We are in a market where LTL carriers continue to aggressively seek methods to improve their yield, reduce their operating ratios, and filter out poor performing business in their portfolios. As a result, shippers need to consistently differentiate themselves from the pack and improve their attractiveness to carriers.
The days of simply blasting LTL bids out to multiple carriers annually with wide-ranging FAK requirements, a laundry list of accessorial waivers, and capped fuel programs and expecting that the carriers will beat a path to your door have ended. Today carriers want more from shippers in exchange for that competitive pricing.
- Know your annualized freight spend and be able to support it with complete shipment data. Shipment level data should include ship dates, origin & destination zip codes, actual freight class, weight, and ideally also detail the accessorials encountered, number of pallets, pallet dimensions, NMFC’s, and shipment density. With more complete information at the carriers’ disposal, there will be less guesswork and perceived risk on their part and as a result, they will be more inclined to offer a more competitive pricing proposal.
- Have pictures available. Pictures can be worth several additional thousands of dollars in savings. Provide multiple photos of common outgoing/incoming LTL shipments on your dock as well as the corresponding weight and dimensions of the shipments depicted in those photos. Also, if you plan to improve packaging in the future, make carriers aware of that also as the photos make not convey that message on their own.
- If you don’t need it, don’t ask for it! Outlining aggressive pricing requirements in your carrier bid packages would seem to always make good business sense. However, making unrealistic FAK demands and asking for waivers and concessions on infrequent accessorials can come back to haunt some shippers. For example, a carrier may grant a waiver on a lift gate charge or extend a FAK 50 (55-250), but may also reduce the discount and/or increase the minimum charge thus negatively impacting all of your business. Negotiations should target the most frequently encountered accessorials and shippers should be prepared to stay flexible with carriers on secondary accessorials by accepting lower flat fee charges or accepting at the rules tariff value.
- Highlight your best assets, but be transparent. Disclose your historical frequency of guaranteed service, volume shipments, shipments to/from Canada, and don’t forget to tout a low frequency of claims if that applies. Don’t hide from your shortfalls either. Electing to hide information from a carrier in fear of less competitive pricing may ultimately lead a shipper to experience an out of cycle GRI or worse yet, have a carrier pull their pricing from the shipper completely causing major service disruptions.
- Be in tune with the latest trends. Ask your carriers to bid using a current CzarLite tariff rate basis and using a standardized market competitive fuel surcharge programs. Current CzarLite tariffs take into account industry-wide changes in carrier networks, equipment, capacity, and demand-side economics. Carriers are more apt to provide a more competitively balanced bid response if they know that the base rates are more reflective of today’s market. Employing standardized fuel schedules and tariffs will also make it easier to analyze the results of the bid.
- Enlist the assistance of a 3rd party logistics provider with extensive LTL experience. Shippers can benefit from leveraging the 3PL’s expertise, buying power, technology, analytical tools, carrier relationships, and back office support without the fixed expense of managing in-house.