Just Your Average General Rate Increase

August 22, 2012
By Gerry McDevitt

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Recently some of the big Less Than Truckload (LTL) carriers, including Con-Way, FedEx, UPS, and YRC, announced a General Rate Increase (GRI). They were in the ball park of 6-7%.

With the big boys leading the way, many more LTL carriers joined in with their own rate increases. As I wrote in last month’s article, the principles of supply and demand have allowed trucking companies to command more for their services this year. Since every major carrier seemed to declared a similar rate increase, a shipper may assume that they should stick to their regular carrier. Why switch when they all announced close to the same increase? The answer may surprise you.

What shippers may not realize is that the GRI is an average across the carrier’s tariff. So, when they announce a GRI of 6.9%, shippers should keep in mind that some point pairs may have increased very little (or not at all), while other point pairs may have increased more than the declared 6.9%.

Why do carriers do this? Is it because they are trying pull a fast one? No. They are trying to adjust their tariffs to be better compensated for areas where costs are higher. Or, they are trying to drive more freight into lanes where they have a lot of capacity. A carrier may want to focus on a particular lane because they can handle it more efficiently than their competitors or it represents a good base of business.

Some shippers may consider themselves lucky if their lanes were hit with increases of less than the 6.9% but if you only have a few options for carriers, how do you really know if you are getting a good deal?

Most shippers don’t have the time to look at every carrier’s tariff and determine which one has the best rate for each particular shipment. Many only have a couple of “go to” carriers and may be paying more than they would if they had more carriers in their stable. More carriers means dealing with more sales people, reviewing more tariffs, and signing more contracts and agreements. This is usually the last thing a busy supply chain professional wants to do.

At Mohawk Global Logistics, we take that burden off of you. We look at each shipment and determine which carrier will give the best service/cost combination. Switch to Mohawk and take advantage of our large stable of national, regional, and specialized LTL carriers.

Find out what we can do for you. Contact our domestic department or your Mohawk account representative for more information.

Mohawk Domestic 
T: (315) 414-0453

Gerry McDevitt is Vice President, Domestic Services for Mohawk Global Logistics.