How do I judge a fulfilment business’s shipping carrier rates and contracts?

Carrier rates can decide whether a fulfilment business makes money. Start with the contracts: who the carriers are, the term, renewal dates and what each side can change. Ask whether the rate cards are fixed or follow a formula that can shift.

Next, test them against reality. Lay several recent invoices beside the rate cards and see whether the charges match. Look at surcharges, address corrections, returns and oversize fees, since those often drive the final cost more than the base rate.

Ask how much of the discount depends on volume. A rate earned by one large client’s shipments may weaken if that client leaves. Find out how rate savings are shared with clients, and whether clients can negotiate directly. Finally, confirm transfer. Ask whether the agreements pass to a new owner and whether a carrier must approve the change. Your lawyer can read the clauses, and your accountant can test the margins. Ask also whether clients ship with the business’s own carrier accounts or their own, since that changes who benefits from the rates and who holds the relationship with the carrier. Ask whether the team compares quotes between carriers regularly, or sticks with habit.

Key takeaways

• Compare carrier invoices with rate cards and look closely at surcharges.
• Check how much of the discount depends on one client’s volume.
• Confirm in writing that carrier agreements pass to the new owner.