Fair Prices: What is Included? – Everything Necessary to do the Job
A fair price is a price that:
- Represents exactly the true market value of the freight transportation service to the customer.
- Is sufficient to repeatedly provide the service under current market conditions.
- Is fully described and disclosed as an all-in price.
A fair price is an all-in price that includes:
- Monies sufficient to cover all of the known required transportation components of the service, including driver compensation, truck and trailer capital and operating costs, and the cost of consumables such as fuel and oil;
- Monies sufficient to cover all of the known required non-transportation components and costs of the service, including, e.g., paperwork handling, border crossing processes, and highway tolls;
- A small contingency margin to accommodate minor unforeseen events; and,
- A fair and modest return on investment.
A fair price can be expressed as a single stand-alone all-inclusive number, or as a group of numbers representing the price of individual components of the all-inclusive price, provided that the customer can easily determine the exact total price using the information provided.
If a Price is not “All-In”, it Cannot Be Fair
How can a quotation for arranging or providing freight transportation services be fair if:
- it does not include the entire cost of fuel?
- or worse, it expresses the cost of fuel as an add-on percentage of price, rather than as a cost per mile?
- it is for a trans-border service, but does not include all of the costs associated with crossing an international border?
- it does not flag the existence of, and provide a reasonable estimate of, the costs of known significant market factors, such as seasonal produce flows, even when those costs cannot be exactly quantified in advance? The practice of mis-leading customers by quoting partial prices that were not “all-in” prices became so prevalent in the North American airline industry that, in the name of fair disclosure and consumer protection, governments stepped in and mandated “all-in” pricing. Why should the freight transportation industry be any different? Copper Run provides “all-in” price quotations.
Fair Prices: What is Not Included? – Work not Required, Work not Requested, and Work not Foreseen Copper Run’s Fair Prices cover:
- All of the tasks and fees that are necessary to provide the defined freight transportation service.
But, Copper Run’s Fair Prices cover:
- None of the tasks that are not required to complete the defined transportation service. The only exceptions are infrequent, but usually not predictable, purely-pass-through expenses such as lumper fees. Copper Run will provide full pricing information and obtain prior customer price approval prior to booking a truck for a shipment. This is true even when significant truck capacity shortages occur and premium prices must be paid to obtain capacity, such as often happens during seasonal produce harvests, during major holiday weeks (e.g., Thanksgiving and Christmas), and at times of peak demand (e.g. Late March).
Work Not Required is Not Included in our Fair Prices
e.g.: if you don’t need temperature control, we won’t include the price of a reefer in our Fair Price quotation, and it will not be invoiced even if your freight is reefer-friendly and is ultimately carried on a reefer trailer;
Work Not Requested is Not Included in our Fair Prices
e.g.: if you don’t need expedited service, we won’t include the price of team service in our Fair Price quotation, and it will not be invoiced even if a team ends up being assigned to your shipment.
Work Not Foreseen is Not Included in our Fair Prices
e.g.: if you don’t tell us it will take extra time to load your freight, we won’t include the cost of loading delays in our Fair Price. However, since every delay constitutes extra work, the cost of an unexpected loading delay will be included in the shipment invoice.
Fair Prices and Extra Work
It costs more to do more. So it therefore costs more to purchase additional services.
For a price to be a Fair Price, it has to be fair to all parties involved in the transaction. So if extra unexpected work is required to perform the requested transportation task, either as a result of a specific request or act of commission or omission by the customer, the shipper, the receiver, or the Customs Broker; or as a result of government-generated inspections or delays, including at border crossings; or in response to natural events such as hurricanes and tornados, then the Fair Price quoted must be augmented to reflect the fair cost of providing that extra work. Delays present a particular Fair Price problem, in that their duration can never be predicted, but they carry real costs, which must be compensated. In short, if you want a truck to wait, to have to pay it to wait. A truck (or driver) only earns money when it is moving, so if you want the truck to not move, that means you are asking it to forego the revenue that it would earned by moving: so you have to pay it for not moving because you are preventing it from earning money by moving.
In other words, delays are a form of extra work, and are billable in the same way that extra miles and extra pick-ups and deliveries are billable. The price of delays will therefore be added to the original Fair Price. By far the most common types of extra unexpected work are loading and unloading delays at shippers and receivers. These are followed by border delays, border inspection, paperwork and clearance issues, increases in the size and/or weight of an LTL shipment, and re-routings and additional stops. If delays are lengthy and grow to the point where a driver is detained overnight or for an entire driving shift, then significant detention and layover charges may also come into play.