Rate caps represent your first line of defence against unexpected price increases. These contractual provisions limit how much your shipping rates can increase during your agreement term, providing crucial budget predictability.
How to Negotiate Effective Rate Caps with Major Carriers
Set realistic targets based on your shipping volume:
| Shipping Volume | Recommended Rate Cap Target |
|---|---|
| Under 100 daily packages | GRI |
| 100-500 daily packages | GRI – 1-2% |
| 500+ daily packages | GRI – 2% or better |
Key rate cap negotiation tactics:
- Secure comprehensive coverage – Ensure your rate cap applies to both base rates and accessorial charges. Many carriers will attempt to limit caps to base rates only, leaving surcharges uncapped.
- Include new surcharge provisions – Your agreement should explicitly address how newly introduced surcharges will be handled. Ideally, new surcharges should be capped or excluded entirely until contract renewal.
- Lock in multi-year commitments – While carriers prefer annual agreements, pushing for a 2-3 years contract with defined rate caps provides longer-term cost certainty.
- Implement strategic carrier diversification – Maintaining relationships with multiple carriers increases your negotiating leverage. Be transparent about competitive bidding to strengthen your position.
- Define volume commitments strategically – Offer guaranteed volume commitments in exchange for stronger rate protection, but ensure commitments remain achievable to avoid penalties.
Based on our research, well-negotiated rate caps can save businesses 3-7% annually compared to accepting standard carrier rate increases.
