Defining Premium LTL Service
Transport Topics April 26, 2000
by Robert Persuit

More than 25 years after Federal Express introduced the first overnight delivery guarantee, the nation's less-than-truckload general freight carriers have begun to offer a variety of premium service offerings.

Terms such as "Exact Express," "American Flyer" and "Suretime" have entered the vernacular of LTL shipping as carriers race to meet demands of shippers to move freight faster and in a more time-definite manner.

The emergence of expedited and guaranteed delivery services in the LTL industry is a welcome change. For a long time, LTL carriers failed to understand the value of guaranteed services. Not only are many shippers willing to pay a premium for guaranteed service, many LTL carriers have found that they can provide the service without increasing operating costs, which helps their bottom line.

For shippers, the multi-tiered service offerings present a new and potentially confusing array of transportation choices. Not all guarantees provide 100% money back, for instance, and there are important restrictions on some services. With surcharges of up to 35% over standard LTL rates, it's important to know what you are getting for your money.

When FedEx introduced overnight deliveries in the 1970s, their guarantee could not be clearer * delivery by 10:30 AM or your money back. This is not the case with LTL carriers.

LTL service offerings fall into three basic categories:

* Standard Ground. These shipments travel on the ground through the selected carrier's terminal network. The transit time, or service days, for standard ground shipments is determined by the carrier's service guide. Delivery of standard ground freight normally can be expected throughout the day until 5:00 PM on the scheduled service day.

* Day Definite. Almost without exception, the process of moving standard ground vs. day definite shipments is the same, so the carrier's service guide determines the transit times. However, shippers are asked to pay a premium surcharge for tracking capability and the right to file a claim if the freight arrives late. As with standard ground, delivery of day definite freight can be expected throughout the day until 5:00 PM on the scheduled service day. For a slightly higher surcharge, several carriers such as Consolidated Freightways and ABF Freight System offer an AM (by noon) delivery option on their day definite product.

* Expedited. These shipments arrive at least one day prior to the transit times listed in the standard ground service guide with the shipper setting the time of delivery. For expedited shipments, service commitments often cannot be met with the carrier's terminal network. Therefore carriers contract these shipments out to their transportation partners (airlines, freight forwarders, cartage companies and local couriers) in order to meet scheduled service times. These shipments move by air or ground or a combination of both. Rates follow the general rule -- the faster it gets there, the higher the charge.  

With the advent of just-in-time manufacturing and reduced stockpiling of inventory, the ability to determine when a shipment gets delivered has become crucial. A shipment arriving just one day late can mean lost productivity or a very unhappy customer. Therefore, shippers are willing to pay a little extra for guarantees that a shipment will arrive on-time.

Day definite guarantees are essentially the same. The shipment must arrive by the committed date or your shipment is free.

However, some companies offer "satisfaction guarantees" that go beyond the scope of delivery. A discourteous driver, for example, could trigger a claim. In this case, the carrier will typically offer the shipper whatever "will make it right." If you are looking for all freight charges to be voided, you must make that request.

Activating day definite guarantee service is fairly painless. For most carriers, you legibly write the name of the guaranteed service ("Assured Service noon" or "Assured Service PM") along with a contact name and re more reluctant to give back 100% of the freight charges.

Several carriers will only refund the difference between the expedited freight charge and the standard ground rate. Incredibly, shippers pay more for expedited service but get less of a guarantee. Even so, most carriers will ask the shipper "What will make it right?"  They are more than willing to satisfy the customer in hopes of getting repeat business.

Certain restrictions do apply. A shipment can be considered as "delivered on schedule" when it is available for delivery on the scheduled service date, but was not delivered due to the unavailability of the consignee, refusal by the consignee or the inability of the consignee to pay any charges due upon receipt.

Furthermore, the delivery guarantee does not apply to acts of God; acts or omissions of public authority; riots, strikes or labor disputes; government regulations or orders; severe weather or natural disasters which disrupt ground networks or acts of omission by the shipper or consignee.

Certain types of commodities are also not eligible for guaranteed service, such as poison gas and certain freezable commodities.

By embracing guaranteed service, LTL carriers have found a way to differentiate themselves from express/parcel carriers. More than their money back, shippers want improved on-time service and information about their shipments. And LTL has stepped up to deliver.