LTL Tariff Myths and Dimensional Parcel Pricing

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Hi, I’m Mike Regan with TranzAct’s two-minute warning for the week of June 30th. In this two-minute warning, we want to briefly share some information about UPS and some more information about how you
can conduct a world-class LTL sourcing event. Last week UPS announced that effective
December 29th, they will use dimensional weight to
calculate billable weight for UPS ground shipments here in the
United States and in Canada. Now taken in conjunction
with FedEx’s recent announcement regarding dimensional weight, these
changes could have a significant impact on your
transportation budget if you have a lot of ground and parcel
shipments. That’s why I will work to provide you
with information in the future to help you understand just how much of
an impact this could have on your transportation
budget. In this two-minute warning we want to continue providing you with
information about how you can conduct a world-class LTL sourcing event, and
that brings us to the question that we get from a lot a shippers as they are about to send out RFP’s for
LTL services. Specifically they want to know, “Is there
one thing we should really pay attention to before we go to market?” And our answer to that is, “Yes, there is.” You should make sure you use the right
base tariff. Now some of you may be saying, “Wow, does the base tariff really make a big difference?” And that’s
why in this two-minute warning, we want to dispel three myths that are commonly held about the base tariff itself. Myth number one is that the base tariff really doesn’t
make a difference. I can use Mars, CzarLite or a carrier tariff, and the carriers will cost neutralize
the tariff to make the difference irrelevant. Well that’s not true, because there’s no
way a carrier can cost neutralize in LTL tariff. The LTL tariff that you use can have a
big impact on your LTL costs. Myth number two: The
tariff itself really won’t impact us in the future if we want to do analytical work regarding our LTL
freight cost. The reason that’s not true is because
depending on which base tariff you use, you may also have to pay for software to
access that tariff. And when you have to pay for that
software it will be done on a very small per look-up charge, but
overall when you do a benchmark analysis where you have potentially hundreds of thousands of look-ups, those little charges could make a big difference. And that
brings us to myth number three: A customized tariff really won’t save our
company that much money. Now, having conducted billions of dollars
worth of LTL sourcing events for our customers, we know that myth’sisnot
true, because a customized tariff can
save you a lot of money because it reflects the way you do
business and where you ship your freight. Now with each and every two minute
warning, we’re here to remind you we’re on your team, we’re here to help, and
we’re passionate about seeing you be successful. And that’s why we also want to wish you
and your family a very happy July 4 as we celebrate Independence Day here in
the United States. Thanks for your time.

 

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