Paul,
I have to say – if the carriers accepted this they must have felt it would really never be applied. Honestly, either I don’t understand what the plan is, or I think the carriers just simply ignored the wording as something that would not change the rating of shipments..
Is this what you are suggesting – If I have a product where the class is based on density and the carrier AW or DW the move, then the additional AW/DW is added to the move and the PCF and thus the class for the product is adjusted.
May I ask, how this is applied to the invoice by a carrier? Does your shipper have to make the adjustment before turning over the bill of lading to the carrier? In other words, they know 450 pounds is gong as 500 so they just state the shipment ways 500 pounds and then class the freight. I’ve never seen a carrier’s system or any TMS that does this type of calculation when rating a shipment.
If adjusted, the intent would be to lower the class. Isn’t this a “double whammy” to the carrier’s revenue (I’ve heard them use the whammy phrase)? the AW/DW is to lower the charge by using the higher minimum weight to end up with a lower cost. if you then add the AW/DW to the product and adjust the class down, then the rate goes down even more.
With about 90% of all shipments being weighed, and now 30 – 40% going through some dimension check, the carriers are relying on the technology to get it right, and they don’t build into a “reclassification” based on the AW/DW when rating.
I applaud you coming up with the idea and process, but I have a hard time seeing how it would work on actual moves.
Very interesting.
Thank you,
Jim G
Dear Jim:
The account has FAK provisions that kick in a higher classification at less than 4 lbs. PCF. As an example, a shipment that weighs 450 lbs. is billed as 500 lbs. If the cube of the single pallet shipment is 120 cubic feet, the density of that freight is 3.75 PCF. Based on my customer’s program, the shipment is rated at class 150. If you used the billed weight of 500 lbs. and divided it by 120, the density is 4.0 PCF. That shipment moves at class 70. Any carrier that recently entered into an agreement with my client must now use the billed weight for density computations.
Think about the difference in cost between a shipment billed at class 70 versus 150. A 450 lbs. shipment from Cranbury NJ 08512 to Pittsburgh PA 15106 costs $101.13 before fuel at class 70 and $210.67 at class 150. The savings are significant.
We do not artificially add weight to any shipment bill of lading.
There are many shipments my client moves that fall into the above circumstances.
How the carriers apply the contract for billing isn’t an issue. My client uses a freight payment company. Any discrepancies in rates are moved to an exception portal where my team reviews the invoice. We either approve or deny the adjustments. Since my customer is under contract, the carrier rules tariff doesn’t come into play. The contract is the ruling document. The data we collect via the exception portal is important, as it allows us to see who is an outlier. I recently reduced one carrier’s footprint significantly because their adjustments far outweighed the volume in comparison to the others.
Your comments on dimensionalizers and carrier W&I assertiveness only come into play when their rules tariff is applied to the invoice. Unfortunately, we do have to review many invoice adjustments, but it is a small price to pay for the savings.
I have spoken with two transportation lawyers on carriers using actual weight versus billed weight for classification computation. Both believe a shipper would have a strong case if they decided to challenge the carrier’s method for density determination. Of course, I am sure more than a few carriers anticipated the potential for legal action and have added rules to their tariffs.
Sincerely,
Paul Benfer
Kinetic Supply-Chain Services, LLC
5 Village Court
Hazlet NJ 07730
https://kineticsupplychain.com
Toll Free 866 572 7552
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