Love ‘em or hate ‘em airlines, have figured out how to make some real money in a regulated environment, and for-hire truckers could learn a few things from their aviated brethren.
That’s the opinion of Jim Park in Today’s Trucking magazine. He writes: “The airlines are actually a great example of how to recover otherwise lost revenue by tacking on fees and surcharges where they are warranted. Want a beer? Seven bucks. A sandwich? Eight bucks. You won’t get a free lunch anywhere else, so why should you expect one on an airplane?”
The article explains how airlines use what’s called “yield management,” – the “process of understanding, anticipating and influencing consumer behavior in order to maximize yield or profits from a fixed, perishable resource (such as airline seats or hotel room reservations,” as Wikipedia explains. Robert Crandall, former chairman and CEO of American Airlines who coined the term, who called it “the single most important technical development in transportation management since we entered deregulation.”
Instead, trucking leaves loads of money on the table. How so? The editorial continues:
“There are the obvious examples such as inadequate fuel surcharges and unbilled detention time, but what about things like cancelled loads, deliveries to remote destinations, day-of-the-week or time-of-day load/unload premiums? You know delivering in Los Angeles on a Friday means a weekend layover … Charging a premium for delivering on a day, or time of day, that limits your reloading potential would be a good way of influencing the customer’s decision. Ever had a load cancelled once the truck is en-route to the pick up? Diverting or sitting that truck is going to cost the driver and the carrier something. Why shouldn’t the customer pay for its lack of foresight?”
Weight is another big issue. “How many carriers (and brokers, for that matter) charge a flat rate for a truckload whether the weight is 10,000 pounds or 50,000? Weight sure matters to the guy paying for the fuel. The customer should pay accordingly.” Other billable extras that spring to mind: “Driver load or unload, special handling, destinations where reloads are difficult, scheduled appointments, team service, temperature-controlled service, multiple-drop, re-consigned loads, weekend deliveries, residential deliveries, security fees, paperwork preparation, scale tickets …”
The author points out that shippers would still have choices if motor carriers were to charge for most things they do.
“Shippers that choose to move trucks in and out promptly would not have to pay delay fees. Shippers that insist on 3 a.m. delivery appointment should have to pay for the lost time between the delivery and a potential reload during normal business hours. Loads that deliver to out-of-the-way locations should pay a location charge to cover the deadhead miles back to civilization.”
Read full article here.