1. High freight rates. The base LTL tariff used in this company was based
on origin and the destination state. Rates were based on shipment size and
on FAK classification. The questions to be answered were: Are overall rate
levels competitive? Is there any advantage to a state (rather than ZIP) based
rate structure? The general rate benchmarking process described in Case Two
(above) followed that. The results were overall levels higher than the lowest
benchmark by 1 to 10 percent, depending on the destination region. States
closer to the shipping point had good rates; those farther away had the most
potential for reduction. For large states like California and Texas, there was
some justification to “sharpen the pencil” and use ZIP-based rates; for most
states the single rate base yielded good results.