Less-Than-Truckload shipping is a complex and confusing industry. Accessorial
fees, surcharges, pricing structures and lane biases make it hard to understand the
true cost of shipping. Too often, shippers focus on rates and fail to understand the
impact of the costs. Avoid these common pitfalls.
For decades, LTL Carriers have offered seemingly unbeatable discounts off their
tariffs. Taken at face value, these discounts look impressive and can exceed 80%.
This discount is often relied on as the sole indicator for whether a company is
getting a competitive rate.
FACT: LTL carriers use sophisticated cost modeling that allows them to offer deep
discounts and still operate profitably. Ask yourself, “What’s the discount off of?”
Another common assumption is that using old tariffs, such as Yellow 1998 or Czar
Lite 2001, locks in low freight costs. By “freezing” rates, LTL shippers try to avoid
cost increases through time. On the surface, this seems like a good idea, but in
reality, this time travel strategy is flawed.
FACT: Carriers have become more efficient over time, using advanced technology
and process controls to lower their operating costs. Using old tariffs can actually
insulate against carrier efficiencies and price reductions.
Efforts to simplify and standardize LTL shipping costs have produced various pricing
schemes. These can make it easier to know what to bill customers for freight by way
of fixed costs, but they also play well into carrier profitability.
FACT: Simple rating structures can help accounting practices, but usually end up
costing more. Understanding the true price of shipping is the key to avoiding
negative freight variances.
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© 2009 HA Advantage
Manufacturers, retailers and distributers
can find considerable LTL freight savings
beyond current rates and tariffs – if they
know where to start. Challenging long-held
assumptions by looking at the true cost of
shipping instead of relying on inflated
discounts, old tariffs and easy pricing
schemes is the first step.
HA Advantage is a leading freight-management and financial-reporting company. Leveraging a
new in-source logistics model and proven business processes, HA Advantage combines webbased technologies and a proprietary tariff to create substantial bottom-line improvements for
small-to medium-size manufacturers and wholesalers. The AdvantageRate™ optimized tariff
eliminates lane bias and allows shippers to choose the lowest-cost carrier for every lane in the
United States.
5175 Johnson Drive
Pleasanton, CA 94588
877.290.3787
haadvantage.com