Continental Rate Base Questions
We have had many calls regarding our Continental Rate Base this week and I’m sure it’s in response to a marketing campaign we initiated recently. We’ve had several conversations, including media calls, that focused on not only Continental, but the “state of the neutral rate base.”
Generally, I don’t like to discuss our products in the blog, but it’s probably the best place given that there are several questions that are common to our conversations. So, I’ll try to answer some here.
Q. What is Continental?
A. Continental is a neutral rate base for pricing LTL class shipments in the U.S. and Canada.
Q. What do you mean by the only rate base not controlled by a rate bureau? What is a rate bureau?
A. Rate bureaus were established when LTL transportation was regulated by the federal government, similar to the airlines a few decades ago. Deregulation ended with the Motor Carrier Act of 1980. Upon deregulation, Rate bureaus such as SMC3, Middlewest Bureau, Pacific Inland, and others started offering products outside their traditional services. SMC3 was by far the smartest of the bureaus by moving into products for the masses, such as Czar Lite. It was the first nationwide rate base and had no reasonable competition for many years. By the time competition evolved, it owned a vast majority of the industry.
Q. What do you mean when you state that Continental is “the only rate base not governed by carriers”?
A. There are three primary companies that make commercially available neutral rate bases for US and Canada: SMC3, Middlewest Bureau, and Transite. While others exist, they are generally a derivative or reseller of some of the above. Transite does not allow any carriers to influence its rates, how general rate increases are applied, or any other rules regarding the rate base.
Q. Why does Czar Lite have such a big market share?
A. SMC3 was very smart. They saw changes coming and filled a need. That doesn’t mean it’s the best, most neutral choice for purchasing or bidding freight. Remember, carriers also purchase it as their sell rate base.
Q. What about a customized rate base?
A. Customized rate bases are good for shippers that have become frustrated with the imbalanced rates in bureau bases, or that have specific needs that can only be addressed in a customized base. Transite provides this to shippers also, but it doesn’t make sense in all situations.
Q. Why haven’t I heard more about Continental?
A. Transite’s revenue mostly comes from transportation management system and transportation spend management services and we’ve never put any marketing behind it. While our rate bases have been available since 2002 and are used by many shippers and 3PLs, publicity has come mostly from industry professionals and word of mouth. Transite has a unique perspective on this market as we are deeply involved in the optimization and cost reduction when purchasing freight by shippers and 3PLs, we are also heavily involved in development of rate bases and bid analysis software for carriers.