LTL Pricing can be too Spirit Airlines

Spirit Airlines is well known for all sort of fees added to their base fare. The lure of low base fares dose drive business to the airline. But a sizable number of airline customers are not happy with these type of fees.  It is not the way they want to be treated by airline and choose other airline carriers.

It is my experience that too many LTL (Less than Truckload trucking) carriers use the Spirit Airlines model in their pricing thinking the only way to get business is with low base fares but plan in reality to get additional with extra fees to make margins.

So let’s stop here a minute and talk about LTL carrier costs. Space and weight take up available trailer space. Carriers if they want to be profitable must think about these issues. Outside services such as loading, lumper services at grocery warehouses cost money and deserve to be compensated. Certain origins and destinations may be much more costly than average to serve than others and deserve higher pricing.  Another way to put this paragraph is LTL carriers are businesses with costs and the need for positive margins to be successful.

Some Spirit customers is to get to the airport and find out a there are unexpected fees which if they don’t pay means they will not get their destination. So they pay them.

Shippers are somewhat in the same boat. If there is a surprise in additional fee or accessorials, usually learned after the fact and when their customer has been billed, the shipper’s profit margin goes out the window.  Shippers will need to pay up or probably will not have that carrier’s service in the future.

In today’s massive data and technology world, LTL carriers are in the best shape ever to figure their costs. And yes, LTL carriers need to cover the costs and to make margins.  LTL carrier’s knowledge is rarely communicated when RFP or bid time comes around and ultimately make’s everyone look bad, shipper and carrier alike, when costs do not match estimates.

Ultimately this lack of communication of anticipated costs increases effects the carriers and shippers cost to process transportation billing and leads to both carrier and customer dissatisfaction with each other.

Right now there are few pricing processes that can avoid the stress of unanticipated additional charges after the bid. At the minimum, for a short term solution, I would recommend Shippers and Carriers ask the question about what costs are likely to occur and not visible on the bid. LTL carriers have done a poor job of being user friendly on pricing.  My guess is there is market out there for the carriers who find way to to have predictable pricing.



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