Logistics Provider: Negotiating a Contract with a 3PL

Tips to negotiating a fair contract with your logistics provider

The word “negotiation” is like nails to chalkboard. Thoughts of a long, drawn out and hostile process can come to mind. But, it doesn’t need to be that way! When you are negotiating a contract with your logistics provider, it should be fair and balanced. Remember, your logistics provider wants this partnership to work. It can be a major cost and headache for them, if you terminate your contract or move on. They need this to work just the same as you. Here are a few tips to negotiating you contract.

Keep a close eye on the details.  This means that you are going to need to look at every line of your contract.  This is especially true of the fine print inside of the contract.  If you do not understand some of the terminology that is used in the contract, ask a third party.

Map out the expectations of all services needed. What may be a given in your book, may not be for your logistics provider. Clearing map out what services you are going to use from your 3PL. A solid first contract will lead to favorable terms down the road as you prosper with your logistics provider.

Agree to cost reductions. Establish rates with a minimum and maximum standard per dollar value. This will clear out many of the issues that may arise down the road. You are in the business of making money, and this space or service should fit into your budget. In the end, your logistics provider should allow you to concentrate on the work you do, not your supply chain

Don’t push too hard! This may sound strange, but try to be fair. This is give and take situation. If you take too much…they’re not going to budge where you might need. This is long-term effort and you need to cooperate.

In many situations, most of the time spent interacting with your logistics provider is done so talking about the contract. Having clearly defined services will maximize the total value of the relationship. This is a person/company you are planning to work with long-term. If you can’t trust their word…this partnership will never work. If you have any questions about negotiating a contract with your logistics provider, give us a call! One of our top referral networks is actually our customers! Good luck on your next contract.

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