In recent years, RFPs in the less-than-truckload business has altered dramatically. The days of supplying only shipment weights, quantities, and lanes are long gone. Shippers must submit significantly more precise information in order to receive an appropriate upfront quote.
According to Curtis Garrett, VP of pricing and carrier relations at Recon Logistics, the key cost drivers for a carrier are space, time, and risk.
The space component examines cubed space as well as how loaded or dense the cube is. The “loadability” of the freight is also important. “How does the freight fit in the trailer and ride alongside the pallets of other shippers?” Garrett asked.
The amount of time a carrier’s assets and drivers are stranded has a significant impact on pricing. Time windows for collection and delivery, distance from the terminal to location, and the amount of time a driver will spend on-site all have a role.
The risk component of the shipping is debatable. According to Garrett, the carrier will be concerned about whether the shipper is transporting freight that poses an excess claims risk. Questions like the quality of the pallets used, the difficulty of reaching collection and delivery sites, and the physical demands of the driver must all be addressed in advance.
After receiving an RFP, a carrier obtains “operational intelligence on existing capacity and equipment status” from the ports and territories concerned. “Not every account in every region is a fit for every carrier at all times,” Garrett explained.
“The golden rule of LTL pricing is that the less a carrier needs to guess on modeling the company, the better your pricing,” Garrett explained. “If a carrier receives poor data or does not feel the data is accurate, they will always hedge and build in more of a pricing buffer.”
Frequently Asked Questions
Why do carriers require images of the freight with the RFP?
“Carriers want to see the packing, arrangement, pallets, and so on,” says GARRETT. They want to know if there is any pallet overhang, as well as sufficient covering and wrapping. Is the freight overly long or overly wide? All freight interacts with other pallets/crates on the trailer in the LTL world, thus there are tremendous space and risk ramifications if one shipper isn’t tendering cargo with sufficient care.”
Why am I being asked for the dimensions of my shipment?
GARRETT: “The linehaul segment accounts for the majority of an LTL carrier’s costs.” This cost is driven by occupied space in the trailer, thus having accurate cube/density data around each shipper’s freight is critical for accurately modeling costs and developing an accurate pricing scheme.”
Why do carriers require at least three months’ worth of shipment data?
“We’ve seen more recently where carrier networks are shifting based on manpower, equipment pooling, weather, and so on.” It’s also critical for the carrier to know who the consignees are because they may already be shipping to the area, thus lowering the price. Carriers want to be able to run a recent dataset through their cost model because their model inputs are regularly updated to reflect current conditions.”
What are you witnessing in terms of electronic bill of lading (eBOL)?
“A high-impact, developing area that carriers are placing a great value on is shippers/3PLs delivering them accurate BOL data via an API eBOL request,” says GARRETT. This expedites the entry of cargo data into the carrier’s system, aids in daily linehaul planning, and helps streamline the invoicing process on the administrative side.”
How can I become a preferred shipper?
“Always provide precise shipment info and label your pallets,” says GARRETT. Many shippers still fail to identify their pallets on a regular basis. Fill out the BOL as precisely as possible, and think about upgrading to eBOL capabilities. Pay your LTL invoices in accordance with your net terms. Make every effort to get your LTL driver in and out of your facilities as promptly as feasible.”
