Negotiate a relationship, not just a deal. When most shippers talk about ocean carrier negotiations, it usually revolves around making a deal that is focused on low rates.
Truth is, very few can really negotiate the rate. In this industry, the rate will largely be determined by the current/near-term supply demand balance. The real job of the BCO is to be on the low(est) side of the bandwidth in which the market has already set for you, hopefully equal to or better than your own competition. To do this, one needs to know the latest market rates, fill ratios, tonnage plans, etc., which is no small feat. Getting a low rate that gets you on the ship week in and week out takes a good deal of skill, but in the end, the market dynamics will have a lot to do with the end result.
That being said, the real opportunity comes from negotiating relationships. Every carrier has a different business model (independent, tramp style, value-based, 3PL integrated), and one needs to figure out what each carrier partner can bring to your supply chain. Knowing the carrier’s capabilities, priorities, and shortcomings are just as important as knowing the latest market rates. Figuring out how to match up your needs with their individual strengths should be part of every negotiating strategy.
Nobody should have a “my way or the highway” attitude. Instead, figure out how to adapt to your ocean carrier’s wheel house — what your requirements are, and then package yourself to highlight how you can work together to maximize each other’s resources.
It takes constant effort to keep up with the strengths and weaknesses of your partners, but at the end of the day, your supply chain is critical to your success and the ocean carrier is usually at the heart of your operations.
Treat the relationship with care. Each carrier is different, and everyone should make the effort to continuously invest in these unique relationships.