Trucking: Trucking Rates, midwest truck, trucking rates

Question
Jim -

I work for a company in Southern California and we manufacture furniture.  Each week, we send a full truck to the Pacific Northwest AND to the Midwest.  Currently our Midwest truck costs us $1.30/mile and our Pacific Northwest truck is closer to $2.00/mile.  Are these rates good?

We also use LTL on occasion to send our finished goods, but use LTL frequently to receive our raw materials (fabrics, leather, frames, etc).  It seems whenever we get our invoices for the incoming shipments the class codes and rates are all over the place.  We could receive the same exact order 2 weeks apart and be charged significantly different for the freight.  Who's responsible for having the proper class on the bill?  Our trucking company is always blaming our vendor for not entering it right, but it seems to me the trucking company should correct this.  Should we be able to negotiate a flat rate per lb?  It would sure simplify things.  If so, what is a good rate?  I

I've done a little homework on freight audits and understand we can look back 6 months to get these fixed, but it seems like a mountain of work.

We spend about $350k per year on the outbound full trucks, and about $200k on the LTL incoming.

Any advice you could give me regarding our account would be much appreciated.

Thanks for volunteering your time to AllExperts (I do too, in a computer category).

Bill

Answer
Bill, Your truckload rates seem to be pretty much in line for quality carriers.  You might find something cheaper through a broker but is it worth the risk?  When selecting a carrier to entrust your freight to keep in mind that they are representing you to your customer on the other end.  Do they have a good low claims ratio, modern clean equipment, and finacial stability?
While cost is an important consideration, keep in mind that the lowest price is not always the best price. In general the per mile charge will be higher for shorter hauls than the longer distances.  Also there is an imbalance of freight moving into the Pacific Northwest so rates will generally be higher going Northbound than coming the other direction.  With regard to your inbound LTL you have an opprtunity to save some money with a little effort.  As you have gathered, classifying the freight correctly is the first step and since you receive different products each one has it's own classification.  For a full explanation of the LTL classification system check the NMFTA website at http://www.nmfta.org/whatisclass2.htm
If you can send me complete descriptions of the commodities involved I can correctly classify them for you.  The next opportunity is, if you are paying the inbound freight you have the right to choose the carrier, and negotiate the price.  You may not be able to control your vendors description on the bill of lading but your invoices and other documentation can prove what the freight actually is.  Carriers will adjust the freight charges with credible evidence.  Of course if you can get the vendor to properly describe it initially it saves a lot of trouble for all concerned.  You can negotiate net commodity rates if there is consistancy of commodity and origin points, but if you change vendors or the type of raw materials it's back to the table for a new round of negotiations.  That's why you see a proliferation of discounting off some base rates.  A word of caution however; don't be blinded by a big discount percentage.  Look at the bottom line because all carriers have their own (different) base rates from which they discount.  Most have rate look up capability on their websites as well as free rate software that they will give you.  
As you noted, you do have six months to have your bills audited and file an overcharge claim against the carrier for any refund.  There are many post audit firms that will audit your paid bills for a percentage contingency of 50%.  You get 50% of anything they recover and it doesn't cost you anything if they don't find any refunds.  Because they work on a volume basis however don't expect them to go to a lot of trouble trying to justify a re-classification.  They look for the easy money.  A good resource for links to just about anything related to logistics is http://www.cloexpress.com/
I hope I have given you some food for thought but if I can be of more detailed assistance don't hesitate to ask.
Jim Bowers
jcbowers@tampabay.rr.com