While transport carriers are watching their rates drop due to overcapacity and weak demand, less-than-truckload (LTL) carriers are seeing rate increases in their annual contract bids.
LTL carriers have maintained the same pricing discipline they’ve held since they began slashing rates between 2008 and 2010, which lead to several quarters and even years of losses for a number of companies in the industry.
Pricing program
Being back in the “driving seat”, LTL carriers have been very selective with which 3PL’s they choose to partner with. The pricing programs we have in place at Blue Grace with our core carriers have genuine scarcity in the market that differentiates us from our competition.
Creating effective pricing programs can be challenging. Shippers are rewarded for wringing the lowest possible price out of carriers; carriers are keen to get paid the most for hauled mileages — a practice that’s not conducive to nurturing long-standing, high quality, rewarding partnerships.
But since a well-managed 3PL can handle LTL shipments for multiple shippers, they can match up shipments both from location proximity standpoint as well as pick up and drop off times to optimize delivery networks for carrier partners. Reduced empty miles, reduced truck idling time, improved truck utilization, and improved driver productivity are just a few benefits that are guaranteed and provide solid basis for an effective pricing program. Savings coming from these best-practices can be passed on to shippers in the form of overall transportation cost reduction.
It’s not about the price alone
Cost is important but we have been in the business long enough to know that it is not about the price alone. We have been monitoring and studying our shipping programs very closely and without exception, the accounts that have been hugely successful in the long run, are the ones where we’ve formed alliances with carriers. These alliances are collaborative relationships, in which we work together as partners to provide best-in-class services and solutions to our shipper customers.
- Despite the size or complexity of the business, we rely on the processes we use and the value that we create.
- We consider carriers as partners not as vendors.
- It’s about talent; it’s about people and how to get them to work together for long.
These alliances, close relationship with carriers enables us to make fast decisions, which lets the parties to be more innovative and can get rid of unproductive work.