Date: Sat, 12 Aug 2000
From: "Ed Birch" <email@example.com>
Subject: Re: AMS-Forum Tariff 2000
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No question that competition and lo-balling will still exist. I think the benefit to tariff 2000 will be that the areas of lo-balling will be narrower, and easier to monitor and control. It will primarily be in the area of weight. As it is today, there is always the dispute between the driver, packers, etc. as to whether or not the packing was ballooned, or the long carry was exaggerated, etc.,etc.,etc. I cannot believe the various carriers will not create a mechanism for compensating drivers for services performed and incorporated into the line haul. It may be that the drivers participate in their full percentage on EVERY linehaul, whether or not they actually performed these services. In that case they are compensated on every shipment to make up for not being paid specifically on those jobs where the extra services are performed, so it all comes out. Or, they may draw on a fund created to compensate drivers as necessary when they do actually perform the service. But, what is for sure, drivers will not be called upon to perform these services for no compensation. They simply will not accept such a situation, and the carriers know it.
No, the new tariff will not control rates, but what it will do is lessen the multitude of areas of lo-balls. With few exceptions, if a rep wants to lo-ball he will simply have the weight to play with. There will be fewer disputes because the sales reps won't have the many items that sometimes cloud the issue of who was responsible for the lo-ball. Than, carriers and agents will establish the guidelines for sales reps to follow. There is no question that lo-balling can and will likely continue, but I think it will be easier for agents and their reps to arrive at understandings that may have the effect of SOME greater control of pricing. Those that hold this tariff to a standard of "cure-all" for all of the pricing ills of our industry will be greatly disappointed. It will be a tool that may help, not cure, the problem. Carrier/agent discipline is the only cure, and that may be a long way off yet.
Chris Noblit Replied:
Ed, I hope I am wrong, but with regards to the *COD HHG's* portion of the HHG's business here is my opinion...
The problem WAS NEVER THE TARIFF, it was -- as it still is -- us, collectively, as an industry.
The problem has been that few of us COD movers ever learned that the customer is buying a relationship and the perception of security, along with price. Too many of us see the sale as solely price driven. I don't believe that Tariff 2000 will change this one damn bit.
I've said several times that COD HHG's is 20% of Avatar's business and 90% of our headaches. My plan is to change that to 0%/0% in the next few years. It's just not worth the aggravation and expense anymore. If other's follow suit and there are fewer COD players left in each market, guess what's going to happen to the price; My bet is that it will continue to drop.
I hope I am wrong.
Ed Birch Replied:
Chris, Your final comments are the point. Many are like you ie, intending to lessen their involvement on COD/Residential. Where I might take issue with your thoughts is that, while I don't know where the point is, surely at some point the pricing will begin to rise as fewer and fewer are willing to book them. Is there absolutely no hope that Supply and Demand will visit our industry some day?
The thought that the customer will eventually buy relationships, etc. is fine so long as the price is right. No, we will never change the customers. After all, all they are buying is "Value" as they see it. They are usually convinced that they are getting the same service for the best price = VALUE.
Where the agents will finally be able to make some headway in retaking control in pricing is that , with weight almost being the only way to lo-ball, they can have a clearer understanding with their sales staff as to what is, and is not acceptable. I feel that by lessening the "Hidden Discount" is important. Measuring estimating performance will be made a little simpler.
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