There is a price to pay to meet the shippers? expectations that the same time‐in‐transit service level should be charged the same tariff.
The LTL carrier's current zone pricing is based on the straight‐line distance, which does not reflect the industry’s operational characteristics, hub re‐handling operations and indirect routes.
Clustering based on administrative division may create subsidies between OD pairs in a zone.
The aggregation of ODs with different operating costs and the setting of a single price at their average operating cost may create underpricing for certain situations but overpricing for others.
The higher the shortfall in operating capacity, the lower the profit for the price‐elastic freight demand.
