LTL Carrier Costs

One of the hardest thing to understand or know is costs of a vendor you might use to price your business. So when I read Joe Heligs article in page 10 of Parcel Magazine  (http://bit.ly/12m2Eom) I knew I was reading something unusual.  In this article he talks about the actual costs a Less Than Truckload (LTL) carriers faces.

Two of the buzz words these days are “analytics” and “big data”.  What that means is while in the past a business could guess what it cost to serve a particular customer, now with the data available in its computer, they are going to get much closer to actual cost to serve a customer than they ever could before.  When a shipper negotiations for pricing, an understanding of the carrier’s costs will lead to a better result. In the article for instance the author says running an ltl pick up costs $120 to $130 hour. It will make a difference if you are in an industrial area where multiple pickups will occur or if the truck has to make a special one hour drive just to get to facility with no other potential customers around.

If you are a carrier or a shipper, one should always remember numbers tell important story but it is not the entire story.  Maybe that shipper one hour drive with his shipments  provides the outbound balance to loads coming inbound, therefore if a slightly lower price leads to that balance it may be worth it.

Finding a story like the one referenced here in Parcel Magazine is like finding a needle in a haystack. These things are not easily found in a general search engines like Google.  So it is worth looking in the table of contents when you get an industry magazine.

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