Mr.Benfer –
I enjoyed your article How to Develop a Good LTL RFP. Some very good points. I too have been in the industry for some time, working with an LTL carrier for over 28 years in pricing, auditing, and weight/inspections. Also, I have worked the last 16 years consulting and sourcing all modes of transportation. Two parts of the article I wanted to mention specifically.
The first – “Most of the LTL carriers use costing software developed by TCG [Transportation Costing Group]. The TCG program utilizes data provided by the carrier to cost shipments.” I have been trying to explain to many in my company and shippers that only a few of the top 25 carriers don’t use this program. What is also not usually thought of is TCG is now owned by SMC3. SMC3’s “National Traffic Database (NTD)” allows carriers to use the same pricing programs, and have access to the largest bench-marking set of data in the US. I don’t know how you feel about this, but to me it is getting extremely close to a conflict of interest or close to being like the old tariff bureaus for carriers know what the others are doing and how to set rates.
The second – “One example is to require the carriers to use the billed weight instead of the actual weight (450 lbs. shipment rated at 500 lbs.) if your commodity is classified by density.” I understand the example is tied to the old policy of “not paying more for shipping less.” The concept is portrayed properly and as you know was in the NMFC and known as “bumping” in order to lower the class. Yes, I have used this in developing rules where not only could you bump the items subject to the old item of 171 in the NMFC, but any item subject to density. What should be a concern to the public is the removal from the NMFC both the bumping and maximum charge rules. Technically, today if a carrier or shipper does not have the maximum charge rule in the carrier’s or shipper’s rules, the carrier is no longer obligated to increase the weight of the shipment to the next higher weight break in order to lower the overall charges on a shipment. Again, as I established my rules tariff, I made sure the maximum charge item was in it. Yes, there are carriers out there that do not have the wording in their rules – XPO being one. Trying to do as you have outlined is nice to be considered, but I know of no carrier today that will entertain any type of “bumping” to change the class. For one thing, the use of electronics now to dim and weigh shipments makes it almost impossible for them to make an adjust to the PCF based on a change of weight for lower class. I know carriers simply could not reconcile the original bill of lading data with the bumping information to their W&I process.
Last – One thing I like to educate shippers about is the liability clause most carriers have in their rules when it comes to shipments out of Canada. The carrier continues to use the language stating the liability is limited to $2.00 CDN dollars “per pound of the article damaged” (or similar). The point is most carriers do this as the normal shipping public does not realize the liability is set by Canadian rules and regulations and the limit is not based on the individual article, but the entire shipment. So if you shipped 2000 pounds and 100 is damaged, the limit is not $200 dollar, it is $4000 dollars. Shippers should push back on this, as the carriers know they cannot go around this law when brought to their attention.
I thank you for your time and I would appreciate your comments and thoughts.
Jim G.
Dear Jim,
Thank you for your comments and kind words.
Your first comment goes to anti-trust. I agree with you that the potential for collusion increases every day.
I wrote a couple of articles on Item 171. Right afterward it was placed on the CCSB for removal. It was probably a coincidence.
My point on using billed versus actual weight was to reduce class adjustments based on density. LTL carriers use actual weight to compute density when billed weight should be the standard. I don’t view it as bumping, as Item 171 was referred to as an artificial way to reduce a shipment classification. I just ran an RFP for an account where we inserted that language into the contract. The good news is not one carrier requested a modification.
Thank you for the information on Canadian claims. I do recall the $2.00 CDN limitation but wasn’t aware it applied to the entire shipment weight.
Have a great week and stay healthy.
Sincerely,
Paul