If you move your freight through LTL (less-than-truckload) carriers, sooner or later you’ll hear the term General Rate Increases or GRI’s pop up. What is it and how can you reduce your impact from them?
What is a GRI?
GRI’s are the average amount that an LTL motor carrier will increase their base shipping rates. GRI’s have zero impact on contracted rates, but they give us insight on what to expect during contracted negotiations.
Typically, GRI’s only happen once a year. As of March 2020, industry leaders like FedEx, UPS, and Old Dominion have already announced and published their increases, which ranged from 4-6 percent. The rate increases assure that carriers continue to operate efficiently and maintain profitability. They happen for many reasons such as:
Offsetting Carrier Costs
GRI’s are meant to offset any predicted increases that carriers may incur. Increases in carrier costs this year were caused by technology upgrades, increases in regulatory compliance, and rising fuel costs.
Increased Competition for Drivers
Attracting new drivers and keeping current ones is still a hot topic for carrier companies. Keeping up with demand means offering carriers better pay and benefits. These includes things like higher driver wages, better sign-on packages, better health insurance, and 401Ks to stay competitive in the industry. Those costs work their way to shippers through General Rate Increases.
Equipment Costs
The need for companies to invest in new technology, manage and update their fleet, and brick-and-mortar costs can cause an increase in their rates.
Reducing Your GRI Impact
Shippers can often predict and plan in a General Rate Increase but working with a third-party logistics company like Trinity Logistics can help reduce your impact from GRI’s altogether.
3PLs are less impacted by GRI’s. You can count on our experience negotiating with carriers, buying power, and our LTL relationships keeping the impact of GRI’s to your company to a minimum.
Choose to ease the headaches of GRI’s and begin working with Trinity Logistics today.
Customer specific pricing (CSP) is one approach that third-party logistics (3PL) brokers use in the Less-than-truckload (LTL) industry 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 may only be used for the designated shipper.
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. In these cases, 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(GRI). Once finalized, CSP agreements are good for 12 months and any items negotiated are not subject to carrier General Rate Increases (GRI). 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. These can be negotiated 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. 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:
- Data collection
-
- Information is collected for qualifying the account and preparing the bid packet.
- Bid packet completion
- An Request For Pricing (RFP) bid packet is put together to send out to LTL carriers
- RFP
- Target carriers are selected. The bid packet is sent out to the carriers. Selected carriers analyze the information and provide us with a pricing proposal.
- Carrier bid analysis
- The carrier proposals are reviewed and analyzed to determine competitiveness among each other and with the customer’s current rates.
- Implementation
- Winning carriers are selected, and the rates are put in place.
Working with Trinity’s experienced LTL CSP Team can help you meet rising customer demands to provide quality service at an affordable cost. It allows you to be able to negotiate upon a specific carrier-neutral rate base, which isn’t subject to periodic changes made by the carrier. This allows for an easier freight spend impact analysis. 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.
Interested in gaining insight on how Trinity Logistics’ LTL CSP Team can help you?