Unlocking value in LTL shipping agreements
Typically occurring annually, negotiations with LTL carriers enable businesses to drive efficiency, mitigate risk and enhance profitability. No longer merely about securing the lowest rates or the fastest transit times, successful LTL negotiations align the terms of the agreement with overarching business objectives to drive sustainable growth.
Uncover the strategies and best practices that will enable you to harness the full potential of your next LTL agreement.
What can be negotiated with LTL providers?
While some LTL rate factors will remain fixed, several aspects of an agreement can be adjusted. What you choose to negotiate should be based on freight volume, budget constraints, business priorities and long-term goals.
Volume commitments
Because LTL shipments are comprised of freight from multiple customers, capacity issues may arise when demand for space is high. However, when shippers commit to certain volume levels, carriers can plan more effectively, leading to potential cost savings and priority service.
If you plan to ship consistent amounts of freight, ask about discounts, guaranteed transit times or other incentives they might offer.
Service level agreements
Service level agreements (SLAs) outline the specific services, performance standards and contingency plans you have with a carrier. Setting expectations around things like pickup and delivery windows and handling procedures upfront can help mitigate risks associated with delays or other service issues.
It’s important to note that strict SLAs may impact a provider’s ability to offer competitive pricing. Work with your transportation partner to understand what can be done to accommodate performance goals without adding costs for unnecessary resources, technology or equipment.
Note: If your freight has specific requirements, it can be beneficial to go through the RFP process to identify carriers specializing in the services you need.
Accessorials
Accessorial charges often have room for negotiation but will depend on several factors. Carriers may be able to offer discounts or provide guidance on how to avoid certain accessorials through better packaging, efficient scheduling or improved documentation.
Payment terms
You can establish terms for invoicing, payment methods and any discounts or penalties related to payment in your agreement. While this stage of negotiations likely won’t impact your pricing, it’s important to discuss anything you’re concerned about regarding how payment is handled. Doing so helps transactions go smoothly and supports the long-term success of your partnership.
Renewal and termination
Renewal and termination terms also can impact your long-term relationship. Be sure to set clear guidelines around when, why and how the agreement can be reassessed. This step reduces the risk of disputes and ensures both parties understand their rights and obligations.
Navigating discussions with your carrier
When you and your carrier clearly understand each other's needs and expectations, it can lead to a stronger, more collaborative partnership. Use these strategies to help ensure favorable negotiations:
1. Know your freight
Knowing the specific details of your freight profile is critical when you’re discussing pricing and service with an LTL carrier. It not only ensures you get accurate quotes from every carrier you’re considering, but it also helps uncover the best options for driving savings and efficiencies.
For example, carriers may be able to use your shipping data to identify lanes where they can offer highly competitive rates.
2. Determine what’s most important
While you may have multiple objectives you’re trying to reach in negotiations, it can be helpful to choose some top priorities before starting discussions. This will help ensure you focus on what matters most, preventing conversations from getting off-track based on minor details.
3. Be flexible
Once you understand your top priorities, keeping an open mind about how to reach them can be helpful. Carriers all have different capacity constraints, tariffs and other business factors that influence their pricing structures, and they may offer different solutions to meet your goals.
Whether they’re suggesting different routing options, alternative modes of transportation, or technology solutions, being flexible allows you to consider a wide range of options and choose the most effective strategies for your business.
Get competitive rates and quality service with ArcBest LTL
With a century of LTL expertise and an extensive network of LTL carriers, ArcBest is positioned to help with any less-than-truckload need. Whether you’re looking to secure published pricing with ABF Freight® or prefer to get an all-in rate through our brokerage network or dynamic pricing, we can help you find reliable capacity that aligns with your business goals.
