A lot has happened in the LTL industry the past few years, with some carriers exiting the market and others struggling. But a lot has stayed the same too, such as the pricing model for LTL shipments, which is still predominantly based on the National Motor Freight Classification (NMFC) schema established in 1936. And this pricing model, which is somewhat complex, tends to confuse a lot of shippers, as I discussed in “Time to Rethink Less-than-Truckload (LTL) Pricing” back in December 2010.
In this Viewpoints on the Air podcast, I explore the complexities of LTL shipping and pricing with Steve Pandolfo, Director of Pricing at Sunset Transportation, who shares his perspective on this topic based on his experience handling pricing negotiations with LTL carriers, as well as his role managing Sunset’s technology platform. Also participating in the conversation is Geoff Comrie, CEO at Transite, who provides his perspective on this topic as a TMS provider.
What are some of the key challenges shippers face today when it comes to LTL pricing and shipping? Here is an excerpt of what Steve had to say:
LTL is pretty confusing to break down and try to rate because of all the different [factors] that go into getting that final [rate]. Every carrier has what is called a rules tariff and those are how they break down the fees that [they] charge to shippers for things like notifying the consignee before [the shipment] delivers, if you have a lift gate, if the driver has to go inside somewhere and break the freight down…[and] it’s important for shippers to know that all these charges are different for every carrier, it’s not a [common] charge across the board, and those charges are increased, generally, on a year-by-year basis, so the [fee] you were charged in December could be completely different in January.
And what challenges does LTL pricing create for 3PLs?
What a shipper wants from me as a service provider is to give them an accurate rate upfront. You have to be as accurate as you can because one of the most frustrating things for a shipper is when he gets a rate from me for $100 and then my invoice comes in and it’s $200 and he wants to know why….From my perspective, it’s important to have a [technology] platform that allows [shippers] to put as much information as possible [about the shipment] to get an accurate rate upfront.
For more insights on this topic, listen to my conversation with Steve and Geoff below. Then post a comment and share your viewpoint on this topic.