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Rate Expertise Still Needed

By Francis J. Quinn, Editorial Director -- Logistics Management, 11/1/2003

Prior to the transportation deregulation acts of the early 1980s, rates were at the heart of the business discipline then known as traffic management. Magazines and periodicals were devoted to the subject. At least once a month, a new book would come out on the intricacies of the rate-setting system. Tariff libraries were bursting at the seams. And the Interstate Commerce Commission (ICC) in Washington and its regional offices around the country were the principal adjudicators of what could and could not be done on the rate front.

All of that represents a distant past now. In fact, we've probably reached the point in time at which there are more logistics managers who never worked in the old regulated environment than those who did. As the years pass, of course, there will be fewer and fewer veterans of those late, largely unlamented deregulatory days. (To get a glimpse of what it was like back then, we point you to the interview in this issue with David Stubblefield, the former head of ABF Freight System, who recently was honored with the National Industrial Transportation League's Logistics Executive of the Year award.)

But just because there's less talk about the subject today—and just because there's no ICC looking over the shoulders of carriers and shippers as they discuss rates—don't assume that knowledge of rates and a competency in rate management is no longer important. If fact, it's as critical today as it ever was. Put another way, it's a core competency of the modern logistics professional.

That point is underscored in every issue of Logistics Management in Ray Bohman's "On Pricing" column, probably the best single resource of practical advice on how shippers can better manage their transportation costs. In this issue, Ray also has written a feature article examining some of the rate-comparison software that's on the market. This technology enables shippers to automatically compare rates for multiple lanes and destinations in a fraction of the time that it takes to do the job manually. In times of lean staffing, that's a pretty compelling benefit.

Yet the rate-comparison software and other routing and modeling programs available today sometimes make us lose sight of that old gridiron maxim we're fond of quoting: At the end of the day, it's the basic blocking and tackling that gets the job done. And the ability to understand, negotiate, and manage the rate process is about as fundamental as it gets. Logistics professionals who understand this and develop that capability as a core competency put themselves and their companies squarely on the road to success.

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