February 9, 2010
Con-way Freight will soon begin offering “truckload-style” pricing for large less-than-truckload shipments by capping rates in an effort to funnel more business into its higher-cost LTL freight network.
The new rate system, which Con-way Freight is calling “True LTL Pricing,” will apply a simpler rate formula commonly used in truckload shipping and removes unexpected charges that can typically show up when moving large LTL freight, Con-way said. The carrier is also offering guaranteed delivery and will never charge more than truckload.
“We recognize customers tend to choose truckload for large LTL shipments due to the unexpected charges and unpredictability of LTL pricing,” said Con-way Freight President John G. Labrie. “Today, we’re fundamentally transforming the way we do business.”
Aside from achieving higher freight density by mixing smaller and larger shipments into available hauling capacity, Con-way anticipates the new pricing scheme addressing environmental concerns by reducing carbon emissions and cutting down on traffic congestion.
Contact John Gallagher at jgallagher@joc.com.
This article gives a message I fear is going to lead to more advantage being taken of businesses that do not understand pricing methodology being used by LTL carriers such as Con-way. An uninformed company will make the mistake of believing they are getting a reasonable truckload rate when it will not be. It appears to me this will be a continuation of the game being played with LTL rates. Even in large corporations there are people who do not realize how the game is played. Carriers like Con-way very often use their own base rate which is extremely high and give the shipper a "big" discount like 80%. Even Czarlite rates are highly inflated so they can be effectively used in "selling high discounts. The unsuspecting shipper thinks they are getting a good deal and in fact they are paying a very high rate. It is similar to my having a house worth $200,000.00 and telling someone I will sell it to them for $1.500,000.00 at an 80% discount. I have not given them a good deal and the more naive they are about housing prices the better chance of being taken advantage of. This is exactly what is happening within LTL and it is very unfair to small businesses imparticular. I believe the proposed idea is not so much an advantage to the shippers and geneeal public as it is a new twist on marketing.
I believe a major change in pricing for LTL should be pushed by small and large businesses to bring the best advantage to busines and ultimately the consumer. This initiative should be grounded in requiring there to be a standardization of pricing method that does not have at its core rates that are so inflated there is actually as much as a 20% bottomline price difference on discounts that are only 5-7% apart.
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