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Just about everything is negotiable

Ray Bohman -- Logistics Management, 2/1/2006

All less-than-truckload (LTL) motor carriers have established standard policies regarding classification, shipping rules, pricing, surcharges, and packaging requirements. These standards apply to all of their customers, but the carriers are also free to depart from them under their "right of independent action," and many do so.

That right of independent action often can be used to your advantage. If you're unhappy with the standards that currently govern your shipments, there's no prohibition against sitting down with your carriers and negotiating something more favorable.

Here are some areas in which you may be able to secure some measure of relief:

Classification.If your LTL carriers are party to the National Motor Freight Classification (NMFC) and you believe your classification rating (class) is too high, you might be able to get one or more of them to establish a lower exception rating.

Such a rating could apply to one product or it could be a single F.A.K. (freight, all kinds) rating for several products that normally take different ratings. F.A.K. ratings are becoming commonplace these days, so if your products qualify, it's worth exploring.

Shipping Rules.Most carriers either maintain their own rules tariffs or are participants in the rules published by rate bureaus or in the NMFC. On occasion the relevant organization may be willing to modify those rules at a shipper's request.

Let's say you are shipping to educational institutions and feel that the applicable delivery surcharge is too high. The carrier or group in question may be agreeable to dropping the added charge altogether or reducing it solely for your account. Fuel surcharges generally are published in individual carriers' or rate bureaus' rules tariffs, but I doubt most of you will get very far if you try to negotiate lower fuel surcharges.

Freight Rates.A number of shippers have been able to get their carriers to agree to adopt class rate levels that were in effect during a prior year, specifically for their accounts. For example, you might be able to get your carriers to apply 2002–2003 class rates for your shipments in lieu of the 2005–2006 scale of class rates.

Packaging Requirements. If you ship items in packaging that does not comply with the requirements set forth in NMFC Item 222 (the special numbered packages) or Items 180 or 181, you may have to pay a penalty. But if you have developed a new type of packaging that provides adequate protection but does not meet those specific requirements, your carriers might be agreeable to classifying it as compliant packaging and allowing you to use it for your shipments.

Make certain to get in writing any concessions that your carriers may agree to establish. That way, if any questions should arise in the future, you'll have a document in hand that spells out exactly what they agreed to.

Also, remember that once your shipments have been delivered to your customer, they may then be forwarded elsewhere via another carrier that never agreed to any concessions. In such cases neither that shipper nor its customer would be eligible to receive the concessions you negotiated.


Author Information
Ray Bohman is editor of several 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 office is located at 27 Bay Lane, Chatham, MA 02633. Phone: (508) 945-2272.

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