Fair Warning! Changes in LTL Pricing Will Impact Your Freight Costs!

Aug 8, 2018

I love to attend auctions and observe what happens when the bidding gets intense. As the bidders go back and forth, ultimately they get to a point where the auctioneer yells “Fair Warning!”. It signals that the bidding is coming to an end and the deal is going to get done, a.k.a. the item is going to get sold.

In that spirit, when we see what the LTL carriers are doing with their pricing platforms, it’s obvious: LTL shippers are getting a “Fair Warning” shout from their carriers. In other words, you can expect some significant changes in your pricing agreements with your LTL carriers. And if your company ignores or fails to understand these changes, you can expect much higher freight costs.

With that thought in mind, we’ve talked to several senior LTL executives and here is what you need to know: Your company needs to understand the issues of “space” and “time”.

Specifically, having installed dimensionalizers at their terminals, the LTL carriers know how much space your freight consumes on their trailers. They also know the density which means that they can very accurately determine your freight class and operating ratio data.

The carriers are also increasing the use of apps which will help them quantify the length of time it takes for your company to load/unload their trailers. As one LTL executive recently shared with us: “We’re done absorbing the cost of inefficiencies at the shippers' docks. If they want to take a couple of hours to load/unload our trailer, we’re going to hit them with some big detention charges!”

So when we see one of the largest LTL carriers in the U.S. implement a matrix-based detention schedule that uses the weight of a shipment to determine the amount of time for their customers to load/unload the truck, it confirms that the LTL carriers are backing up those words with actions. And those actions will mean higher freight costs unless your company intelligently addresses these issues.

Fortunately, we have some great resources that can provide insights on how to deal with LTL carriers and rates. Here are are few resources that might interest you:

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