Putting a Price on Speed

Putting a Price on Speed

Expedited trucking is a premium service, commanding a premium price. But that price might not be as high as shippers think, carrier executives said.

“We’re going to be higher than any truckload carrier, but if you look at the total cost of logistics, including damage and theft, we can show our customer we’re a low-cost provider,” said Panther Expedited Service’s Andy Clarke.

Expedited pricing “is surprisingly close to the LTL rate structure in many instances,” said Jeff Curry of Express-1. “The cost of expedited has decreased and the cost of LTL actually increased over the last several years, though not the last year or two,” he said. “The two have become much more aligned.”

And while expedited pricing is still higher, “the added level of service is sometimes very worthwhile” to shippers, he said.

In recent years, less-than-truckload and truckload carriers have targeted expeditors by expanding next-day services. The expeditors struck back by partnering with or acquiring companies to offer more shipping options at various prices. That’s helped keep freight in their networks, expedited carrier officials say.

“The conversation has really changed with the customer,” said Virginia Albanese of FedEx Custom Critical. “It used to be, ‘So-and-so charges me $2 a mile, will you give me $1.95?’ Now they’ll come to us with two pallets. We can feed the characteristics of the shipment into our system and it will give us an array of services at various prices. If you need it to be there at 5 a.m. tomorrow, your best bet is an exclusive expedited truck. If you can wait a bit longer, we can put it on expedited LTL. We give them options.”

One thing expedited trucking is not is a commodity service. “If you’re just looking at the rate per mile,” Clarke said, “that’s not where we sell to our customers.”