One of the most common questions I get from businesses looking at their shipping costs is some version of “are we even big enough to negotiate?”
Lots of people assume there’s a magic number: whether it’s packages shipped or annual spend that separates companies who get custom rates from those stuck paying published pricing.
But that number doesn’t exist.
None of the major carriers publish one because that’s not how they operate. And any consultant out there who tells you there’s a hard floor to custom shipping rates is just guessing.
What I can tell you: many of the businesses asking this question are closer to custom contracts than they might realize.
There Are Three Levels of Shipping Pricing
Before I get into the volume here, it helps understanding what you’re actually trying to move between:
1. Published Rates
All of the pricing is on the carrier’s website, and it’s what you pay before you open an account, print any labels, or speak to anyone. This is the ceiling before surcharges and accessorial fees come into play.
2. Program Rates
Discounts that come pre-negotiated by someone else. It could be an association you belong to or an ecommerce platform, marketplace, or something along those lines. Resellers have arrangements with carriers and pass a discount through to you without any minimums or negotiations.
3. Custom Contracts
Pricing gets negotiated specifically for your account based on your volume and shipping profile. It’s done through an account executive with the carrier.
When people ask “how much volume they need” they’re referring to this bucket. The problem is that most of the businesses inquiring about this are sitting in the first level. But the good news is that there’s definitely money on the negotiating table if you’re trying to bridge this gap.
Discounts You Can Get Without Negotiating Anything
Every major shipping carrier has some version of this. The names can change and vary slightly, but the mechanics are similar.
FedEx: Offers discounted rates through its membership programs. For example, if your business belongs to a local chamber of commerce, trade association, or has a professional association, there could be a discount waiting for you unclaimed.
UPS: Runs similar member programs, plus discounted access through ecommerce platforms and marketplaces that have their own arrangements in place (like Shopify, Etsy, Shippo, Easyship, etc.).
USPS: Works a bit differently than the private carriers. Their commercial pricing tiers are published, and most shipping software will grant you access to this automatically. Beyond that, negotiated service agreements with individual shippers get filed publicly for transparency. So instead of guessing, you can find those filings to see what real negotiated USPS pricing looks like.
DHL: Primarily an international play for US shippers. Smaller accounts can access discounted rates through resellers and platform partnerships (ShipStation, BigCommerce, etc.) rather than direct contracts.
None of these discounts require any minimum volume.
All it requires is that the program exists. So if you’re currently paying published rates right now, this is the easiest and first thing you can fix.
You should be able to find and compare all of the options at your disposal pretty quickly by running a search online. Just look up information about whatever carrier or carriers you’re using, and where/how you’re selling. Some discounts are better than others so be sure to identify any that you qualify for. If you’re unsure, reach out to me or my team here at The Cost Guards and we can help too.
No Carrier Has a Volume Threshold for Custom Pricing
Here’s where things get interesting.
There’s no set threshold established by any of the carriers because custom offers are built around each account individual. Two businesses with similar spend can be handled completely differently.
It’s something we see constantly in the contracts that we review. For example, in one FedEx earned discount schedule we recently pulled apart, the shipper earned nothing until they crossed a $630,000 in annualized transportation charges. At that point, they got a 10% discount that could climb to 18% at the top tier.
Whereas a smaller shipper using the same carrier got discounts at $250,000, topping out at 12%.
Neither is necessarily better than the other. It’s just proof that the carrier decided what to offer based on the specifics on the negotiating table. Not some company-wide cutoff that a seller has to reach before they can even have the conversation.
What Carriers Actually Evaluate For Custom Rates
Volume is definitely an important factor. But it’s not the only thing that gets evaluated during a potential custom rate contract.
Carriers also assess:
Consistency: It’s easier for carriers to plan for a business that ships 400 packages every week instead of a company that has 1,500-unit bursts and then nothing for weeks. Predictability serves real operational value to carriers.
Package Profile: If all of your packages are small and uniform it’s going to work in your favor compared to sellers with bulky or odd-shaped items, even if the latter has more volume.
Zone Mix: Short-zone volume costs the carrier less. So if your freight only moves two or three zones from your warehouse, it’s worth something as opposed to going across the country with every delivery.
Residential vs. Commercial: Carriers love commercial deliveries because they’re cheaper to execute. Which means commercial-heavy shippers are more profitable at the same volume, and have more room to work with in terms of getting a better discount.
Growth: If you have a credible growth story with real numbers to back up your projections, carriers are willing to listen. But this needs to be realistic and you can’t just make unfounded claims like “we’re on track to triple our volume next near” expecting a discount.
Competitive Pressure: You have leverage if you’re able to move to a competitor or regional carrier. Your current carrier can offer concessions to keep your business.
Obviously, most businesses won’t check all of these boxes simultaneously. But any one of them could move the needle in your favor, and the more that applies to your business, the greater chance you have of getting a better deal.
The takeaway is that it’s not all about volume.
Scenarios You Should Definitely NOT Be on Published or Program Rates
Some situations make having a custom contract close to mandatory:
- You’ve grown substantially since anyone last looked at your pricing.
- Your contract has auto-renewed untouched.
- You run multiple accounts or locations.
- You split volume across carriers.
- Your shipping profile has changed.
- You run a seasonal business
- An acquisition added more volume.
So if any one of these describes your business, you’re almost certainly leaving money on the table by paying the published rates.
What Custom Rates Will Actually Save You at a Lower Shipping Volume
It’s important for you to have realistic expectations here.
While you don’t need to set the bar too low or blindly accept the first deal put in front of you, the last thing you want to do is walk away from a good offer.
For smaller shippers, you probably aren’t going to dramatically move off the base discounts. That’s fine because those rates aren’t usually where the biggest problem is.
Focus on these numbers when you’re negotiating a custom contract:
- Residential delivery charges
- Delivery area surcharging
- Additional handling fees
- DIM pricing
- Fuel surcharges
- Peak season fees
- Minimum charges
These types of surcharges and accessorial fees make up a large share of most parcel invoices, and they’re completely negotiable.
You can ask for waivers, caps, and reduced rates on the surcharges you actually concur. These can substantially outperform any base rate concessions.
Final Thoughts
There is no minimum volume requirement to negotiate custom shipping discounts. And there’s no size “too small” in which it’s a waste of your time to ask.
What’s the worst that’s going to happen?
You send an email or pick up the phone, and they tell you no. More than likely, that won’t happen. But if it did, it’s well worth the time to at least start the conversation.
Beyond volume, you need to look at other levers available for you to pull. If you’re a smaller shipper claiming a pre-negotiated program rate, you can still save a ton by cleaning up your surcharges and negotiating a reachable earned discount tier. Even if you’re nowhere near enterprise volume.
If you want to know where your current pricing actually sits against your shipping profile or if you’re looking at a proposal and can’t tell whether it’s a good deal for your volume, we can check it all out and negotiate directly with your carrier on your behalf.
Everything we do is contingency-based. Which means our service is completely free unless we save you money.