While there are many factors that can contribute to the carriers viewing a company as a desirable client, one major on is whether their package and business profile is more desirable (either because costs to service are lower than average, or because the revenue is higher than average.)
When we ask whether a customer is desirable for FedEx or UPS, we are asking whether their profile is more profitable than the average customer, assuming that their discounts are the same as the average customer. Much of this is tied to the way that the carriers bill for their services.
For example, deliveries to residential locations cost more for the carriers because they are able to deliver far fewer packages per hour than to commercial locations. The carriers compensate for this with a residential surcharge. In some cases, contractual discounts are also lower for residential deliveries. But from an economic perspective, these differences in price do not make up the difference in costs that the carriers incur between a residential delivery and a commercial delivery. This means that a business that ships more to commercial locations will be more desirable than one that ships to a residential location.
Note that since these considerations are tied to pricing and costs, changes to pricing and costs can shift the profile of a desirable client and ultimately, a lot will depend on your discounts. A company with a poor package profile who also has negotiated poor discounts will often be more profitable than a company who has a good profile, but has negotiated well.
Note that there are many other reasons and ways that a client may be considered a desirable client for a carrier including ease of servicing, risk of leaving etc. We have considered this from a cost perspective here. Understanding the desirability of your package profile can help you understand your position in a negotiation.
Background The freight charge for FedEx and UPS packages are billed based on service, distance (measured in zones) and weight. The weight is determined by
Overview While there are many factors that can contribute to the carriers viewing a company as a desirable client, one major on is whether their
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