Ray Bohman has written a column on pricing trends for Logistics Management Magazine for more than 16 years. The long-time transportation consultant graduated from the Wharton School of Finance and Commerce, where he majored in transportation, and from the U.S. Army Transportation School at Ft. Eustes, Va.

Ray is a registered practitioner before the Surface Transportation Board and represents a number of national trade associations, such as the Toy Industry Shippers Association and the National School Supply and Equipment Association, in transportation matters. He also is managing director of the International Furniture Transportation and Logistics Council. He has written several guidebooks for transportation managers and publishes several newsletters.

An astute observer of the trucking industry, Bohman recently spent time with Executive Editor James Cooke, discussing his thoughts on the future direction of regional motor carriers.

LM Regional trucking has been the hottest growth segment in the trucking industry. Will that continue in 2004?

RAY BOHMAN It will continue because the economy is expanding. Also, a lot of the carriers have found a niche and they're doing well at it. I don't see anything that will diminish that growth, although you're going to see a few fatalities among some of the smaller, unionized LTL carriers. They seem to be the most vulnerable.

Overall, the regionals will continue to grow, particularly those that are innovators and are able to work with the new hours-of-service rules, and those that are offering faster deliveries.

LM Do you expect more regional carriers to offer money-back guarantees on delivery?

RB Absolutely not. When you saw Con-Way and FedEx Freight come out with those guarantees, you would have thought the others would have to respond. Nobody to my knowledge has followed suit.

Take Con-Way. They have such a good on-time record that they're not going to give away the store. But I don't see that becoming a big deal. To be honest, a lot of them don't want to touch it, particularly right now with the hours-of-service rules changing. They have a lot on their hands to adjust to that.

LM Over the past few years, regional truckers have entered into interline agreements to provide service to shippers outside their territories. Will that trend continue?

RB I would say that it probably will. They're relying on a partner, and some have worked out good alliances. Whether it's good or bad depends on who they jump in bed with.

When they go in there (to a shipper), they want to be able to take care of much, if not all, of the freight that the customer is tendering. With the interchange arrangements broadening territorial coverage, they can do that.

LM How will the combination of Yellow and Roadway impact the regional trucking market?

RB That's a tough one. They will go after more regional business than they have in the past because the long-haul growth isn't as great as it was. They are cutting transit times. There's going to be tougher competition with the big guys involved, and they've got advantages like the technology they have to offer.

LM Will larger regionals like the Con-Ways and FedEx Freight put more pressure on small players in the regional LTL market?

RB They have up to now, and that will continue. The Con-Ways' overnight service up to 400 miles is tough to compete with, though their rates are a little higher. The smaller regional carriers have to decide whether to compete against the likes of those carriers.

LM Do you expect that there will be other major mergers among regional carriers to counteract the Yellow-Roadway merger?

RB Yes. I'm waiting for UPS to decide whether, to be competitive with FedEx, it has to acquire an LTL carrier. To me, the most obvious [acquisition candidate] out there is ABF Freight System, because it has Teamsters and national coverage—two important factors that UPS would want. I don't think they want to touch a non-union carrier. Sooner or later UPS is going to say that they're lacking one element of broad comprehensive service that their major competitor offers.

LM What pricing strategies should shippers consider if they want to obtain the best freight rates from LTL carriers?

RB Obviously, discounting is the most widely used strategy. Second, there's the Freight All Kinds rating, where somebody has a Class 100 rate in the National Motor Freight Classification, and they go after Class 70 and still hold on to a good discount. It's like double dipping.

Another thing they could do is have the carrier spot trailers while they do the loading all day, giving it to [the carrier] as a shipper's load and count. It might be worth something in rate reductions. There are going to be opportunities if shippers are aware of the carriers' needs—if nothing else, to at least make changes to avoid an increase.

LM Should shippers make more use of online tools to select regional carriers?

RB If the regional carriers have those features that some of the majors have on their Web sites, such as rate quotations, it would be a good time saver. It's an expense for a big carrier to enhance their Web sites as many are doing. A lot of small carriers can't afford all the bells and whistles that the bigger guys can offer.

LM Do you expect discounts to deepen or flatten next year?

RB They may decrease slightly or almost flatten out. With CF (Consolidated Freightways) out of the picture, you don't have anybody out there cutting their prices in a heavy-handed manner. The carriers are trying to exercise some restraint.

LM Will regional truckers start to balk at giving shippers tailored rates now that the economy is picking up?

RB If they can handle it in their computer systems with the rate scale that the shipper has developed and make money on it, they'll go along with it. But I don't think they're as anxious to do that as one might expect.

LM Many truckers are using analytical software to determine who are the profitable customers these days. As a result, do you expect more shippers to face rejection when tendering loads?

RB Not rejection. Truckers would rather jack up rates and put it on a profitable level than just walk away from that business. One major LTL carrier I talked with a couple of years ago said it had been giving a 55-percent discount to a manufacturer of steel cabinets that had a 52-percent claims ratio, so they were dropping them. That was so unprofitable. So they do sometimes drop them, but they would rather hold onto them with some adjustments.

LM Any other major directions that will show up in the regional LTL marketplace this year?

RB There's been some mortality out there and we'll see more. The challenge for the regionals to stay in business is great.