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What’s involved in an RFP for an LTL shipper?

AskWaves looks at the data needed to get accurate LTL pricing

The more detail an LTL carrier has the more accurate your pricing will be. (Photo: Jim Allen/FreightWaves)

RFPs in the less-than-truckload industry have changed significantly in recent years. The days of just providing shipment weights, volumes and lanes are gone. For shippers to get an accurate upfront quote, they need to provide much more detailed information.

For a carrier, the main cost drivers are space, time and risk, according to Curtis Garrett, VP of pricing and carrier relations at Recon Logistics.

The space component looks at cubed space and how loaded or dense the cube is. Also, “loadability” of the freight matters. “How does the freight fit in the trailer and ride next to other shippers’ pallets,” Garrett said.

The amount of time a carrier’s assets and drivers are tied up is a big dictator of pricing. Time windows for pickup and delivery, distance from terminal to location and the actual amount of time a driver will spend on-site all factor into the equation.

The risk component of the shipment is open for debate. The carrier will have concerns over whether the shipper is moving freight that presents excess claims risk, Garrett said. Questions around the quality of the pallets used, the degree of difficulty reaching pickup and delivery locations, and the physical demands of the driver all need to be answered ahead of time.

Once a carrier gets an RFP, it acquires “operational insight on the current capacity and equipment status” from the terminals and regions involved. “Not all accounts in all regions are a fit for every carrier at all times,” Garrett said.

“The golden rule of LTL pricing is that the less a carrier has to guess on modeling the business, the better your pricing will be,” Garrett stated. “If a carrier gets poor data, or doesn’t believe the data to be accurate — they will always hedge and build in more of a buffer on the pricing.”

Often-asked questions

Why do carriers need to see pictures of the freight with the RFP?

GARRETT: “Carriers want to see the packaging, configuration, pallets, etc. They want to see if there is pallet overhang, proper protection and wrapping. Is the freight too long or too wide? In the LTL world, all freight interacts with other pallets/crates on the trailer — so there are huge space and risk implications at play if one shipper isn’t tendering shipments with proper care.”

Why am I being asked for shipment dimensions?

GARRETT: “The largest portion of an LTL carrier’s cost is represented in the linehaul segment. Occupied space in the trailer is what drives this cost — so having accurate cube/density data around each shipper’s freight is very important to properly model costs and develop an accurate pricing program.”

Why do carriers need at least three months of recent shipment data?

GARRETT: “We’ve seen more so lately where carrier networks are changing based on labor, equipment pooling, weather, etc. It’s also important for the carrier to know who the consignees are as they may be already shipping to the location, which could lower the price. Carriers want to be able to run a recent dataset through their cost model, as they are constantly updating their model inputs to match current conditions.”

What are you seeing on the electronic bill of lading (eBOL) front?

GARRETT: “A high-impact, emerging area that carriers are placing a huge importance on are shippers/3PLs sending them accurate BOL data through an API eBOL call. This gets the shipment data into the carrier’s system sooner in the process, can assist with daily linehaul planning and helps automate the billing process on the admin side.”

How do I get to be a shipper of choice?

GARRETT: “Always give accurate shipment data and label your pallets. Many shippers still don’t label their pallets regularly. Fill out the BOL as accurately as possible and consider upgrading to eBOL capabilities. Pay your LTL invoices within your net terms. Strive to get your LTL driver in and out of your facility as quickly as possible.”

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Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.