When your business grows, so does your less-than-truckload (LTL) supply chain complexity.
That means more shipments, more quotes, more options — and likely —more questions.
- Am I getting the best LTL rates I can for my freight volume?
- Am I and my team spending too much time and resources getting LTL quotes?
- Are our accessorials making our LTL shipping costs unpredictable?
If you’re asking yourself these questions, your LTL network might be ready for customer-specific pricing — commonly referred to as CSP.
CSP has both advantages and quirks, and it can be tough to know when it’s right for your LTL freight. We’re here to help you.
What You'll Learn in This Article:
- How LTL Pricing Works
- What Blanket Rates Are
- What LTL CSP Is
- When CSP Makes Sense for Your Business
- How to Request CSP
- How a Third-Party Logistics Provider (3PL) Can Help
If you’ve ever shipped a full truckload, you might have some ideas about how freight pricing works.
While the process of requesting a truckload quote and an LTL quote from a carrier or a third-party logistics company (3PL) might look the same, what’s happening behind the scenes is actually quite different.
The truckload market is incredibly diverse, with over 900,000 for-hire long-haul carriers currently operating in the U.S.
By contrast, there are around 200 LTL carriers, and a new LTL carrier has not entered the market since the 1980s.
The barriers for entry in the LTL market are much higher — LTL carrier networks require a large amount of freight density to operate efficiently, and they need to move constant high volumes to run at a profit with this structure.
This means that, while your request for a spot quote on the TL market results in a number determined largely by market forces of supply and demand, the number you see in LTL is set more by carriers’ own complex operational models and internal pricing algorithms.
In fact, the quote you get for a single LTL shipment isn’t really a spot quote at all.
Instead, it’s the first of two main types of LTL pricing structure.
A blanket rate is a standardized rate structure (i.e. a pricing matrix) that can cover all shipments with a given LTL carrier.
Using their internal knowledge of their own fleet, equipment, facility locations and lanes covered, an LTL carrier will take your shipment information into account and generate a quote for you based on their cost to serve.
Most LTL shipments will move under blanket rates, even from shippers with consistent freight volume.
Although they’re not guaranteed and are subject to change with a certain amount of notice, LTL blanket rates are relatively stable and usually cost-effective when compared to the fluctuating demand and rate cycles of the TL spot market.
Factors that might influence your quote when using carriers' blanket rates:
- Origin and destination
- Number of pallets
- Weight of shipment
- Freight class
- Accessorials required
3PLs May Be Able to Help You Get Better Blanket Rates
It’s important to note, though, that you might see different blanket rates for the same carrier’s service if you go to them directly vs. if you go through a 3PL.
3PLs are often able to negotiate cheaper blanket rates than individual shippers will see because of the total volume of freight they will move with a carrier.
This is just one of a number of reasons why 3PLs can be great allies in LTL shipping.
True to its name, LTL customer-specific pricing is a special, guaranteed rate prepared for a single shipper for a specific lane, group of lanes or origin point.
You can either negotiate CSP directly with an LTL carrier yourself or you can pass that responsibility on to a 3PL (more on that below).
For certain LTL opportunities, there are some clear advantages to CSP:
- It offers cost certainty
- It can reduce the volatility of accessorial fees
- It provides stability for non-standard freight
- It lessens strain on your internal logistics resources
CSP is the LTL market’s answer to contract pricing in the truckload market, but they’re not quite the same thing.
If you’re interested in CSP, you won’t run an RFP to obtain multiple bids for a contract.
Instead, you’ll approach carriers with the specific operational requirements you need for your freight to see what kind of pricing they can offer you.
There’s no one right answer for when CSP is the right call for your freight, no tipping point that will 100% make you say, “Yes, I’m ready!”
However, there are some guidelines you can keep in mind and questions you can ask yourself to gauge whether it’s the right move.
When It Might Be Time to Have the CSP Conversation
Ask yourself these questions to gauge how ready you are for CSP:
- Do you move over 100 LTL shipments a month?
- Are you frustrated with the blanket rates you're getting?
- Are your accessorials out of control?
- Do you have staff shopping for rates who were hired to do something else?
- Is important work ever put off because time needed to be dedicated to quote shopping?
- Are you looking to find more rate consistency?
- Is your freight irregular in any way?
If you answered “Yes” to a few of these questions, you might be ready to look into CSP.
Is Freight Volume a Factor for Getting CSP?
The short answer is yes.
But the amount of freight you ship is not the determining factor.
A volume threshold isn’t the only way to know if you might save money and secure better service by pursuing CSP, but it is a good indicator that you might be ready.
Standards vary, but good benchmarks of overall network size are LTL freight spend exceeding $200,000 per year or volume of over 100 shipments per month.
Your actual freight requirements, volume density in a lane and different carriers' preferences will all factor in.
Are Different Types of Freight More Compatible With CSP?
Again, the short answer is yes.
Any type of LTL freight can get CSP, but it can be especially useful for non-standard freight that is more prone to accessorials or add-on services.
In these scenarios, carriers sometimes prefer to make it simple for both parties and create special pricing for special freight.
- Either very high or low freight class
- Irregular freight shapes (vs. a standard pallet)
- Special equipment requirements (e.g. liftgates)
- You require special services (e.g. inside delivery)
If you’re feeling a bit overwhelmed after reading to this point, there’s good news: There are LTL shipping experts out there who are more than happy to help you get the best rate you can.
3PLs know the ins and outs of customer-specific pricing.
They know when your freight is non-standard enough that it might benefit from CSP and how to broach the conversation with a carrier, and they’ll conduct annual reviews of your shipping expenditures to see if you have an opportunity to save.
3PLs also work with a wide range of carriers in the LTL market.
This means they’ll be able to pinpoint the right carrier or carriers for you who have the capacity, the equipment and the network of facilities to move your freight most efficiently.
If you and your 3PL decide it’s in your best interest to pursue CSP, here’s what you’ll need to provide:
- A letter of authorization giving your provider legal authority to negotiate on your behalf
- Shipment-level operational data for at least one month (but up to a year is preferable)
- Photos of your freight to ensure it does not expose your 3PL to undue damage claims
- Pricing parameters you will accept (base rate, accessorials, fuel table)
- Density of your pallets (i.e. freight class)
For all of these points, accuracy and detail are key. The better data you can give your 3PL, the more empowered they will be to have productive conversations with your carriers.
All of that said, 3PLs also know that getting a good, consistent rate doesn’t necessarily mean getting CSP.
3PLs bring so much business to LTL carriers that they are able to contractually negotiate blanket rates that are more favorable than those you would find if you get a quote directly on your own.
This means that whichever rate structure you pursue with a 3PL, you’ll often find it to be more affordable than the rates you’ll get quoted if you go it alone.
Have More LTL Shipping Questions? Ask a Specialist
LTL shipping is complex, and we know that the questions you have about getting the best rate might just be the beginning.
We want to help you navigate the process from beginning to end, and to grow into a confident LTL pro. A great place to start is with a conversation with one of our LTL shipping specialists.
They can help you get quotes, learn how to navigate and avoid damage claims, understand accessorials and more.