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  3. Service discount rules in carrier agreements

Service discount rules in carrier agreements

The intent of this article is to guide you through the function of each service discount rule 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 executed from top to bottom and 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

Rules at the bottom are executed after the rules above and can overwrite the rules where overlap exists.

Service discount rules

Effective start date

Terms that begin in year 2 and 3 can be managed with a start date on the date that the rule takes effect.

Default start date: Null

Start date format: mm/dd/yyyy

Common mistake: The 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.

Effective stop date

Terms that expire after a certain date are managed with these rules. These dates typically coincide with the start date of a new incentive term that typically begins in year 2 or year 3.

Default stop date: Null

Stop date Format: mm/dd/yyyy

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

Directions

Domestic service types are managed as a single rule on Service Discounts. Service Discounts on international shipments, in contrast, are managed as separate rules under Export and Import.

Default: All rules are enabled by default

Options include:

  • Import
  • Export
  • Domestic

Common issue: Carriers commonly invoice customers for domestic service types for international ship from or ship to locations. This problem can be overcome by the selection of All enabled by default for domestic service types.

Address type

Service discounts by address type are common in larger agreements and target service types where that service type applies to all address type like Express or Air service types.

Default address type: 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.

Package 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

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

Billing unit default: Regular weight-based shipment

Billing unit options:

  • Regular weight-based shipments
  • One Rate/Flat Rate shipments
  • Any shipments

Returned

The Returned rule targets incentives specific to return service types.

Default: Regular Shipments

Returned options:

  • Regular shipments
  • Return manager shipments
  • Any shipments
  • arrier-speficic

Pay type

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

Pay type default: All are enabled

Pay type options:

  • Shipper
  • Receiver
  • Third-party
  • Other

From Zone

The lower bound of a zone-based incentive. Relevant to Ground service types.

From zone default: Null

Options: Carrier specific

Note: Leaving the zone field NULL will apply the service discount to all zones.

To Zone

The upper bound of a zone-based incentive. Relevant to Ground service types.

To zone default: Null

Options: Carrier specific

Note: Leaving the zone field NULL will apply the service discount to all zones.

Min Weight

The lower bound of a weight-based incentive. Relevant to Ground service types.

Min weight default: Null

Options: Carrier specific

Note: Leaving the weight field NULL will apply the service discount to all weights.

Max Weight

The upper bound of a weight-based incentive. Relevant to Ground service types.

Max weight default: Null

Options: Carrier specific

Note: Leaving the weight field NULL will apply the service discount to all weights.

Discount

The base discount for a given incentive. It’s common for base discounts to increase by a few points per revenue band. The best target is the middle band on volume.

Discount default: 0%

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

Next Steps

Updated on April 4, 2019

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