FedEx Money Back Guarantee Policy
FedEx guarantees the on-time delivery of all Ground and Express packages; however, did you know that many are not delivered on-time? If one of your packages arrives late by 1 minute or longer, under their MBG (Money Back Guarantee) policy you can recover 100% of the shipping charges.
This is an incentive to shippers to ensure that packages shipped get to customers in a time frame anticipated based on desired service level paid. Let’s consider your customer is eagerly waiting on a package whether they need it that day or took time off to be there for the delivery knowing when it is supposed to arrive, but it was not delivered on-time. Your customer is now going to submit a complaint to your business through customer service channels and may not order from you again in the future. This is lost revenue, not only to possible future business, but also to your bottom line as you would generally resolve the issue by refunding the clients shipping costs but have no recourse with the carrier.
FedEx Money Back Guarantee Waiver
There has been an increase in carriers pushing a “Money Back Guarantee Waiver” or “GSR Waiver” in exchange for what they consider larger incentives or extra discounts. This prevents a shipping client from recovering the costs to ship the package if the carrier delivers your package late leaving any accountability of the carrier to deliver on-time.
Through our experience with Contract Negotiations, we have been able to obtain or even get better incentives and discounts by keeping the Money Back Guarantee policy part of the agreement. In addition, minimum charges are still part of your agreement which may negate any incentive or discount offered in the first place.
Occasionally, you may even feel coerced into thinking that you are required to sign a MBG waiver in order to capitalize on the shipping discounts and incentives offered which is nothing more than a negotiating tactic. This is never the case.
Would a carrier push this on shippers if it were not advantageous to their bottom line?
Hold FedEx Accountable by not Signing a Waiver
Carriers need to be held accountable to the terms and conditions they set forth guaranteeing on-time deliveries. By doing this, the carrier is accepting responsibility to deliver to your customers in the time frame specified by the service level picked. Ship Watchers keeps the carriers accountable to ensure the on-time delivery to your customers avoiding customer service complaints and bringing back refunds to the true cost of your transportation.
Where is the FedEx Money-Back Guarantee Waiver in my Contract?
Under “MONEY BACK GUARANTEE AND OTHER PROVISIONS” within your FedEx Agreement you will see one of the following:
“Customer is entitled to request refunds under the Money Back Guarantee Policy provisions of the FedEx Service Guide for all FedEx Ground services.”
“Customer is entitled to request refunds pursuant to the Money Back Guarantee Policy provisions of the FedEx Service Guide for all FedEx Express services.”
If you find either of the above within your FedEx Agreement you DO NOT have a waiver and are entitled to file for refunds on late deliveries.
However, if you see the following, you are NOT eligible to file for refunds on late deliveries and have WAIVED your rights under the FedEx Money Back Guarantee Policy:
“Customer waives the right to request refunds under the FedEx Money Back Guarantee as specified in the FedEx Service Guide.”
FedEx Incentives in Exchange for MBG Waived
Often carriers will include additional incentives or rate discounts in exchange for you to sign a Money Back Guarantee Waiver. These can include:
- 1-3% Package Rate Discount
- Small Percentage off Accessorial Fees (Time Restricted)
Consider Discounts Never Realized
Due to Minimum Package Charges placed within your agreement you could not even be realizing the additional discount or incentive offered by the carrier.
This discount is overshadowed by other fees causing you to never realize the benefits.
Example:
As a shipping customer of FedEx, you ship mostly lightweight packages receiving a 40% discount on Ground rates. Including an additional 2% discount for waiving the Money Back Guarantee Policy, giving you a total discount of 42%.
- Shipping a 3-pound FedEx Ground package to Zone 5, the standard list rate cost is $10.12.
- Now apply the 42% discount ($4.25 discount)
- You should only pay ($10.12 – $4.25) $5.87 for that package.
- Unfortunately, there is a minimum package charge stating the lowest amount to pay is a Zone 2 1-pound package, which in 2018 was $7.25.
- Therefore, there is $1.38 worth of discounts that you are not realizing which includes the additional 2% waiver benefits.
- The ACTUAL discount for this package is only 28%.
Taking Accessorial Discounts or Incentives into consideration also include a time frame before they expire. So, after 12 months your accessorial discount goes away and you miss out on future incentives leaving you with the waiver still in place and paying 100% of the accessorial cost going forward.
Why is FedEx pushing MBG waivers?
They have realized that auditing companies such as Ship Watchers are providing shipping clients with valuable transportation analytics, holding carriers accountable for mistakes, and bringing substantial savings back to shippers’ bottom line. They push for the waiver to mitigate the additional chance of lost revenue.
Ship Watchers does not only recover for Late Deliveries. We also keep carriers honest with:
- Address Corrections (In Error and Cleaned Databases)
- Residential vs. Commercial Charges
- Dim Weight Adjustments (In Error and Correctible)
- Incorrect Rates, Discounts, and/or Incentives
- Saturday Delivery Charges (Delivered Early or w/out Attempt)
- Plus 93 other Audit Points
Ship Watchers also provides our clients with:
- Customized Reporting (Cost Allocation / GL Coding)
- Transportation Analytics
- Contract Evaluation
- Various Customizable Dashboards
- Damage Claims Processing
- Unauthorized / Chargeback Monitoring
- Enhanced Web Portal (Multi-User)
- Accessorial Charges Corrected to Avoid Future Charges
- 24/7 Support including Chat
Work with your FedEx Account Executive to request an impact summary that will show you how many packages will be subject to the additional discount or incentive given for having the waiver in place. How much will this save you each month. They can provide you with a summary based on your historical shipping. Also, keep in mind of your future shipping characteristics and how this will affect your bottom line.
Ship Watchers does not suggest MBG Waiver
Our auditing solution without a “Money Back Guarantee Waiver” or a “GSR Waiver” returns on average 3-5% for mostly Ground shippers and an average of 8-16% for mostly Express shippers. This return is far superior to the 1-3% incentives and discounts given back by the carriers even after our small percentage fee is applied. Not too mention the additional savings recovered or avoided through our transportation analytics and corrective measures.
Consider the following:
- Negotiate your Carrier Agreement(s) with Analytics to get even bigger discounts
- Don’t give up your right to hold the carrier accountable
- Use a Consultant with years of negotiating experience using data analytics
- Sacrificing service for price only increases unsatisfied customers and customer service calls
- You can save more and gain valuable resources by using an experienced auditor such as Ship Watchers
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