Ltl Discounts Origin Of The Confusion Marketing Strategy

As a person who enjoys history and is deeply rooted in the transportation industry I will try to keep this short and knowing all of your schedules BLUNT! Stay with me and trust me…at the end of this short piece you will have a far better understanding of the trucking industry than the freight reps who pound on your door (a future article). If you disagree at the end of this let me know and I’ll buy both you and your rep lunch. (at a discount, of course!)

What should you look for in a freight carrier? Forget about the way you select a freight carrier in 2010 (both LTL and truckload). I’m going to explain how we’ve gotten to where we are at. When I explain to my customers that trucking was once heavily regulated by the government they look at me like I’m crazy. It gets better.

Imagine it’s 1935 and The 1935 Motor Carrier Act gave the Interstate Commerce Commission (ICC) regulatory authority over trucking. That’s right, the ICC controlled whether or not a carrier was granted operating authority. If denied, you had two options: purchase the authority of an existing trucking company, at a premium, of course or gobble up newly available lanes as other carriers went out of business. If a carrier wanted to run a new lane they went before their state operating authority and asked PERMISSION to do so.

Perhaps most interesting is the fact that the ICC also set the RATES and services each carrier could offer. That’s right, those sales reps who call you all day and “just stop by” could not offer “discounts” between 1935 and 1980 because everyone had the same rates. The term FAK was not developed yet. As one veteran of the trucking industry states “Pre 1980, the sales people traveled with a trunk full of booze, cigars, and tickets for sporting events.” Perhaps a frightening thought for all of you business owners out there but a small dose of reality nonetheless.

At this point if you haven’t already thought it I’ll put the idea in your head: imagine if all of those freight reps who bring you sticky buns, donuts and pizza couldn’t win (or lose) your business with PRICE. How would you select a carrier?

As a person in charge of spending a lot of time with customers and developing new business I ask prospects nearly 100 times a week what their primary reason is for selecting a carrier. The most common answer?: PRICE! Now I know none of them would lie to me (enter, sarcasm) so I imagine at this point in my little history lesson you are all wondering….How WOULD I have chosen a carrier if price were taken out of the equation?” Those Crispy Crèmes sure are good!

That question, as you can imagine comes up as well in my daily travels. The most common answer: SERVICE. Okay, a close second is “whoever I like dealing with most”…a response that can be considered closely tied to service. Trucking companies worked hard to develop an extremely loyal customer base that stuck around because of the ‘whatever it takes’ attitude at the time. Customers were king and servicing them was the primary focus.

It’s the end of another week of 2010 in a completely different trucking industry than it was 75 years ago. I can’t help but wonder if the MAJOR LTL (if you really need to know which one continue reading) company that lost the time sensitive freight of one of our customers would have handled things differently pre-1980 when customers were treated differently. Two day guaranteed delivery from Pennsylvania to Kansas turned into 9 days and damaged custom freight that ended up getting returned back to our customer in PA while production down time in KS cost hundreds of thousands of dollars!. To top it off a replacement was sent via a different MAJOR LTL company that failed to meet it’s guarantee also. The system is antiquated.

I’m now taking you back to the days of trucking industry regulation for a moment. As all of you know, the present day trucking industry is no longer regulated by the government. In fact, the Motor Carrier Act of 1980 resulted in a defunct ICC and opened up the flood gates of the LTL DISCOUNT WAR…one flooded with confusion marketing.

The truth behind LTL discounts and how they originated and evolved will be the topic of my next article. It is my hope that you will take the information from the coming articles and have some fun with it…quiz your freight reps and ask each of them: What is the bottom line? This information will arm many of my readers for their next talk with a freight salesman. I do this all of the time as a career choice…recently, while personally walking a Con-way Freight dock with a “Supervisor” (in search of lost freight) I was amazed at his lack of industry knowledge.

Here at AIRO Logistics, Inc. we strive to offer more than just the service of moving your freight. We want to be your trusted advisors and to serve as an extension of your company.

Stay tuned and if you have feedback on this article feel free to share it!

Take Home Message: As the controller of freight or the owner of a manufacturing company ask yourself if you can reach out to your carrier reps for independent, non biased advice on transportation. Do they know and understand how we got here today? When was the last time you called your carrier for a rate or to schedule a pickup and they offered a better way of doing it? Perhaps a more efficient way…shorter transit time, less transferring of the freight while decreasing it’s chances of being damaged or lost in a break bulk terminal somewhere between origin and destination…much like Con-way Freight did to our customer….oops, I guess that secret is out!