Every price has to be calculated on the basis of underlying assumptions:
- What is included?
- What is excluded?
- What process is used to determine the costs that lie behind the price?
- What is the duration of time during which the price will be valid?
- What are the market conditions in which the price will be valid?
- What are the actions that a prospective purchaser can take to obtain a reduced price?
- What are the actions that a prospective purchaser might take that will result in upward pressure on prices?
- The sub-headings in this section discuss several of the more important of those assumptions, and disclose the assumptions that Copper Run uses to prepare its fair prices.
Included in the discussion of these assumptions are the following:
Unless we explicitly tell you at the time we issue you a price quotation that we have a reserved truck standing by for your shipment, then we do not have a truck. Why? …
Over the course of days, week, months, Copper Run issues hundreds of price quotations, and while we would prefer that every one of those quotations generates immediate business within minutes, we are not that fortunate. It may be that our customer is merely building an understanding of costs would be incurred to open up a new geographic market. Or a customer may be quoting a project that will not begin for several months. Or our customer’s customer may not yet have finalized their order. Or the truck that will ultimately carry the shipment may not yet know that it will be in the city where the shipment originates, so it will not yet be seeking a reservation for the return trip. Or our price might not be the most attractive in a competitive market.
So the majority of quotations we issue do not relate to immediate shipments, and even if they do, we do not know whether our quotation will be successful. So if we reserved a truck for every quotation we issued, we would end up cancelling as many or more trucks as we used: we would quickly get a reputation for cancelling, and carriers would stop doing business with us.
And the next time you gave us a shipment, we would not be able to source a carrier for your shipment, because the last few times we booked a truck with that carrier, we subsequently cancelled.
“Subject to Availability”
Since we can’t reserve trucks in advance, there will be some days when there are simply no appropriate trucks available in the area where you need them. Or there may have been a few trucks nearby, but other shippers finalized their orders earlier in the day or the week, and those few trucks have already committed to other shipments. Or there may have been bad weather in the area (e.g. an ice storm), and trucks are avoiding the region, or those that do make it through the weather find that they can’t get unloaded because their receiver is closed, due to road conditions or a power failure.
So while we can give you a price that is competitive and that will get you a truck every time in a normal marketplace, we cannot give you a price that will get you a truck when there are no trucks to be had, or that will necessarily be higher than the price every other shipper in the area is willing to pay when the only empty truck left in town is running an auction for its services, or that is sufficiently rich to provide funds for us to bring in an empty truck from a distant location.
Thus, every quotation we issue is subject to the truck availability. And truck availability, in times of reduced capacity, is often subject to price, But before you choose to pay another supplier more to solve an availability problem, ask us for a Spot Price: since we have been actively working the market where your shipment is located, we probably are aware of the trucks that are available just outside your shipment area, and the costs of bringing them in. Our Spot Prices are designed to be fair this these types of situations.
The Melon Factor
Melons are shorthand for produce, and farmers are producing produce almost everywhere across the continent. When it is harvest time, farmers need trucks to quickly get their perishable harvest to market, and the entire available fleet is sometimes not sufficient to satisfy the demand. This extra seasonal demand drives up prices, just like the Economics 101 teacher said it would. This impact is especially true if the harvested commodity can be carried on a dry van instead of having to use a refrigerated van, and it is especially true if the region where the harvest is occurring is mixed agricultural / industrial, so there is a year-round supply of general freight to be shipped.
One part of the continent where harvest price pressure is particularly significant is the South-Eastern U.S. For example, it is not unusual to see the prices for dry van truckloads to increase by 50% – 60% at the peak of the watermelon harvest in Georgia. Thus, the “Melon Factor”.
The short-term regional result is a bidding war for available capacity … see “Subject to Availability”.
Seeking price quotations from multiple freight brokers and/or carriers is a good way to ensure price competitiveness, and Copper Run is happy to compete and test our competitiveness in any lane.
But our fair pricing is based on the assumption that the customer, whose controls the bidding process, will pick a winning supplier as a result of a competitive quoting process, and will assign the shipment to that competitor.
If the customer elects to forego a bidding process, and instead to simultaneously assign an active shipment to multiple brokers, then the truck sourcing process, both telephone- and Internet-based, is such that the available carriers can quickly see that multiple brokers have the same shipment. And that quickly morphs into a price-based competition controlled by the available carriers, not by the customer. The result is the carriers push prices up, to levels that are no longer fair to the customer.
Because these situations ultimately result in negative results for the customer, and frustration for all, Copper Run avoids carrier-run, customer-facilitated price auctions.
Who’s Fee Is It?
There is no shortage of reasons or of excuses to charge extra fees in regard to the transportation of freight by road. But Copper Run believes that fees must only be charged for extra services provided and for extra costs incurred, they must fairly reflect the cost of those extra services and costs, and they must only be charged when those extra services are required and those extra costs incurred.
And most importantly, Copper Run believes that “extra” does not include services and costs are integral to providing the request service, as defined.
So for Copper Run, the cost of handling paperwork for a trans-border shipment is certainly a real and known cost if the shipment origin and destination are not in the same country, but it is not an “extra” cost. We are aware of competitors who charge extra fees for crossing the border, but we are not aware of any of them who did not know in advance that processing paperwork would be part of the border crossing event.
But there are services and costs that are truly extra, e.g., delays, de-vanning, additional stops, etc., and that were unknown at the time a price quotation was prepared for the shipment. In instances of extra costs, Copper Run does charge extra fees over and above the quoted price.
Reducing Costs & Prices
There are plans and techniques that a customer can use that will result in lower freight transportation costs. Copper Run will pass those savings on to its customers who decisions and actions generate those savings. Longer shipping and receiving hours, shorter loading and unloading times, immediately available complete and accurate paperwork, properly loaded and scalable freight, and adhering to original ready times and reliable payment terms are all characteristics that reduce costs for brokers and carriers.
And whenever there is a known cost reduction available, Copper Run is able to reflect it in price quotations.
For more information on each of the above subjects, please refer to the appropriate sub-section within this Fair Price section.