The intent of this article is to guide you through the function and components of Minimum Net Charge Rules and reductions to minimums 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.

  1. Minimum Charge:
    • Each carrier (UPS, FedEx, DHL) has a predetermined minimum charge for a shipment.
    • This is the minimum amount that will be charged for a shipment, regardless of any discounts that may apply.
  2. Discount Application:
    • Various discounts are applied to the shipment fee.
    • After applying these discounts, the resulting fee may still be higher than the carrier’s minimum charge.
  3. Ineligibility for Further Reduction:
    • If, after applying discounts, the shipment fee is equal to or less than the carrier’s minimum charge, it becomes ineligible for further reduction.
    • The fee can’t go below the minimum charge, even with additional discounts.
  4. Minimum Reduction:
    • Even if the shipment fee hits the minimum charge, there can be a provision for a minimum reduction beyond that point.
    • This minimum reduction could be a fixed amount, such as 50 cents, $1, $2, etc., as per the signed agreement between the parties involved.

Here’s a simplified example to illustrate the process:

  • Initial Shipment Fee: $10
  • Carrier’s Minimum Charge: $8
  • Discount Applied: 30% on $10
  • Adjusted Fee: $7 (original fee – discount)

In this example, the adjusted fee ($7) is lower than the carrier’s minimum charge ($8). Since it’s already at or below the minimum charge, therefore this shipment is not applicable of discounts (30% on $10), hence the customer is obliged to pay a flat discount of 50 cents, $1 or $2 on Initial Shipment Fee ($10-50cents or $1/$2) as prescribed in the agreement.

This structure helps ensure that, even with discounts, the carrier still receives at least the minimum amount specified for each shipment.

Organization Of Rules

Rules are ordered by class type as follows:

Data Transformer icon 32px svg   Data Transformer

Dim Divisor icon 32px svg   DIM Divisors

Earner discount icon 32px svg   Earner Discounts

Fuel surcharge discount icon 32px svg   Fuel Surcharge Discounts

Service period discount by region icon 32px svg   Service Period Discount by Region

Grace period discount icon 32px svg   Grace Period Discounts

Minimum net charge icon 32px svg   Minimum Net Charge

Multipiece minimum weight qualifier icon 32px svg   Multipiece Minimum Weight Qualifier

Service discount icon 32px svg   Service Discount

Service discount by region icon 32px svg   Service Discount by Region

Service net rate icon 32px svg   Service Net Rates

Surcharge net rate icon 32px svg   Surcharge Net Rates

Surcharge discount icon 32px svg   Surcharges Discounts

It’s important to note that rules are executed from top to bottom according to the position of the rule among all other agreement rules. 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.

  • Net Minimum Charge
  • 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.