NPI transportation spend management experts help companies lessen impact of carrier rate increases, prevent offset of rising costs to consumers
ATLANTA – October 30, 2007 –Transportation spend management experts at Atlanta-based NPI predict recent carrier rate increases will deal a powerful and negative blow to companies that rely on parcel shipping – unless they have an aggressive spend management and contract negotiation strategy in place. This warning comes on the heels of FedEx’s recent rate increase announcement, which is the largest overall domestic rate increase in seven years. In response, NPI is arming companies with the spend management tools and insight to counterbalance carrier rate hikes.
Last week, FedEx became the first carrier to announce 2008 rate increases resulting in a 6.9 percent rate increase for its domestic Express service and more than 15 other surcharge rate increases. With other major carriers expected to announce similar increases soon, most companies will be forced to increase shipping budgets, raise end consumer prices, reduce profits or take other cost reduction measures to offset rising transportation costs.
NPI, a spend management consulting firm that specializes in reducing corporate transportation spend, recommends companies bring in the expertise of third-party pricing and shipping experts to counter rising transportation costs. John Haber, partner and practice leader for NPI’s transportation and logistics practice, comments:
“Many companies don’t realize that it’s possible to negate carrier rate increases. However, to do this you have to understand the unique shipping characteristics of your company and how those are impacted by rate hikes. Unfortunately, this is easier said than done for most,” says Haber. “These increases are intentionally confusing. It takes a lot of time and manpower for companies to uncover the cost saving opportunities.”
An example of the confusing nature of carrier rate increases is FedEx’s fuel surcharge reduction. The carrier recently announced a two percent reduction, which will take effect on January 7, 2008. However, the carrier is increasing its current fuel surcharge rate by 2.5 percent effective on November 5, 2007. In effect, the 2008 increase will be nullified and companies will actually pay 7.4 percent more to ship goods in January 2008 compared to today.
Many companies are turning to NPI’s transportation spend management experts to better understand carrier rate increases and counter the rise in costs. NPI partners with internal logistics teams to carefully analyze specific package and delivery characteristics and understand exactly how the rate increases will impact budget.
NPI combines this insight with its analytical and cost modeling expertise to identify cost saving opportunities that counteract carrier rate hikes. Using their experience as corporate pricing strategists with many different major carriers, NPI’s experts can optimize a company’s mix of shipping methods and contractual terms and conditions to reduce transportation spend.
To learn more about NPI’s transportation spend management services, such as contract benchmarking and negotiation, network optimization, and bill auditing and service recovery, please visit www.npifinancial.com.
NPI is a privately-held company that provides assistance for its customers in implementing rigorous processes for making sound spend management decisions. Using a combination of market experts and proprietary methodologies, NPI provides assessments of a variety of traditionally difficult spend management categories – information technology, telecommunications and transportation – to ensure that expenditures and operating expenses are in-line with current market conditions. NPI leads this emerging best practice, offering procurement expertise, a fair market value database and experience from both sides of the table with quality and integrity. For more information, please visit www.npifinancial.com.
