"If past history was all there was to the game, the richest people would be librarians." - Warren Buffett

Pricing freight without knowing the costs and operational details of the business creates unnecessary risk. You can't rationally provide a rate for a piece of business unless you understand what you are being asked to do. Here is a checklist of information to obtain and consider when rating a lane.

Regulations.

Analyze the lanes and operations to insure that loads can be hauled legally and efficiently. What looks good on paper is different from the driver's seat. Drivers run hub miles, not computer miles. A truck can only average 45 or 50 mph in most cases. In that truck is a driver, who has human needs, such as stopping for a rest, using the bathroom and eating. Determine if there are tolls, mountains, congestions, scales, multiple stops or other things en route which slow the driver down. Listen carefully if you hear drivers complaining that a lane can't be run legally. Track complaints and if you see a trend, determine the reason and address this with the customer. A common bid mistake is to price a lane as a one day run, when in reality it takes more time, turning it into a two day run. A truck and a driver will require a certain amount of revenue per day.

Mileage Determination.

Is the shipper paying on short miles or practical miles? There is around a 4% difference. If the shipper pays on short miles, then the fuel surcharge is less as well. Do the origins or destination require deadhead? If so, include both a rate and fuel surcharge for the empty miles to service these points profitably. Does the customer require point to point rates or state to state?

Volume.

How much volume is the customer offering?

Seasonality.

Is the freight steady or does it surge? Will the shipper pay surge rates if a carrier is required to surge with their freight?

Lane Ownership.  

Does the shipper expect lane ownership or is it flexible? If you are committed to serving a lane, you may have to incur deadhead miles if a truck is not in the area to service the account properly.

Dwell Time.

Analyze all warehouse facilities, pick up and delivery schedules. With the advent of CSA and electronic logs, time management is a critical cost component. Understand detention prior to pricing business.

Driver Friendly.

There is a severe driver shortage problem and drivers will gravitate to carriers with "driver friendly" freight. Is the business drop and hook? How are drivers treated at these facilities? Is there room to park? Can they park at the facilities overnight? Does the shipper overload trailers? Does the shipper load and secure the shipment or is the driver expected to perform this work? Is the warehouse adequately staffed to keep drivers moving? Are warehouse personnel properly trained on the issues in the industry? What are the hours of operation at the warehouse? Are they flexible? Are the drivers required to unload, remove nails and sweep trailers? Can a driver deliver early? Are driver facilities available?

Detention.

How much free time is allowed in the contract? The contract probably provides for detention, but does the shipper pay it? What paperwork is required? Do they pay detention within terms? Drivers hate sitting, even if they are paid. Trailer and power detention should be sufficient to reimburse costs and to hold warehouse personnel accountable for waste.

Trailers.

How many trailers are required? Is a shuttle service fee required? Does the shipper beat up trailers? Are you paid for trailer damage and the downtime incurred? What is the trailer turn?

Fuel Surcharge.

Does the fuel surcharge adequately compensate carriers for the changing prices in fuel? How often does it adjust? If a fuel surcharge is "light" the shortage must be included in the line haul rate. However, when fuel spikes it is easy to forget to change the line haul rate to reflect the added costs. Keep a list of customers with a "fuel surcharge light," and act quickly on the rates when fuel spikes. If you provide refrigerated service, is your fuel for the trailer covered either in a refer surcharge or in the rate?

Contract payment terms.

Anything over 30 days is an abusive practice. Consider the time cost of money and working capital. Does the shipper pay all charges, including accessorial charges within terms or do they play games? Late payments cost carriers' interest, labor and concern. Monitor account receivables for timely payments. Check the shipper's credit. It takes a lot of revenue to make up for one bad receivable.

Extra Charges.

Does the shipper charge for shuttle, lumpers, loading services, bulkheads and similar items? Is it pallet exchange?

Nature of the Cargo.

What is the cargo's value? High value freight requires the carrier to implement additional security procedures, procure additional insurance and should command a higher rate. Have you limited your cargo claim liability to the stated value? Is the shipment hazmat? Does it require special routing? Does the shipper provide the proper paperwork? Many drivers dislike hazmat because they believe they will be pulled over and inspected more frequently. Accidents can be more expensive. What is the average weight of shipments? Heavy loads burn more fuel. If you have a heavy load, take another look at the fuel surcharge before determining a line haul rate.

Contract.

Is the contract fair or it is a one sided "take it or leave it" contract? Contracts are often put in the file and forgotten…until something bad happens. Look particularly at limits on cargo exposures, indemnification clauses, waivers of subrogation, payment terms, and forced jurisdiction and venue. Does the contract state you will pay special damages, consequential damages or attorney's fees? Insurance may not cover these items. Does it provide for fines against the carrier? Does it require the carrier to pay for plant shutdowns or airfreight is the carrier is late? Does the shipper or broker have the right to unilaterally deduct disputed charges from your invoice in the event of a disagreement? Must you defend and indemnify for loss caused by the shipper or others? Does the shipper agree to defend and indemnify you if a third party sues you on a cargo claim for amounts beyond the agreed upon limits.

Customer Service Work.

Does the shipper push all order entry work onto your Customer Service Representative causing you to hire more customer service reps? Does the shipper use EDI? Do you have to pay for the set up? Does the shipper allow relationship building between your CSR's and their people or is everything based on a routing guide? Does the shipper tender loads in advance or at the last minute?

Relationship.

This is the only subjective element of the scorecard, but carriers know it when they see it. How was the relationship during the recession? History is the best predictor of the future. Did the customer give you all the information needed to make good pricing decisions or are they taking advantage of your lack of knowledge? Are there multiple rounds in the bid? Are you able to meet with and talk with decision makers and influencers? Does the shipper bid regularly or between cycles? Does the shipper change carriers regularly or are they loyal to incumbents with good service? Does the shipper work with you to reduce inefficiencies? Are the traffic people abusive? Retain all compliments as well as abusive emails.

There is so much low lying fruit.