On the Front
Author: Eric Black
Less-than-truckload (LTL) carriers are more aware of their operational costs than they have been in many years. Now that they have figured out how to control these operational costs, they are targeting how to get appropriate revenue for them. The most popular method used by LTL carriers to increase their revenue is to adjust their discounts or minimum charges. How does an LTL carrier decide how they will make these general rate changes? That is not an easy answer, but we can help you better understand your transportation costs. To begin, LTL carriers use the term Operational Ratio (O/R) to help determine the profitability of an account. For example, an O/R of 95 means that for every $1.00 in revenue the carrier is profitable by $0.05. A non-profitable O/R could be 110, which would mean that the carrier is losing $0.10 for every $1.00 in revenue.