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VALUE-ADDED PRICES: “value-added” that comes at additional cost isn’t added value

Just as some seek to attract business by charging cheap prices that may or may not be sufficient to provide an acceptable service level, others seek to enhance their profits by charging inflated prices that they attempt to justify on the basis of “value-added” services.  Beware of fabricated metrics that do nothing more than pretend to justify higher prices.

Indeed, there may well be additional services that are attractive, even at additional cost.  But there are clearly many so-called “value-added” items that are actually just a part of normal business in the wired age, or are extras that can be produced and delivered at virtually zero extra cost.

For example, what is the value added in “expedited” truckload service between Toronto and Chicago or between Vancouver and Calgary?  These are single-driver, next-day delivery lanes in which there is no difference in cost or transit time between standard and so-called “expedited” service.

Similarly, metrics are another example of faux value added:  brokers and carriers need to track when freight is picked up and delivered, so sending a computer-generated pick-up or delivery notice to a customer can be done for zero marginal cost.  This does not qualify as a service for which an additional “value-added” fee can be justified.

The “value-added” extra charges levied in these examples flow straight to the bottom line, for both the seller and the purchaser.  These charges may enhance a supplier’s bottom line, but they are a poor value-for-money proposition for the shipper’s bottom line.