Last week I met and spoke with Fedex Founder Fred Smith while at a conference for CEOs in Memphis. The man is brilliant, so I paid particularly close attention to his comments that while change is constant, what is noteworthy about today’s transportation marketplace is the speed at which things are changing.
As I was processing his message, I couldn’t help but think about the changes that are occurring in the transportation marketplace—especially in the LTL area. After New England Motor Freight left the market earlier this year, I know a lot of shippers were concerned about and YRC and their union negotiations. Count us among those that breathed a huge sigh of relief when YRC announced last week that they had made significant progress in the negotiations and the March 31 deadline had been extended until May 31, 2019. It looks like they will have an agreement ratified well before the deadline. There's a lot happening, and it's happening quickly.
With New England Motor Freight and YRC getting so much attention, is it possible that shippers are overlooking some significant changes in how LTL carriers are determining rate increases? As one senior executive from a large LTL carrier explained it to me, “We’re no longer relying on the old General Rate Increase—or GRI—methodology. We are using “targeted” price increases which directly address our costs to serve a particular shipper.
Given these changes, it’s no surprise that several shippers have called us looking for some constructive advice on how to work with their LTL carriers. As you head into negotiations with your LTL carriers:
1. You have to have good data. This is an absolute must if you want to have a fruitful negotiation with your carriers.
2. You must understand how your freight fits into your carriers' networks.
3. You need to understand how much space your freight consumes on your carriers' trailers.
Our supply chain consulting group has been leading customers through enhanced negotiations with carriers with some great results. You can benefit from their expertise. All you have to do is send us an email at solutions@tranzact.com or give us a call at 630.833.0890.
You would also do well to review our Transportation Spend Management eBook, which can help you reduce your freight costs and drive profit directly to your bottom line. And that's just one of many resources we make available in our Storm Center.
