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  3. Minimum net charge rules in carrier agreements

Minimum net charge rules in carrier agreements

The purpose of this article is to guide you through the function and components of Minimum Net Charge rules in carrier agreements. This information is intended for any system user with a PDF agreement that needs to be loaded into the Agreement Management System.

Organization of rules

Rules are ordered by class type in the following order:

  1. Dim Divisor
  2. Service Discount
  3. Grace Period Discount
  4. Earned Discount
  5. Minimum Net Charges
  6. Surcharge Discount
  7. Fuel Discount

It’s important to note that rules are executed from top to bottom. In other words, rules at the bottom are executed after the rules above and can overwrite the rules where overlap exists.

Minimum net charge discount

The Minimum Net Charge rule calculates the minimum charges. It includes logic for all three types minimum charges rules:

  • Net Minimum Charge
  • Minimum Reduction by amount
  • Minimum Reduction by amount

Effective Start Date

Relevant for expiration terms on Minimum Net Charge and Minimum Reduction incentives.

Default: Null

Format: mm/dd/yyyy

Common mistake: Effective Start Date is entered on a date that is after the analysis period date range within CAO View. Ensure that the Effective Start Date does not affect the service discount being applied to the date range of analysis.

Pro tip: Create one Net Minimum Charge rule for each term within the agreement. The Effective Start Date and Effective Stop date fields are build each rule for the targeted date range.

Effective Stop Date

Relevant for expiration terms on earned discount incentives.

Default: Null

Format: mm/dd/yyyy

Common mistake: Effective Start Date is entered on a date that is after the analysis period date range within CAO View. Ensure that the Effective Start Date does not affect the service discount being applied to the date range of analysis.

Pro tip: Create one Net Minimum Charge rule for each term within the agreement. The Effective Start Date and Effective Stop date fields are build each rule for the targeted date range.

Effective Zones

Zone Range: Specify the zone range with Start Zone and Stop Zone.

Note: This is the most common

Zone List: Click the arrow to the right of the row to specify individual zones separated by comma.

Exclude Zones: Use this to target a zone to apply an exclusion rule for the given Zone Range or comma separated Zone List.

FedEx

Domestic Zone Range: 1 – 99
International Zone Rage: A – Z

UPS

Domestic Zone Rage: Service type specific
International Zone Rage: Service type specific

DHL

International: A – Z

USPS

Domestic Zone Range: L – 10
International Zone Range: 1 – 99

Services

Create a row for each service type where the earned discount applies.

Address Type

Overview: Service discounts by address type are common in larger agreements and target service types where that service type applies to all address types. Express or air service types, for example.

Default: All enabled by default

Options:

  • Residential
  • Commercial

Service Type

All of the service type discounts that apply to a service type are restricted to a single service type. This is by design. If there are multiple service types with the same discounts, then the best practice is to clone the rule and update the service type to the other service type targeted.

Default: none

Options: Carrier-specific. Check the agreement page for a given carrier for a full list.  

Packaging Type

Carrier-specific packaging (e.g. UPS Express Letter/Envelope) has a list rate and incentive specific to that package type. Discounts and incentives for such packaging types are managed as separate service type rules.

Default: All Packages

Options: Carrier-specific. Check the agreement page for a given carrier for a full list.  

Common mistake: Given the organization of rules within an agreement, the ideal order of rules is to put all packages first, then build secondary rules for each carrier-specific packaging type section. In other words, the general rule that targets All Packages is above the carrier-specific package type rule. This way, the discounts related to a given carrier-specific packaging type overwrites the general rule targeting All Packages.

Billing Unit

Overview: Flat rate shipments (e.g. FedEx OneRate Pak) have a list rate and incentive program specific to that.

Returned

Returned rule carrier agreement

The Returned rule targets incentives specific to return service types.

Default: Regular Shipments

Options: Carrier-specific. Check the agreement page for a given carrier for a full list.  

Pay Type

Pay type carrier agreements

Pay Type targets payee type incentives. Third-party, for example, sometimes has lower discounts than Shipper or Receiver Pay Types.

Default: All Selected

Options:

  • Shipper
  • Receiver
  • Third Party
  • Other

Discounts

  • Min Rolling Average. The lower bound on the revenue band.
  • Max Rolling Average. The upper bound on the revenue band.
  • Discount. Amount of the Earned Discount.

Next steps

Updated on April 4, 2019

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