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LTL vs Parcel CWT:
Advantages and
Disadvantages
Rob Martinez, DLP
Shipware LLC
Learning Objectives
• Understand FedEx/UPS CWT programs and the LTL marketplace
• When these services are viable alternatives to traditional parcel
shipping
• Pricing structures and advantages and disadvantages for each
mode
– Contract nuisances and carrier incentives
– Transit times
Part 1:
Hundredweight
Hundredweight Agenda
• What qualifies for Hundredweight (CWT)
• Benefits of CWT
• Understanding Commodity Tiers and pricing rules
• Common accessorials associated with CWT
• Differences between FedEx and UPS Hundredweight services
• Tips for negotiating optimum CWT contracts
Hundredweight Service
• Multiple-piece shipments from single origin to single destination on
same day
• Contractual service
• Different rules for Air/Express vs Ground
• FedEx & UPS: Not identical services/prices
Benefits of Shipping CWT vs LTL
• Less operational handling
– Palletizing, shrink-wrapping, staging or shipment segregation not required
• Eliminate pallet costs
– CWT shipments do not require a pallet, reducing shipment weight by 30-35 pounds
• Lower fuel surcharges
• Get accessorial discounts
– LTL accessorial fees, such as lift-gate or inside delivery, don't apply to CWT shipments.
• Guaranteed, cost-effective delivery
– Choose a day- or time-definite delivery option at no additional cost. Three delivery attempts at no extra charge
FedEx Multiweight Requirements
• Requirements– Contract pricing
– Average package weight 15-25 Lbs (15 Lbs average minimum; max of 150 Lbs per package)
– 100 Lbs or more (200 Lbs or more for Express Saver and Ground)
– Up to 108” in length and up to 165” length and plus girth (L+2W+2H)
• Charged lower of two rates– Multiply the per-pound rate by total shipment weight to determine which of
the two options below will be applied:• Price per package
• Price per total shipment weight (always applies to Intl MWT)
Hundredweight Ground Pricing
Components
• Multiple commodity tiers
– Based on package density
– UPS: Tiers 1-7 (+ AK/HI)
– FedEx: 1/501-8/508 (+ To AK/HI, From AK/HI, Canada)
• Minimum shipment weight
• Minimum per piece weight
• Discounts available
• ALL NEGOTIABLE
UPS FedEx
Tier 1 Tier 1/501
Tier 2 Tier 2/502
Tier 3 Tier 3/503
Tier 4 Tier 4/504
Tier 5 Tier 5/505
Tier 6 Tier 6/506
Tier 7 Tier 7
Tier 8/508
FedEx & UPS Hundredweight
Services/Rates Do Not Exactly Match
Source: Shipware, LLC
Category FedEx UPS
Ground Commodity Tiers 8 primary tiers 7 primary tiers
Air/Express Commodity Tiers No Yes
Air/Express Minimum Package Weight 15 Lbs 25 Lbs ground/3DA
20 Lbs Air
Air/Express Weight Breaks 100, 500, 1000, 2000 100 (Except 3DA: 200, 500, 1000)
Ground Weight Breaks 200, 500 200, 500, 1000
Available for Next Day 8AM Product Yes No
Express FSC (3/26/18) 5.25% 6.25%
Ground FSC (3/26/18) 5.50% 6.50%
Saturday Delivery Ground $16 per package No charge (but not requestable)
Saturday Delivery Air No charge $16 per shipment
Saturday Pickup Ground $16 per package $6 per stop; $16 if no p/up
Saturday Pickup Air $16 per package $16 per package
UPS Air CWT Based On Commodity Tier
UPS Air Hundredweight (Commodity Tier 1) UPS Air Hundredweight (Commodity Tier 7)
Zone Weight NDANDA Saver
2DA AM
2DA 3DA Zone Weight NDANDA Saver
2DA AM
2DA 3DA
2100–499 lbs $1.62 $1.36 $1.12 $0.99 $45.70
2
100–499 lbs $2.24 $2.06 $1.51 $1.34 $100.60
500–999 lbs $2.24 $2.06 $1.51 $1.34 $97.85500–999 lbs $1.62 $1.36 $1.12 $0.99 $39.90
1000 Lbs > $1.62 $1.36 $1.12 $0.99 $42.40 1000 Lbs > $2.24 $2.06 $1.51 $1.34 $101.95
3
100–499 lbs $2.43 $2.11 $1.30 $1.21 $54.00
3
100–499 lbs $3.14 $3.05 $1.77 $1.56 $127.80
500–999 lbs $2.43 $2.11 $1.30 $1.21 $45.70 500–999 lbs $3.14 $3.05 $1.77 $1.56 $122.50
1000 Lbs > $2.43 $2.11 $1.30 $1.21 $47.75 1000 Lbs > $3.14 $3.05 $1.77 $1.56 $127.60
4
100–499 lbs $3.69 $3.60 $1.71 $1.56 $59.95
4
100–499 lbs $5.64 $5.58 $2.32 $2.04 $152.50
500–999 lbs $3.69 $3.60 $1.71 $1.56 $49.60 500–999 lbs $5.64 $5.58 $2.32 $2.04 $150.40
1000 Lbs > $3.69 $3.60 $1.71 $1.56 $52.50 1000 Lbs > $5.64 $5.58 $2.32 $2.04 $156.70
5
100–499 lbs $4.11 $3.90 $2.55 $2.17 $67.45
5
100–499 lbs $6.13 $6.07 $3.38 $2.92 $187.85
500–999 lbs $4.11 $3.90 $2.55 $2.17 $59.00 500–999 lbs $6.13 $6.07 $3.38 $2.92 $185.70
1000 Lbs > $4.11 $3.90 $2.55 $2.17 $61.85 1000 Lbs > $6.13 $6.07 $3.38 $2.92 $193.30
6
100–499 lbs $4.34 $3.95 $3.87 $3.52 $106.90
6
100–499 lbs $6.16 $6.10 $5.48 $4.74 $273.90
500–999 lbs $4.34 $3.95 $3.87 $3.52 $94.10 500–999 lbs $6.16 $6.10 $5.48 $4.74 $266.55
1000 Lbs > $4.34 $3.95 $3.87 $3.52 $97.95 1000 Lbs > $6.16 $6.10 $5.48 $4.74 $277.30
7
100–499 lbs $4.74 $4.47 $4.39 $4.04 $160.45
7
100–499 lbs $6.78 $6.72 $5.77 $5.09 $314.90
500–999 lbs $4.74 $4.47 $4.39 $4.04 $140.55 500–999 lbs $6.78 $6.72 $5.77 $5.09 $306.60
1000 Lbs > $4.74 $4.47 $4.39 $4.04 $146.65 1000 Lbs > $6.78 $6.72 $5.77 $5.09 $319.25
8
100–499 lbs $4.87 $4.64 $4.49 $4.21 $182.00
8
100–499 lbs $7.08 $7.02 $5.83 $5.35 $339.90
500–999 lbs $4.87 $4.64 $4.49 $4.21 $159.30 500–999 lbs $7.08 $7.02 $5.83 $5.35 $330.55
1000 Lbs > $4.87 $4.64 $4.49 $4.21 $166.05 1000 Lbs > $7.08 $7.02 $5.83 $5.35 $344.00
Tier 1 Tier 7
Notes:1. No Early service2. Flat rate (NDA, Saver,
2DA AM and 2DA)3. Weight based for
3DA, and only over 200 lbs
4. 3DA you have to divide by 100
Zone Weight FO PO SO 2Day AM 2Day ESP
2
100–499 lbs 2.54 2.24 2.06 1.51 1.33 1.18
500–999 lbs 2.52 2.22 2.04 1.49 1.31 1.16
1,000–1,999 lbs 2.50 2.20 2.02 1.47 1.29 1.14
2,000+ lbs 2.48 2.18 2.00 1.45 1.27 1.12
3
100–499 lbs 3.44 3.14 3.05 1.79 1.55 1.45
500–999 lbs 3.42 3.12 3.03 1.77 1.53 1.43
1,000–1,999 lbs 3.40 3.10 3.01 1.75 1.51 1.41
2,000+ lbs 3.38 3.08 2.99 1.73 1.49 1.39
4
100–499 lbs 5.94 5.64 5.58 2.34 2.03 1.89
500–999 lbs 5.92 5.62 5.56 2.32 2.01 1.87
1,000–1,999 lbs 5.90 5.60 5.54 2.30 1.99 1.85
2,000+ lbs 5.88 5.58 5.52 2.28 1.97 1.83
5
100–499 lbs 6.43 6.13 6.07 3.41 2.95 2.27
500–999 lbs 6.41 6.11 6.05 3.39 2.93 2.25
1,000–1,999 lbs 6.39 6.09 6.03 3.37 2.91 2.23
2,000+ lbs 6.37 6.07 6.01 3.35 2.89 2.21
6
100–499 lbs 6.46 6.16 6.10 5.54 4.75 3.16
500–999 lbs 6.44 6.14 6.08 5.52 4.73 3.14
1,000–1,999 lbs 6.42 6.12 6.06 5.50 4.71 3.12
2,000+ lbs 6.40 6.10 6.04 5.48 4.69 3.10
7
100–499 lbs 7.08 6.78 6.72 5.83 5.11 3.49
500–999 lbs 7.06 6.76 6.70 5.81 5.09 3.47
1,000–1,999 lbs 7.04 6.74 6.68 5.79 5.07 3.45
2,000+ lbs 7.02 6.72 6.66 5.77 5.05 3.43
8
100–499 lbs 7.38 7.08 7.02 6.13 5.37 3.99
500–999 lbs 7.36 7.06 7.00 6.11 5.35 3.97
1,000–1,999 lbs 7.34 7.04 6.98 6.09 5.33 3.95
2,000+ lbs 7.32 7.02 6.96 6.07 5.31 3.93
FedEx Express Multiweight
N o t based o n t i e rs
Ex press M W T t yp i ca l l y no t spec i f i ed i n co nt rac t
Ex press d i sco unts app l y to Ex press M WT
FedEx Ground MWT Tier
Comparison (2018 Data)2018 FedEx Ground MWT (Tier 1 vs Tier 2)
Zones 2 3 4 5 6 7 8
200 to 499 Lbs. 7.9% 5.7% 6.1% 5.9% 5.5% 6.3% 6.3%
500 Lbs > 9.1% 5.6% 6.7% 7.1% 6.9% 7.8% 7.9%
Minimum Charge 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
2018 FedEx Ground MWT (Tier 1 vs Tier 3)
Zones 2 3 4 5 6 7 8
200 to 499 Lbs. 13.0% 13.6% 13.9% 13.8% 13.3% 14.1% 14.8%
500 Lbs > 15.8% 15.2% 16.2% 15.7% 15.3% 16.7% 17.2%
Minimum Charge 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
2018 FedEx Ground MWT (Tier 1 vs Tier 4)
Zones 2 3 4 5 6 7 8
200 to 499 Lbs. 19.4% 19.0% 19.6% 20.3% 19.3% 20.9% 21.6%
500 Lbs > 22.3% 22.7% 23.3% 23.1% 22.3% 25.3% 25.8%
Minimum Charge 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
2018 FedEx Ground MWT (Tier 1 vs Tier 5)
Zones 2 3 4 5 6 7 8200 to 499 Lbs. 27.4% 27.4% 28.5% 28.4% 28.0% 29.7% 29.1%
500 Lbs > 34.6% 32.3% 34.0% 33.7% 33.0% 35.8% 34.8%
Minimum Charge 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
2018 FedEx Ground MWT (Tier 1 vs Tier 6)
Zones 2 3 4 5 6 7 8
200 to 499 Lbs. 35.7% 34.8% 38.1% 38.4% 37.9% 39.5% 40.0%
500 Lbs > 45.2% 44.3% 47.4% 47.0% 47.0% 49.7% 49.6%
Minimum Charge 4% 4% 4% 4% 4% 4% 4%
2018 FedEx Ground MWT (Tier 1 vs Tier 7)
Zones 2 3 4 5 6 7 8
200 to 499 Lbs. 87.8% 86.0% 97.3% 87.7% 92.3% 98.6% 97.6%
500 Lbs > 116.7% 114.1% 127.1% 115.6% 121.7% 129.9% 128.8%
Minimum Charge 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0%
2018 FedEx Ground MWT (Tier 1 vs Tier 8)
Zones 2 3 4 5 6 7 8
200 to 499 Lbs. 56.9% 44.1% 44.8% 45.0% 42.6% 43.7% 45.3%
500 Lbs > 67.5% 53.4% 54.1% 54.6% 52.4% 53.3% 55.7%
Minimum Charge 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3%Source: Shipware, LLC
UPS CWT Price Calculations
• Choose service
• Commodity Tier listed in contract by account number
• Determine billable weight– Note: If length plus girth {Length + [(2 x width) + (2 x height)] > 130”} OR length > 96” minimum
billable weight = 90 Lbs, then it’s considered “Large Package”, $80.00 additional fee applies
• 3DA & Ground– Divide by 100 to determine CWT units
– Multiply number of CWT units by shipment rate (chart)
– Charge based on GREATER of average weight of 25 Lbs/package OR per shipment minimum
• NDA, Saver, 2DA AM, 2DA– Multiply number of CWT units by shipment rate (chart)
– Charge based on GREATER of average weight of 20 Lbs/package OR per ship/min.
UPS Hundredweight Rating Tool
https://wwwapps.ups.com/crt/rate?loc=en_US
Hundredweight Shipments Subject To
Other Accessorial Charges (2018)
• Address Correction: UPS = $15.90 per package, $111.30 max per
shipment; FedEx = $15.00; $105.00 max for Express ($45.00 for
Ground)
• DAS: UPS = $12.75 Ground Comm, $17.25 Res, $13.50 Air Comm,
$20.00 Air Res per shipment; FedEx = $13.50 Express, $12.75 Ground
• Residential Surcharge: UPS = $37.35 per shipment; FedEx = $37.35
per shipment
• Remote Area Surcharge: UPS = $26 AK/$8 HI; FedEx = $26 AK, $8 HI
Accessorials Associated With Larger
Parcel Shipments (2018)
• Additional Handling Service $12.00 (UPS/FedEx)
• Large Package Service (or Oversize) $80.00 (UPS/FedEx)
– Length plus girth [(2 x width) + (2 x height)] combined >130” or its length exceeds 96 inches.
– Subject to a minimum billable weight of 90 pounds
– No AHS fee when LPS assessed
• Over Maximum Limits UPS ($500.00) / “Unauthorized” FedEx ($300.00)
– Max actual weight per package is 150 Lbs
– 165” in length and girth combined [(2 x width) + (2 x height)]
– Max length 108” per package
– 90 Lbs minimum billable weight
UPS Ground With Freight
Pricings,,.;l
• Guaranteed delivery for non-palletized, multiple-package shipments– Palletized shipments removed from pallet; rated with freight pricing
• Based on Class
• Base rate = UPS Freight 560 Series tariff (based on Class)– Weight up to 500 Lbs = 80% discount
– Shipments 501 Lbs > = 65% discount
• Charge based on greatest of: 1) base rates, 2) per package minimum (Ground minimum charge) X total # of pieces, 3) absolute minimum ($74.00)
• Benefits– Often provides savings over LTL rates
– Reduces weight 30-35 pounds by eliminating pallet
– Eliminates lift-gate or inside delivery fees
– Lower fuel surcharges
Differences Between CWT & GFP
• Hundredweight
– 50 States & PR
– Multiple services
– 200 Lbs Min (Ground)
– DIM applies
– IB, OB, 3P
– Returns
– Haz mat okay
• Ground with Freight Pricing
– 48 States
– Ground only, no air
– 151 Lbs or more
– DIM does not apply (Class)
– OB only
– No returns
– No haz mat
Source: Shipware, LLC
Hundredweight Negotiating Tips
• Understand your CWT usage & current pricing; run comparisons between FedEx and UPS
• Negotiation points are many!– Commodity tier
– Discounts
– Minimum package charges
– FSC differential
– Accessorial differential
• CWT volume to contribute to revenue based incentives
• UPS shippers should compare GFP
• Model LTL pricing (and vice versa)
Part 2: Less-Than-
Truckload
Less-Than-Truckload (LTL) Agenda
• What qualifies for LTL
• Understanding rate bases, classification and FAK’s
• Common accessorial charges associated with LTL
• Liability (claims)
• Risks/benefits associated with LTL
• Tips for negotiating an optimum LTL contract
LTL Qualification
• Typically palletized
• 150-12,000 lbs
• Takes up no more than 12 linear feet of trailer space– Subject to fee if > 12’
– Check your carriers rules tariff- in some case this can be extended to 20 ft. or greater
• Allergic commodities– Carbon Black
– Perishables (unless refrigerated LTL)
– Livestock
– Certain hazardous materials (explosives, radioactive, etc.)
Components of an LTL Rate• Rate base (SMC3)
– Deficit weight (weight added to cost less)
• ZIP to ZIP pairing
• NMFC classification (50 to 500)– FAK’s
• Weight
• Discounts
• Fuel Surcharge
• Accessorial Fees
• “Off” invoice incentives (loading allowances = rebates based on volume, or percentage of revenue)
• Transit time (Expedited or Non-expedited)
Primary
Secondary
LTL Rate Base Examples
From a high of $109.93 to a low of $97.11 per CWT = 12% reduction in gross rate calculation, prior to a discount being applied
Freight Classifications
• Governed by National Motor Freight Classification (NMFC)– Standardizes liability
– www.nmfta.org
• 18 different classes– Low class of 50 to a high of 500
– Higher the class, the higher charge per hundredweight
• Freight Class is determined by:– Density
– Liability/value
– Stowability (how easily does it fits into trailer?)
– Handability (how easy to move across dock?)
Freight-All-Kinds (FAK)
• Pricing mechanism to price multiple classes as single class
• Higher class shipments charged at a lower classification
– Class 50 and Class 85 might negotiate FAK 60
• Liability
– Typically at lower class schedule (trade off)
– Price per pound is reduced
• Beneficial if you ship many different items & classes, and
freight not easily subject to damage
FAK Affect On Gross Rate
FAK 50 (actual class-70) = 22% reduction in the gross rate
Additional Fees
• FSC
• Single shipment
• Arrival notify
• Reweigh/Reclassification
• Lift-gate
• Inside delivery
• Construction site
• Residential delivery
• Expedited/Guaranteed
• Haz-Mat
• Etc.
Accessorial Comparison
LTL Carrier Differences
• Pricing components
– Rate base
– Rules tariff
– FSC
• Transit days
• Service area
• Tech capabilities
• Liability (detailed next slide)
Liability
• Different by carrier
• In most cases the LTL carrier’s liability is higher than that
of the parcel carriers
• FAK’s can have a negative affect on liability
• Can be negotiated lower in exchange for higher discounts
or other pricing concessions
• Process can be different for filing and collecting from each
carrier you use
Risks with LTL vs CWT
• More susceptible to damage
• Entire shipment could be delayed
• Less condensed routes (missed or late pick-ups and deliveries)
• Interline agreements or agents
• Routing compliance
• Access
• Packaging costs could increase (pallets, shrink-wrap, etc.)
Benefits Of LTL vs CWT
• Larger liability limits
• Many carriers servicing the same lane (competition)
• Odd size (over-dimensional packages)
• Transit times in some cases better than parcel CWT
• Depending on shipment characteristics, it can be a lower cost
Rate Comparison CWT vs LTL
Parcel Rates:High= $177.62Low = $175.67
LTL Rate:$122.02
LTL Negotiating Tips
• Common rate base
• Not subject to GRI’s (or
delayed)
• Equivalent rules tariff
• Lane segmented pricing
• FAK’s
• Liability
• Payment terms
• Help carriers reduce costs
– EDI
– Pickup & delivery windows
– Accurate forecast of daily volume
– Accurate weights and classifications
– BOL creator
• Outsource
• Resellers
CWT Vs LTL Comparison Chart
Enabling technologies and/or standard business/routing rules may be required to determine the mode that has advantage
CATEGORY CWT LTLLower Fuel Surcharge XAvoid Inside Delivery Fee XAvoid Liftgate Fee XPayment Terms XFast Pay Discounts XLiability XTransit X XNet Price X XPickup Scheduling XChances of Partial Delivery X XCarrier Flexibility XRouting Compliance/Complexity XReduced Materials (Pallet/Wrap) XOver-Dimensional Pricing XTransit Guarantee XLess Operational Handling X
Conclusions
• Blending of parcel CWT and LTL; Each service offers unique benefits
• LTL
– More competitive market
– Standardization of rate structures between carriers is a must
– Enabling technology for comparisons is needed (LTL vs LTL & LTL vs CWT)
• CWT
– Complex CWT pricing can make it difficult to calculate and compare costs
– Multiple areas to negotiate
– Amend FedEx/UPS contracts as needed
Q&A
• Rob Martinez
• 858-879-2014
Remember:
• Evaluate this session
• Visit Shipware in Booth # 613
