Moore on Pricing: Your 2014 truckload pricing checklist

By Peter Moore, Adjunct Professor of Supply Chain
January 01, 2014 - LM Editorial

Shippers who are facing pricing pressure from driver shortages, new regulations, and rising fuel and equipment costs frequently ask me: “How can we get the carriers to be more efficient?” I interpret more as: “How can I save money without suffering from poor service?”

By way of response, I like to remind shippers that much of what they do in the freight buying process and in their daily operations drives up carrier costs significantly. To help keep a handle on these costs, I keep a list of elements handy that Dynarate’s Hank Mullen—the sage of truckload pricing—can rattle off from memory. Here are 10 of Hank’s favorites for shippers:

  1. Start in your customer service area and work to extend the notice you give carriers of upcoming loads. Instead of waiting for the warehouse or transportation system to issue freight orders, provide estimates of inbound and outbound needs as early as possible. A day or two of notice is worth money to carriers in optimizing their operations.

  2. Can you take advantage of a backhaul lane of your carrier? Planning time is important. Get to know the truckload carrier’s network and ask about lanes you can work together on.

  3. Do you have the best rates in your supply chain? Your customer or a supplier may have found that lowest backhaul or round-trip rate already. Don’t insist on using your carrier until you check with all of your business partners.

  4. Who are your neighbors? Talk with nearby companies and see if you can jointly schedule a continuous move, joint load, or shared trailer pool.

  5. Are you holding up a road driver at your facility? Under hours-of-service restrictions, you need to help the driver keep moving with “drop and hook” options as well as by providing space for standby equipment.

  6. Do you really need a 53 ft. trailer? If you have dense freight or less than a full truck to move, take advantage of reefer backhauls and 48 ft. trailers rather than insisting on a 53 ft. unit.

  7. Call a LTL carrier. They may surprise you with a truckload rate ( > 10,000 lbs.) in a unique situation (“lane special”) where they need to reposition equipment. You’ll possibly also learn that your LTL carrier is moving long hauls by interlining with your truckload carrier or by intermodal already.

  8. Do you have some hidden truckload freight? Could you possibly increase your volumes by combining more LTL into truckloads? There are systems that can help you explore multi-stop and pool distribution options. Increasingly, we see customers asking for multiple deliveries of smaller amounts during the week to save on space and spread out inventories. Pool distribution contractors will take your truckload and then schedule multiple deliveries from their facility during the week.

  9. Are you paying too much for insurance? If you have corporate coverage for your product through to destination, or if you can sign off on a low release value per pound, then you are entitled to ask for relief in your rates. See the Carmack Amendment and your carrier’s rules tariff for more details.

  10. Can you save on warehouse space with trailers? This may or may not be a plus for your carriers and should not be abused, but it’s worth exploring with your carrier on utilizing storage in transit to pre-stage inventory and postpone warehouse receipt by holding loaded trailers in a safe location. The carrier can balance driver schedules, and the shipper can relieve space pressure and costs in meeting customer demands.

If you’ve spoken to Hank Mullen, as I have many times, you know the list goes on. Shippers can make an impact on a carrier’s efficiency by broadening the scope of investigation into their own operations. Collaboration with your service providers will yield savings every time.

About the Author

Peter Moore
Adjunct Professor of Supply Chain

Peter Moore is Adjunct Professor of Supply Chain at the University of Denver Daniels School of Business, Program Faculty at the Center for Executive Education at the University of Tennessee, and Adjunct Professor at the University of South Carolina Beaufort. Peter writes from his home in Hilton Head Island, S.C., and can be reached at .(JavaScript must be enabled to view this email address).

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