Understanding LTL Rates

Understanding LTL Rates

 

Do all carriers use the same base rates? NO !

No two major carriers rates are the same. Each carrier's rates are based on THEIR costs.

Do carriers have more than one base rate? Yes, some do.

Some carriers do use more than one rate base (which is why we must get all rate and tariff information from each of our customer)

What are some of the variables that effect carrier rates?

1) Zip Codes - Most rates are now based on 5-digit zip codes. The cheapest carrier going to zip code 75202 in Dallas, may not be the cheapest carrier going to zip code 75203 in Dallas.

2) Freight Class - Your lowest priced carrier on class 50 and class 60, may not be your lowest priced carrier on class 55

3) Weight Break - Your best choice for your 2,000# shipments, is not always your best choice for your 5,000# shipments.

4) Rate Increases - (At least) every year, carriers take an increase. That increase is not the same for all carriers and the published increase is an AVERAGE of all 'zip code, 'freight class' and 'weight break' increases.

5) Surcharges - Some carriers add additional charges to their base rates for certain zip codes.

What advantage is there to stay on a prior years rate base?

The only advantage to the carrier is to not have to admit that they are giving a 75% discount to a customer. The advantage to the customer comes if they have to pay to update their rate bases in their shipping system every year.

The disadvantages are that the carriers adjust their rates every year based on 'current business,' can that carrier discount as aggressively if they have to base their discount on their business from 10 years ago? Also, what happens when you are on a 'frozen rate base' and you start shipping to a new zip code? The US Post Office updates valid zip codes every three months, which is a good reason to keep your rate bases current.

What are some of the variables that affect a carrier's fuel surcharge?

1) Base Rate - Just as each carrier has it's own rate base, each carrier also has it's own 'fuel chart'

2) Zip Code - Some carriers FC (fuel surcharge) vary by zip code

3) Effective Day - Carriers vary by which day they adjust their FC. Your lowest cost carrier on Tuesday, may not be your lowest cost carrier on Wednesday.

4) Accessorials - Some carriers charge a FC on their Accessorials, others do not.

5) Region - Some carriers always base their FC on the 'National Average,' other carriers base their FC on a 'Regional Average', while others change which Average they used depending on a number of factors for each shipment.