WHAT IS LESS-THAN-TRUCKLOAD CUSTOMER SPECIFIC PRICING?
Customer specific pricing (CSP) is one approach that third-party logistics (3PL) brokers use in the Less-than-truckload (LTL) industry. Allowing customers to pursue, secure, and operate LTL business. CSP refers to the negotiating and publishing of customer specific pricing programs with LTL carriers for a specific LTL shipper. This is in contrast to using generic or blanket pricing agreements with carriers to move LTL freight. LTL carriers provide blanket pricing agreements to a 3PL that can be used at any time for any shipper. Customer specific rate agreements are only be used for the designated shipper. Which allows you competitive pricing for your customers.
CSP is often negotiated for shippers with higher volumes of LTL freight. Usually, blanket pricing may not be competitive enough to gain business from shippers with high volumes of desirable freight. Moreover, CSP can be a good option for securing more competitive rates.
BENEFITS OF LTL CSP
CSP can be a great way to protect our customers from general rate increases. Once finalized, CSP agreements are good for 12 months and any items negotiated are not subject to carrier General Rate Increases. CSP can also be beneficial due to the fact that the rates are negotiated specifically for the customer’s needs. For example, let’s say a shipper requires a Freight Of All Kinds (FAK) or has specific accessorial services they use often. Additionally, customers can negotiate with the LTL carriers as part of the customer specific pricing.
Finally, customer specific pricing is better for both the customer and the carriers. Carriers usually prefer account specific rates. This allows them to put pricing in that they have developed around the needs and details of the customer’s freight. The dedicated carriers get familiar with the customer’s business, shipping and receiving requirements, and freight profile. Additionally, this allows for a higher level of service for your customer, fewer carriers to work with, and fewer service failures.
HOW DOES CSP WORK?
Below are the key steps in the CSP process:
1. Data collection–Information is collected for qualifying the account and preparing the bid packet.
2. Bid packet completion– A Request For Pricing (RFP) bid packet is put together to send out to LTL carriers.
3. RFP–Customer choses their carriers or brokers of choice. Then, the bid packet is sent out to the carriers. These carriers analyze the information and provide us with a pricing proposal.
4. Carrier bid analysis– The carrier proposals are reviewed and analyzed. This is used to determine competitiveness among each other and with the customer’s current rates.
5. Implementation– Winning carriers are selected by customer and broker together. Once chosen the carrier’s rates are set into motion
Working with GlobalTranz’s experienced LTL CSP Team can help you meet rising customer demands to provide quality service at an affordable cost. Also, it allows you to be able to negotiate upon a specific carrier-neutral rate base. These rates aren’t subject to periodic changes made by the carrier. This allows for an easier freight spend impact analysis. Additionally, it offers you many carriers to choose from and guidance from our team to select the LTL carrier that is the right solution for your shipments.
