What's that fast service going to cost you?

By Ray Bohman -- Logistics Management, 4/1/2000

Every time you turn around, it seems that another carrier is offering a new expedited service. Expedited transportation represents a rapidly growing and profitable market, and more and more carriers-including less-than-truckload (LTL), truckload, and small-package carriers-are devising services to tap it.

Unfortunately, many shippers-particularly small shippers-really don't know how much more these expedited services cost than a carrier's standard service would, and many times they end up selecting a far more costly expedited service than they really need. In this month's column, I thought it might be helpful to provide an example of the cost differences among various expedited services offered by major carriers. I've selected United Parcel Service's small-package rates for the purpose of this illustration, using its year 2000 nondiscounted rates on shipments moving from Dallas, Texas (ZIP 75210), to Pittsburgh, Pa. (ZIP 15210)-Zone 6 rates.

The accompanying chart shows charges for different services on a shipment consisting of three packages weighing 25 pounds each, with a total shipment weight of 75 pounds. (I pulled it from a rate-comparison software program called The Rate Shopper marketed by ABM Transportation Services of Delray Beach, Fla.)

*Any negotiated discounts could be factored in here and would obviously reduce the total charges in the lefthand column.

As you can readily see, using UPS Ground service (whose transit time in this lane is four days) would cost only $33. But if you wanted Next-Day Air service, with a money-back guarantee on commercial shipments to consignees in major cities if not delivered by 10:30 a.m. (or by noon to more distant destination and extended zones), you'd pay $209.25. And if you wanted your shipment delivered no later than 8:00 a.m. to a major city (or no later than 8:30 a.m. to an outlying area), UPS would tack on an extra $25, bringing the total charge to $234.25.

You'd pay a little less-$183-if you opted for Next-Day Saver service. That provides for deliveries no later than 3:00 p.m. to consignees in major cities (or by no later than 4:30 p.m. to more distant destinations). There is a money-back guarantee on shipments moving under this service as well.

Obviously, on most expedited shipments, cost is no object. It's just got to be there by a certain deadline-or else. There are times, however, when you may have some flexibility, and in such instances, given the substantial differences involved, cost may well influence your decision on which expedited service you use.

Editor's note: ABM Transportation Services can be reached at (516) 433-9226 or via its Web site (www.abmrate.com).

Ray Bohman is a well-known consultant and author. Mr. Bohman is editor of several highly successful newsletters on transportation and is a consultant to a number of national trade associations. He is president of The Bohman Group, consultants and publishers in the freight-transportation field. His offices are located at 27 Bay Lane, Chatham, MA 02633. Phone: (508) 945-2272.