INTERVIEW WITH HANK MULLEN
The next few years
will likely see
dimensional-based
pricing eclipse the
old model of
ratemaking based
on weight. Hank
Mullen says it’s about
time we say farewell
to the old and bring
in the new.
A new
dimension
in pricing
BY MARK B. SOLOMON, SENIOR EDITOR
THE DC VELOCITY Q&A
thoughtleaders
IT SOUNDS PERFECTLY LOGICAL: A TRUCK SHIPMENT SHOULD BE
priced based on the amount of space it occupies aboard a vehicle. But in the
less-than-truckload (LTL) and ground parcel businesses, logic has been turned
on its head for decades. For nearly 80 years, LTL pricing has been set by a mechanism that rated goods by their weight rather than their dimensions. The model
penalized heavier, low-cube shipments and rewarded high-cube goods that rode
along paying less than their fair share based on space occupied.
Dimensional pricing is slowly superseding weight-based pricing. But old habits die hard, and the legacy model still remains in place. The ground is shifting,
however. By year’s end, YRC Worldwide Inc., which has worked under the old
pricing model since the mid-1930s, will have installed 38 machines at some of
its YRC Freight terminals that will measure a shipment’s dimensions and price
it accordingly. UPS Freight, UPS Inc.’s LTL unit, is making cube-based pricing
available to customers who want it. In the ground parcel world, UPS and FedEx
will, as of late this year or early next, shift to dimensional pricing for parcels
measuring less than three cubic feet, which accounts for a good chunk of the
carriers’ business-to-consumer (B2C) traffic mix.
For Hank Mullen, who runs Dynarates, an Atlanta-based freight pricing consultancy, it’s high time for dimensional pricing. Mullen, who has spent more
than 40 years in the business, recently offered his views to Senior Editor Mark B.
Solomon on why the great pricing migration can be good news for all concerned.
Q In 1897, the Interstate Commerce Commission wrote that the “space occu- pied by merchandise” should be the main factor in determining a product’s
classification. Why has it taken 117 years for the trucking industry to go along?
A In 1897, railroads moved most of the nation’s freight. Their competitors were horse-drawn wagons. By 1936, when the first classification proposal
was filed, LTL carriers were moving a lot more goods. Keep in mind that from
