Less-than-truckload rules tariffs provide a blueprint for the carrier-shipper relationship, defining all of the duties a carrier will and won’t perform for a particular shipment. The statements often outline parameters and charges for commodity type, shipment characteristics, ancillary services, and duties performed at origin and destination, as well as information about claims, liability and payments, among many other items.
The broad set of rules are available on most carrier websites, but shippers often struggle to accurately interpret them or fail to review them altogether. This often results in final pricing for a shipment not aligning with the original quote. Some LTL carriers are making the effort to better highlight the potential pricing and service exceptions up front to avoid some of the inherent pitfalls in the current process.
“LTL rules tariffs have always been a stand-alone rule set, or terms and conditions for carriers. Very reactive, somewhat disconnected from the actual LTL quoting process, but very much governing how services are defined and how the carrier will be protected,” Curtis Garrett, senior vice president at FreightPlus and founder and chief creative at Understand LTL, told FreightWaves.
The rules are designed to be a catch-all, although many agreements between carriers and shippers can be negotiated to provide further specifics around duties and associated pricing. Things like liftgate usage at pickup and delivery, service to remote areas, residential drop-offs and appointment-only deliveries can be hashed out and priced appropriately ahead of time.
The way the rules are implemented is also a competitive differentiator among carriers as the information is public. Most operators try to set their fees in line with the rest of the industry as no carrier wants to be the first or the highest with an accessorial charge or the last or the lowest either.
“As carriers have gotten more savvy with identifying costs due to space in the trailer, they have built in more safeguards within the rules tariff,” Garrett said. “However, as their defining logic in the rules tariff has gotten more advanced, the basic rating mechanism has become less connected.”
Shippers can go to a carrier’s website to price a load or pull an application programming interface rate. However, Garrett said these rates often come with surprises.
“Rather than getting that true calculated, accurate rate, they get the traditional price based on the base rates in play, the ZIP codes, the weight and the class. If they’re lucky, the carrier will give an alert saying the shipment ‘may’ be subject to a specific rule in the tariff. Others do not.”
Most shippers work with multiple carriers, and with more than 30 major LTL providers, most of which have variations to their respective rule sets and how they relay the information, the likelihood of missing something is high.
Some carriers are trying to do a better job of drawing attention to the rules tariff, quantifying the terms and inserting them into their web applications and making them available through APIs. “This makes them more definable and less opaque or interpretive,” Garrett said. “Eventually all LTL rules tariff items will need to be in an ‘if this, then that’ format with all potential variables considered.”
Garrett said he’s seeing more carriers put their tariffs in “digital, consumable formats — and with more customization specific to clients” as the industry is moving to smart contracts and Web3-type technologies.
“There shouldn’t still be a single bucket of reactive rules sitting in a PDF, buried on a carrier website, if they want it to really impact customer behavior proactively.”
More FreightWaves articles by Todd Maiden
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