There’s one area where FedEx Freight will stick to the LTL playbook: pricing. Although it’s redefining its services as priority and economy, it won’t change the rates it currently charges for next-day, two-day or longer-haul shipments. It also won’t move to the dimensional-weight pricing used by the package operations of FedEx Express and competitors UPS and DHL.
“Our pricing is based on a lot of individual customer contracts and tariffs,” President Bill Logue said. “We’ve tested simplified pricing, but that’s not driving the program here.”
Logue believes simplified LTL pricing methods eventually will win out, however.
“We really need to get the shipping industry more automated,” he said. “The parcel business takes place on an automated platform, but in LTL you’re still in a heavily manual environment. Automation would improve the customer interface and carrier’s cost position.”
Dimensional pricing will become an option as customers automate operations, he said. “There is certainly a demand for it, but there are systems issues involved. We’ve got to figure out a way to get there.”