Is the LTL Industry ready for a Shipper – Carrier Pledge?

  • Is the LTL Industry ready for a Shipper – Carrier Pledge?

    Shippers and LTL carriers have long operated under a tacit freight tender process whereby the shipper uses the BOL to tell the carrier what and how much they are shipping, from where and to where, and what services are requested.  But it is too common for the shipper and carrier to disagree on what and how much was shipped.  This leads to a myriad of problems for the shipper including surprise charges they cannot pass on to their customer, administrative headaches, and complicated payment reconciliations.  For the carrier it means having a staff to police and correct freight bills, delayed payments, and unwanted friction with customers.  And for both sides, inaccurate or lacking data means an inefficient operation based upon guesses rather than the truth.

    Is the LTL industry ready for a real and meaningful change in how business is conducted?  Is the LTL industry ready for real partnerships between shipper and carrier to drive out inefficiencies and promote transparency and visibility?  Is the LTL industry ready for a true Shipper – Carrier pledge, that includes all or most of the following:

    • Shipper pledges to provide accurate handing unit dimensions, weights, descriptions, package types, counts, and service requirements on the BOL.
    • Carrier pledges to honor provided handling unit dimensions and weights within a 5% normal distribution tolerance.
    • Shipper pledges to utilize an Electronic Bill of Lading based upon industry standards.
    • Carrier pledges to issue ONE single invoice containing all charges including special services requested and/or provided.

    Think of the massive amount of friction and inefficiencies and overhead expenses that can be removed from the equation.  Think of the sense of partnership such a pledge can yield.  Carriers can learn a lot about the sense of partnership a shipper seeks by their willingness to sign such a pledge.  Likewise, shippers can learn a lot about the carriers they utilize.  The transparency and visibility provided by such a pledge could be huge.

    Today more than ever it is critical that shippers be seen as a “shipper of choice” by their LTL providers.  What better way to accomplish that than to give the carriers exactly what they want and need?  An accurate electronic BOL, complete with all the information the carrier needs.  It is definitely a case of helping them to help you.

    This could be what the industry needs to move it forward in the future.  That future almost assuredly means more pricing based upon density, which makes the early capture of shipment dimensions so critical.  It does not help the shipper for a carrier to identify dimensional or classification errors and fix them after pickup. By then, the shipper has already obtained a freight quote and most likely already invoiced their customer.  The shipment profile information really needs to be 100% known, by both shipper and carrier, at time of freight pickup.  That’s how the industry can remove inefficiencies.

    Some shippers may feel they don’t have a way to accurately weigh and measure their freight.  Well, there are many options out there to do both depending upon your operation.  There really is no valid excuse for not providing this accurate information.  In virtually all cases, the long-term cost of making such an investment in your operation will be more than offset by the benefits such as those noted above.  Other shippers may feel they do not have the means to provide an Electronic Bill of Lading.  There are a multitude of options, some provided by the carriers themselves.  Some of these options are even free to the shippers.  There really is no valid excuse for not being able to provide an EBOL.

    LTL carriers should embrace a pledge like this.  Sure, some may be worried about a loss of revenue.  Done right, this pledge can be monitored and audited to hold shippers accountable.  If one party reneges on the pledge, the other now has the right to back out as well.  And whatever revenue the carrier might lose from inspection activity, that loss should be more than made up for by capturing the right revenue on each shipment, every time.

    Lastly, most everyone involved with LTL shipping agrees that density-based pricing in one of many forms is the way the industry is headed.  Shippers want predictable costs, and they don’t want surprises.  So to really make density-based pricing, it is in everyone’s best interests for shippers to know exactly what they are shipping and how much.  Simply put, shippers need to know their commodity descriptions, the weights, and the dimensions.  And they need to provide that information to the carriers.

    So is the LTL industry ready for such a pledge between shipper and carrier?  If not, why not?


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