The new government “feels that this timeline is not good enough, and hopes to hold the globally popular trade facilitation deal hostage in order to force a global agricultural deal immediately that will make its current policy legal under WTO rules. India professes to support trade facilitation, which only lays bare its cynical strategy to renege on its earlier commitments and blame everyone else for failing to re-negotiate,” Jones says.

“DESTRUCTIVE BRINKMANSHIP”

India’s “strategy of brinkmanship appears not only destructive to the WTO’s credibility as a negotiating forum, but to India’s global interests as well. Most major trading countries are so furious at India for breaking its word at Bali that many are planning to implement trade facilitation outside the regular WTO framework, through bilateral, regional or ‘pluritaleral’ agreements,” he says. “Global WTO agreements are the best way to expand trade, but countries have already shown that they will strike their own deals if WTO negotiations break down.”

According to Jones, “These initiatives outside the WTO would deprive India of any leverage in pursuing agricultural rules reform in its favor, while forfeiting its potential leadership role among developing and emerging economies. Brazil and China, in particular, reportedly criticized India’s veto.”

Without a deal forged in Bali, the “peace clause” preventing disputes against India’s agricultural policies would be suspended, which could lead to trade sanctions. India’s export industries would also suffer from abandoning the WTO negotiations. It stands to lose a lot from this misadventure,” he asserts.

“Indian trade diplomats insist that they have presented viable compromise measures that could lead to a new deal in September,” says Jones.

“Diplomats can always walk back from the brink, but it seems clear that there will be no fundamental renegotiation of what was agreed in Bali last December. By throwing rocks in its own harbors, India’s economy will remain tethered to a costly protectionist regime, while the rest of the world will seek other shores—and negotiating venues.”

08/07/2014