Freight shipping is one of the many costs that most businesses will have to account for. These shipping rates can apply for an array of shipping needs such as shipping merchandise from stores, delivering heavy equipment for production services, and anything else that involves moving goods or equipment from one place to another in the course of business.
Driven in large part by today’s eCommerce industry, more and more businesses are relying on shipping companies to prosper and stay ahead of the competition. The last thing business owners need is to worry about the constantly fluctuating truckload freight rates. But why are these shipping rates changing so regularly?
To better the reason for this and to learn how to get the best full truckload freight quote, you will need to know why full truckload (FTL) freight rates differ based on mode, product, distance, and several other cost variables.
The Full Truckload Freight Rate
FTL freight shipping is the most common mode of transporting goods in the United States. When compared to the applications for less-than-truckload (LTL) freight shipping, FTL shipping is used when a company has enough cargo to fill up an entire truck. As such, full truckload rates are easier to calculate than LTL shipments. If the total weight of the transport is under 45,000 pounds, and the normal cargo insurance is adequate, the type and amount of product being transported – the freight class – doesn’t impact the overall truckload rate.
With FTL, customers usually encounter a cost-per-mile-traveled calculation or a flat, door-to-door rate. However, that flat rate will be calculated based on multiple factors and variables. The key to having a strong and long-lasting relationship with your truckload carrier is trust. Yet, you can’t trust someone if you think that their rates are unreasonable. In order to evaluate this objectively, you must know the variables that go into pricing these rates. Below, we have broken these down so that you can use them in your decision-making process while shopping providers.
Total Mileage and Trucking Lanes
Truckload quotes will obviously be influenced by the distance the shipments need to travel. However, the calculation isn’t always that straightforward. While longer distances will typically charge more because of the increased fuel consumption and transit time, trucking lanes also influence this metric.
Put simply, trucking lanes are the origin-to-destination routes routinely served by the truckload carrier. These lanes can fluctuate in cost based on freight volumes coming in and out of those areas. In general, large cities and metropolitan areas will have a higher ratio of available trucks in the area. This means that it’s usually cheaper to ship from these locations than from places with fewer available vehicles. As such, it will, most likely, be cheaper to ship to and from a city like Los Angeles than it would be from a small town in Wyoming.
Market Capacity and Seasonal Pricing
FTL freight shipping rates are also influenced by the truck availability in an area and the demand for truckload shipping in a given period of time. Overall capacity will tend to change due to seasonal demand, as well as other external forces, such as employment rates, equipment sales, natural disasters, cost of living, and the like. Shipping companies will often change their rates based on supply and demand.
During certain times of the year, such as peak holiday season and back-to-school rushes, freight carriers will have to deal with larger volumes of merchandise. The same thing applies in late spring and summer when shipping companies transport seasonal fruits and vegetables from heavy produce production regions, such as Georgia or Florida. When crops are ready to ship, demand, particularly for refrigerated and expedited freight rises. This, in turn, results in lower overall capacity and, by extension, higher rates. To adjust for the extra demand, many freight carriers will implement surcharges during peak seasons.
Some shipping companies may charge more for orders that originate from undesirable facilities. There are several factors that can influence the overall attractiveness of an order. Certain regions can influence this decision. Smaller towns, for instance, tend to have undesirable truck-to-load ratios.
If a driver is to drop off in an area where there are very few distribution or production facilities, they may have a difficult time finding freight to bring back. This means that they’ll have to travel back on “empty miles.” In these sorts of situations, they may charge a premium or even decline a load altogether. Other factors that affect order attractiveness include distance, load requirements, and seasonality, as well as the shipper’s and consignee’s reputation.
Scheduling Flexibility and Lead Time
Another factor that can influence the rates for truckload shipments refers to pickup and delivery days and time windows. Odd hours or weekend orders aren’t very enticing for many carriers and may require some premiums. The same thing applies to the delivery time window flexibility. Having a two-day window will, for instance, allow shipping companies to better route your order with others that they may have in the same area.
By helping them optimize their capacity, you could also work toward a lower rate. Restrictive schedules, on the other hand, may result in higher quotas because carriers may need to make up for potential lost revenue. Lead time also applies in a similar fashion. Basically, the more time you provide your logistics partner to plan for your order, the lower your potential cost may be. Lead time can also provide additional benefits in the form of higher capacity, fewer unexpected surprises, increased control over expenditures, higher service levels, and more.
Fuel Surcharges and Accessorials
Potential fuel surcharges are another main driver of cost that can influence the bottom line. Since this variable is influenced by the market price of diesel, it’s not uncommon for logistics carriers to raise or lower their prices on a regular basis, based on the average price of fuel.
Accessorials imply additional work, such as detention or special handling in the form of driver unloads, lift gate, and other special requirements. These extra services are usually billed on the spot and are not a part of the base rate. However, by communicating them upfront, they can be planned for or even avoided.
It’s also important to mention that FTL freight shipping doesn’t generally operate on a freight class system as LTL shipments typically do. However, FTL orders that may require some special attention and expertise or are under strict deadlines will tend to cost slightly more than those that don’t.
Spot Rates vs. Contracted Truckload Quotes
If you have a standing relationship with a carrier to move your shipment on a regular basis, it will usually help generate a lower cost. Such an arrangement will provide shipping companies with the possibility to plan their operations better than one-off or day-of orders. These, by comparison, will usually cost more.
Getting the Best Full Truckload Freight Quote
As you can see, there are plenty of variables that go into calculating a freight rate. The best way to get an advantageous truckload freight quote is to understand these factors and try to mediate them wherever possible. In addition, it’s advisable to provide your transportation partners with as much information as you can and as early as possible. If they have all the details upfront, there will be less back-and-forth communication, your orders will be handled faster, and your quotes will often be cheaper and more accurate.
Partnering up and cooperating with a reliable logistics provider will also be more advantageous, allowing you to form a synergy for mutual benefit. If you are looking to optimize your supply chain operation, Red Bird Logistics is at your service. We provide reduced costs and end-to-end transit solutions, no matter your requirements. Feel free to check out our logistic services and supply chain solutions.