It's time to review carriers' minimum-charge floors

By Ray Bohman -- Logistics Management, 11/1/1998

As reported in this column last month, several individual LTL carriers and practically all regional motor carrier rate bureaus have either implemented early general rate increases (GRIs) or will be doing so by early November. (Since my last column, AAA Cooper, American Freightways, Central Freight Lines, Consolidated Freightways, and all USFreightways LTL subsidiaries have gone ahead with GRIs.)

Not only are rates being raised on minimum charge, LTL, and truckload shipments, but some LTL carriers are also increasing their minimum-charge floors (what are many times called "absolute minimums"). These are flat dollar-and-cent figures, below which they will not go even after a discount is factored in.

Although it's still too early to tell whether we have a trend in the making, a review of increases announced by those few LTL carriers that have already raised their rates or will before Jan. 1 shows some hefty increases in minimum-charge floors. Here are some examples:

Increase in Minimum-Charge Floors

Carrier A $2.00 per shipment

Carrier B $3.00 per shipment

Carrier C

0 - 149 lbs. $6.75 per shipment

150 lbs. or greater $21.50 per shipment

Non-direct points $38.00 per shipment

Obviously, if you haven't compared your current or potential LTL carriers' minimum-charge floors recently, this might be an appropriate time to do so. You may find significant pricing differentials from carrier to carrier that didn't exist before.

Also, when comparing LTL carriers' minimum- charge floors, don't overlook minimum charges that apply on competitive LTL package carrier services, such as United Parcel Service's "Hundredweight" program or RPS's "Multiweight" program. The package carriers' programs may now be more cost effective--up to certain weights--than they were before, assuming that your shipments stay within the carriers' size and weight limits.

Of course, we've only been considering pricing differentials here. Other criteria for selecting one particular carrier over another may be more compelling. These might include the carrier's record of delivering shipments complete, loss and damage history, liability limits for lost shipments, percentage of on-time deliveries, and so forth.

But when you are talking about pricing differentials of $20 or more per shipment, this one factor might override all others in your choice of carrier.

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.