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Transportation Best Practices/Trends: How shippers can gain from dimensional pricing | Logistics Management

4 moves shippers need to make
There are four key actions that shippers need to make in preparation for the coming freight pricing revolution.

First, shippers need to learn about pricing models verses rate tables. Pricing models will likely be more complex, but it’s the disaggregation of pricing—beyond just density—where the savings opportunities will be found.

Second, make changes to shipper-controlled processes to enable more flexible shipping and handling options. Work with customers and your own receiving dock to make receiving times more flexible and to turn trucks faster. Determine if you can self -insure to earn lower release values when shipping.

Third, invest in new technology and connectivity to enable API calls to carriers for rates and service metrics. Use the cloud and third party integrators to reduce the need for internal IT support. Agree to use the carrier’s rate system as the system-of-record to simplify invoicing and auditing and to reduce errors.

Fourth, learn about collaborative contracting and know which carriers and 3PLs are ready to implement it. Remember that the International Association for Contract and Commercial Management and major universities are promoting the idea of collaborative contracting thus legitimizing it for purchasing professionals. A growing list of carriers and shippers are experiencing the benefits of breaking the old paradigm of class-based rates and annual bidding on pricing tables.

Getting started
Shippers approached by carriers to start using dimensional or density pricing should respond that they would only entertain this new process if more elements of freight cost are on the table.

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Transportation Best Practices/Trends: How shippers can gain from dimensional pricing – Logistics Management.