Your customer is now going to submit a complaint to your business through customer service channels and may not order from you again in the future. This is lost revenue not only to possible future business but also to your bottom line as you would generally resolve the issue by refunding the client’s shipping costs but have no recourse with the carrier.
Carrier GSR waivers could mean a loss of revenue 3-5% lost revenue
There has been an increase in carriers pushing Money Back Guarantee waivers or GSR waivers (Guaranteed Service Refund) in exchange for what they consider larger incentives or extra discounts. This prevents a shipping client from recovering the costs to ship the package if the carrier delivers your package late leaving any accountability of the carrier to deliver on time.
Through our experience with parcel contract negotiations, AFMS has been able to obtain or even get better incentives and discounts by keeping the Service Guarantee Policy part of the agreement. In addition, minimum charges are still part of your agreement which may negate any incentive or discount offered in the first place.
Occasionally, you may even feel coerced into thinking that you are required to sign carrier GSR waivers in order to capitalize on the shipping discounts and incentives offered which is nothing more than a negotiating tactic. This is never the case. After all, isn’t service commitment date and time and industry-standard? The U.S. is the biggest market by parcel expenditure, earning up to $119 billion of the $317 billion spent on parcel shipping. Would a carrier push this on shippers if it were not advantageous to their bottom line?
Hold your carrier accountable by not signing GSR waivers
Carriers need to be held accountable to the terms and conditions they set forth guaranteeing on-time deliveries. By doing this, the carrier is accepting the responsibility to deliver to your customers in the time frame specified by the service level picked. Ship Watchers keeps the carriers accountable to ensure the on-time delivery to your customers avoiding customer service complaints and bringing back refunds to the true cost of your transportation.
Where are GSR waivers found?
You can find out if you have GSR waivers by reviewing your carrier contract or by logging into your billing center with UPS, clicking the link “Request a Refund” on the right side and entering one of your recently billed tracking numbers to get a message indicating “This package is not eligible for a refund due to the terms of this shipper’s contract.”
You can also find the language within your Agreement under Exhibit F – Specialized Incentives – Service Guarantee.
- Service Guarantee. Customer agrees to waive the Money back Guarantee.
- (Guaranteed Service Refund or “GSR”) provision as outlined in the Rate and Service Guides and the Tariff for all services during the life of the Agreement. For each calendar quarter, from the effective date of the Agreement, and every calendar quarter thereafter for the term of the Agreement, Carrier agrees to provide Customer an additional incentive in the amount of X.0% of net transportation revenue.
Incentives in Exchange for MBG Waived
Often carriers will include additional incentives or rate discounts in exchange for you to sign a Money Back Guarantee Waiver. These can include:
- 1-3% Package Rate Discount
- Small Percentage off Accessorial Fees (Time Restricted)
Consider Discounts Never Realized
Due to minimum package charges placed within your agreement you could not even be realizing the additional discount or incentive offered by the carrier.
This discount is overshadowed by other fees causing you to never realize the benefits.
Example:
As a shipping customer, you ship mostly lightweight packages receiving a 45% discount on Ground rates. Including an additional 1% discount for waiving the Money Back Guarantee Policy, giving you a total discount of 46%.
- Shipping a 3-pound Ground package to Zone 5, the standard list rate cost is $10.22.
- Now apply the 46% discount ($4.70 discount)
- You should only pay ($10.22 – $4.70) $5.52 for that package.
- Unfortunately, there is a minimum package charge stating the lowest amount to pay is a Zone 2 1-pound package, which was $7.35.
- Therefore, there is $1.83 worth of discounts that you are not realizing which includes the additional 1% waiver benefits.
- The ACTUAL discount for this package is only 28%.
Taking accessorial discounts or incentives into consideration also include a time frame before they expire. After 12 months your accessorial discount goes away and you miss out on future incentives leaving you with the waiver still in place and paying 100% of the accessorial cost going forward.
Why do carriers push GSR waivers?
They have realized that auditing companies such as AFMS are providing shipping clients with valuable transportation information and analytics, holding carriers accountable for mistakes, and bringing substantial savings back to shippers’ bottom line. They push for the waiver to mitigate the additional chance of lost revenue.
AFMS not only recover for Late Deliveries. We also keep carriers honest with:
- Address Corrections (In Error and Cleaned Databases)
- Residential vs. Commercial Charges
- Dim Weight Adjustments (In Error and Correctable)
- Incorrect Rates, Discounts, and/or Incentives
- Saturday Delivery Charges (Delivered Early or w/out Attempt)
- Plus many other Audit Points
AFMS also provides our clients with:
- Contract Evaluation
- Customized Reporting (Cost Allocation / GL Coding)
- Transportation Analytics
- Various Customizable Dashboards
- Damage Claims Processing
- Unauthorized / Charge-back Monitoring
- Enhanced Web Portal (Multi-User)
- Accessorial Charges Corrected to Avoid Future Charges
- 24/7 Support including Chat
Work with your account executive to request an impact summary that will show you how many packages will be subject to the additional discount or incentive given for having the waiver in place. How much will this save you each month. They can provide you with a summary based on your historical shipping. Also, keep in mind of your forecast shipping characteristics and how this will affect your bottom line.
Consider the following:
- Negotiate your Carrier Agreement(s) with Analytics to get even bigger discounts
- Don’t give up your right to hold the carrier accountable
- Use a Consultant with years of negotiating experience using data analytics
- Sacrificing service for price only increases unsatisfied customers and customer service calls
- You can save more and gain valuable resources by using an experienced partner like AFMS
AFMS will provide a no-fee 30-day audit review of your recent shipments to determine the impact of lost spend. Please complete the or call (800)246-3521 to begin.
