New FedEx Freight pilot focuses on simpler approach to pricing

Earlier this week, FedEx Freight, the less-than-truckload subsidiary of global logistics and freight transportation services provider FedEx, announced it is rolling out a new pilot initiative, which it described as an industry changing space and pace pricing pilot for select customers.

Leveraging dimension-based pricing for LTL, company officials explained that it this pilot program will provide simple quotes based on the space and pace shipper customers need to move freight, with shipper customers providing FedEx Freight with the weight, dimensions, origin zip, and destination zip of their shipments in order to get a quote.

“With the simplicity of space and pace pricing, we aim to build confidence with our customers by ensuring they receive accurate pricing on the frontend in order to reduce the frequency of price adjustments and disputes on the backend,” said Mike Lyons, Vice President LTL Revenue Quality, in a statement.

Explaining how the space and pace pilot works, company officials said that when FedEx Freight receives a shipment, its Dimension in Motion (DIM) technology then verifies the weight and dimensions of the shipment. The key benefit of this process, the company said, is that it “simplifies pricing structure by removing the need for complex freight classifications under the National Motor Freight Classification (NMFC) pricing system.”  What’s more, it added that this removes the need to classify freight, with pricing tied to the space and pace to move freight needed by a shipper customer, with simple rates paired with straightforward invoices, as well as the elimination of class-based surcharges help ensure pricing accuracy for customers.

A FedEx Freight spokesperson told LM that this pilot has been a goal of the company for a few years.

“We’ve been able to develop and refine our technology to capture the dimensions and weight of most shipments, so Space and Pace was a natural next step in simplifying our overall pricing structure,” she said. “Being a part of the entire FedEx enterprise, and with the expansion of our FedEx Freight Direct e-commerce solution for delivering bulky items to-or-through the door of residences and businesses, we know many customers are already familiar with dimension-based pricing of our other operating companies—we believe this will improve the customer experience by getting away from the complexities of the historical pricing classification system.”

When asked to describe the main benefits of this pilot for the select shipper customers participating in it, she explained that LTL shipping is simple with Space and Pace, in that customers benefit from the elimination of certain rules and surcharges that are class-based within the National Motor Freight Classification (NMFC) pricing system.

“To produce a quote for the customer, Space and Pace uses fixed data—length, width, height, and weight—rather than freight classifications,” she said. “A customer can be confident that their invoice will match the quote if they enter the correct dimensions when they create a shipment in FedEx Ship Manager. We know simplicity and transparency are important to our customers – they’re important to us too.  With Space and Pace pricing, customers can get a quote without having to worry about the complicated freight classification system.

As for next steps, she said that this pilot will allow FedEx Freight to learn more about how to best provide this convenient, easy-to-use option to a larger customer base.