22 DC VELOCITY JULY 2017
www.dcvelocity.com
newsworthy
ArcBest unveils density pricing in latest carrier move
to shift from class rates
ArcBest Corp. said it will roll out density-based pricing for
less-than-truckload (LTL) traffic on Aug. 1 as an alternative
to the commodity classification system that has been used
for more than 80 years to set prices for LTL transportation
services.
In a sign that Fort Smith, Ark.-based ArcBest is serious
about migrating customers to the density-based pricing
scheme, the company said it will apply minimum charges
based on a shipment’s cubic dimensions if the traditional
class-based pricing formula produces lower charges than
when the freight is cubed out. However, the company,
whose LTL unit is known as ABF Freight, will continue
to offer rates through the traditional system, which determines LTL hauling charges based on classifications assigned
to specific commodities.
The move by ArcBest, which generates around two-thirds
of its revenue from asset-based services that include LTL,
comes as all LTL carriers grapple with growth in the volume
of bulkier shipments that occupy a disproportionate amount
of trailer space. “We believe this initiative is the natural step
for us to take now to ensure that the value we provide is
appropriately reflected in the compensation we receive for
our shipping and logistics services,” said ArcBest Chairman,
President, and CEO Judy R. McReynolds in a statement.
Established in 1936, classifications were the required
formula for rating LTL shipments until motor carrier
deregulation in 1980. The system has remained the com-
mon model for setting prices. However, critics contend that
the class system is inherently unfair because prices often
don’t reflect a shipment’s actual dimensions. For example,
two shipments of skateboards may have different densities
and occupy different amounts of space on a trailer. Yet
they receive the same rate because the classification system
shows they are the same product.
ENABLING TECHNOLOGY
The proliferation of sophisticated dimensioning equipment
that captures a shipment’s true size will allow carriers to
fairly price their services based on proper trailer utilization,
carrier executives have said. It would also curtail, if not
eliminate, battles over misclassifications, which require the
carrier to return to the shipper for more money because the
shipment was improperly classified and priced, carriers say.
Carrier executives and analysts have estimated that shipments can be underpriced by as much as 7 to 9 percent by
not uniformly relying on density-based pricing. Beyond
the savings for carriers, which would vary depending on
the transaction, is the simplicity of displaying a shipment’s
precise dimensions on a computer screen, rather than using
tape measures and rulers to determine its size, carrier executives say.
In a statement, FedEx Freight, the LTL unit of Memphis,
Tenn.-based FedEx Corp. and the largest LTL carrier,
ArcBest said it would install measuring equipment, known as “dimensioners,” in most of its
distribution centers by Aug. 1. The company
said it has dimensional data on more than 90
percent of the freight shipped in its asset-based
network. Customers can calculate the shipping
charges by submitting the shipment’s dimensions, or ArcBest will calculate the charges for
them, the company said.
Many shippers still resist changing to density-based pricing, perhaps because they sense
they get the long end of the rate stick with
imprecise classifications from their carriers.
There has been more traction from third-party
logistics service providers because they tender
large volumes and don’t want the hassle of
dealing with the classification process.
—Mark Solomon
Mobile computer workstation supplier Newcastle
Systems has hired Derek Coppinger as vice president
of sales and marketing. … Sean Daley has joined
sourcing and procurement services spe-
cialist LogicSource as vice president of
sourcing and procurement. … Shannon
Hooton has joined Saddle Creek Logistics Services
as senior director of business development. … ITS
Logistics has promoted Mike Crawford to president
of the Freight Brokerage division. … Bill Wood has
joined Direct Recruiters Inc. as an executive recruit-
er for the supply chain/logistics, military leadership
excellence, and military transition practice areas. …
Members of the International Warehouse Logistics
Association have elected Doug Sampson, senior vice
president and partner at Acme Distribution Centers, to a three-
year term on the board of directors.
COPPINGER
HOOTON
WOOD
newsmakers
