In today’s unpredictable business climate, less-than-truckload (LTL) contract negotiations have become increasingly challenging. But shippers with the right negotiation technology can approach the process with confidence—and even gain the upper hand.
Driven by comprehensive data and real-world scenario analysis, computer modeling can equip teams with powerful visibility and forecasting capabilities. In turn, this technology can dramatically simplify tariff complexities, rate structures, and more—and open the door to more efficient LTL contract negotiations, right from the start.
Account for LTL contract negotiation complexities
A number of factors drive LTL contract negotiations. By using negotiation tools to stay on top of the following contracting complexities, shippers can craft their best agreements yet.
- Optimal tariff years and discount levels
Carriers release annual tariffs, intended to favor their own network. For each contract, well-prepared shippers select a tariff year to negotiate on; carriers, in turn, modify their discounts accordingly.
Without the right technology and expertise, shippers may find themselves at a major disadvantage. After all, determining the optimal tariff year involves a number of complexities: as with FedEx rates, LTL tariffs increase each year, and carriers adjust their discounts based on the tariff in question.
A far more recent tariff year—while typically associated with much higher baseline costs—will likely come with a relatively high carrier discount. A more distant tariff year, on the other hand, may result in a comparatively meager discount.
“Let’s say you have an 80% discount on a 2024 tariff, versus a 42% discount on a 2004 tariff,” says Josh Miller, Vice President of Sales at CTSI-Global. “An untrained person might think that the 80% discount is a much better deal. But it isn’t—that’s an 80% discount on a much higher base rate.”
- Freight All Kinds (FAK) structures
FAK structures, too, can be challenging. Typically, light but bulky shipments are placed into higher classes, as are valuable and “high-risk” shipments (which may contain goods like cell phones). But what about freight that contains a combination of traditionally high- and low-class shipments? Alternatively, how should shippers handle variations in density across shipments?
Bring the real world into the equation
When negotiating LTL contracts, teams need as much information as they can get. Their forecasting strategy depends on it—and with real-world scenario analysis, shippers can maximize precision based on their own unique circumstances.
CTSI-Global’s LTL Negotiation platform, for example, runs real-world scenario analysis on shippers’ most common hauls. This data is then applied to a pricing matrix, which yields crucial insights into shippers’ historical data, carriers, costs, timing, and more.
“You may send your bid proposal out to 10 different carriers, all of whom may use their own baseline tariffs,” says Miller. “Without a modeling tool, it’ll be challenging to see how these carriers stack up against each other. CTSI-Global’s modeling engine enables an apples-to-apples comparison.”
CTSI-Global’s platform loads each carrier’s historical shipment data and proposal (including the tariff, discount, and fuel costs) into the pricing matrix. Afterwards, the engine re-rates the data, generating a simple and accurate cost-per-carrier analysis. Shippers can then select the most cost-efficient carrier for each route—without having to factor in tariff years, discounts, and other intricacies.
The LTL Negotiation platform also assists with tariff year changes, or “break-even analysis.” For shippers currently using an earlier tariff year, CTSI-Global’s modeling engine enables quick pivots to more recent baseline years: shippers simply input their data into the platform, which re-rates their shipments based on the new tariff year. Shippers now know the discount they’ll need to break even in the new tariff year—and can even reap additional savings, should CTSI-Global negotiate on top of the break-even amount.
Simplify negotiations once and for all
Today, shippers need flexible tools to stay ahead of the curve. When it comes to LTL contract negotiations, that’s especially true—particularly as shippers navigate new carrier hurdles and complexities.
CTSI-Global’s best-in-class LTL Negotiation platform opens the door to the best rates yet. By breaking down costs, modeling unique FAK scenarios, forecasting timing, and leveraging industry benchmarking, CTSI-Global’s modeling engine makes it easy to save on carrier costs—and drive visibility and efficiency where they matter most.
In need of more powerful LTL contract negotiation tools? Contact CTSI-Global today.
