Price. Cost. Value.
These words seem interchangeable when we talk about LTL…but they all have separate meanings.
- ✔ Price = What you pay (the actual shipment invoice from your carrier, maybe with corrections)
- ✔ Cost = What you expend (the shipment invoice + all costs associated with the shipment - administrative costs, damages, delays, any other exceptions, customer goodwill, etc etc)
- ✔ Value = What you get (what the carrier is actually providing to you - shipment picked up and delivered on time and in full, invoice meets expectations, customer is happy)
Too often in LTL, the focus is centered on Price (and it makes sense due to the proliferation of TMS systems).
Shippers rate-shop and choose the cheapest carrier; shippers too often see the carriers that pop up on their “Expedia” choiceboard as interchangeable service providers.
But do you really know the full cost and value you can receive from each LTL carrier?
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The fact is each LTL carrier offers a very unique value proposition for your shipments. Each carrier offers a different price, and you expend a different total cost structure when tendering freight to them.
In return, you get a different value from each. What does that mean?
Consider Carrier X, who gives you a very cheap price but may not consistently pick up or deliver your freight on time. Maybe their damage claims are higher than average too.
When you try to communicate with Carrier X, you get stuck in their “1-800-Wait-on-hold-forever” phone queue which takes hours just to reach a simple resolution. On top of that, you have more reweighs and reclasses with this carrier than with others.
Now consider a different partner - Carrier Y. Even though their pricing is 10% higher than that of Carrier X, Carrier Y is hardly ever late on pickups or deliveries, has nearly zero damages, and is extremely easy to reach at the local terminal level when issues arise.
Who has the best price? Carrier X.
But, who has the lower total cost? Carrier Y.
So...Who provides the most value? Carrier Y.
It's a fairly simple concept. The focus really should not be on Price - it should be on Minimizing Cost and Maximizing Value.
Don't treat your LTL carriers as a commodity…or they may just treat you as a commodity!
Analyze your data with someone at Rocket today for a full cost & value breakdown from each of the carriers in your portfolio. Reach out now to get started, and #LetsTalkLogistics 🤝
This article was collaboratively written by “LTL Observers” - a collective of industry veterans spanning the carrier, shipper, 3PL, and tech provider spaces who are willing to report their findings and share opinions.
Want to get involved with these opinions we release? We'd love to add you to the line-up to ensure we include a diverse set of LTL observers. Contact us today.