The Complete Guide To Contracted Truckload

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Freight shipping has become a major component in today’s eCommerce-driven business environment. Businesses, big and small, rely on transport companies to see their goods delivered to customers all across the country. When it comes to moving goods across the United States, over 70% is transported via truckload freight. In 2017, over 10.8 million tons of cargo were transported on freight shipments, with an equivalent of $700 billion for the entire freight industry. That’s more than ocean shipping, rail, and air freight.

And with market conditions showing that freight shipping is only expected to increase over the coming years, motor carriers are competing with each other on speed and efficiency. 

Choosing a logistics service provider that will best suit your needs can prove challenging. For that reason, we created this guide to transportation carriers to help you understand what to look for in a provider. Before we get started, however, we will need to shed some light on the differences between less than truckload (LTL) and full truckload freight shipping (FTL).

FTL and LTL Freight Shipping

Full truckload (FTL) and less than truckload (LTL) freight are two of the most common transportation options for truckload freight shipping. Deciding which one will be best for your organization depends on your specific needs, the amount and type of goods you are shipping, your budget, and several other factors. For those who don’t use freight service providers, these two terms might be somewhat confusing.

LTL Freight Shipping

Put simply, LTL shipments are those that do not use the entire cargo space of a truck. As such, LTL shipping will combine different shipments from multiple customers into the same vehicle. There are several benefits and drawbacks to LTL shipping.

On the one hand, customers are only required to pay for the space they use, making it a good alternative for small businesses that don’t ship in large enough quantities to require an entire cargo space. These individual shipments will usually fall between 100 and 10,000 pounds.

On the other hand, LTL freight shipping may have longer transit times and will take longer to deliver. Since there are multiple shipments, it’s obvious that there will be several stops along the way. Therefore, LTL may not be the best choice when the shipments need to be delivered in a short period of time. Likewise, there will also be a higher chance of damage or loss with LTL shipping since there will be more handling of the cargo during transit.

FTL Freight Shipping

As opposed to LTL freight, an FTL shipment will typically take up the entire truck’s capacity. Smaller shipments can also benefit from full truckload shipping if you are sending high-risk goods, for instance. Since these shipments remain on the same truck for the entirety of transport, there is less risk of damage or loss than with LTL shipping. In general, however, an FTL shipment consists of around ten pallets or more.

As such, FTL freight is a great option for companies that typically ship goods in large quantities. Furthermore, there will be no additional pickups or deliveries from other companies, meaning there won’t be other destinations. What this means is that the shipment will reach its destination faster than with LTL shipping.

Put simply, full trucking freight companies can provide better cost savings, along with better security, and they can also be an effective means of transporting goods in large quantities. FTL shipments are also a good alternative for those looking to ship high-risk or fragile products.

Researching and Selecting the Right Contracted Truckload Carrier

Shipments that are not handled properly can be subject to damage, loss, or delays. As a shipper, you will need to find a realistic solution that will meet your logistical needs. When you are in the market for truckload carriers, you will need to ensure that their services will have you covered, no matter the circumstances. You will also want to ensure that you get a fair truckload contract rate.

Below, we will be looking at what questions and selection criteria you need to go through when searching for the right contracted truckload carrier.

Will the Freight Service Provider Cover My Logistical Needs?

Someone who is in need of daily freight shipments will also need a truckload provider that has a large enough fleet to support their demand. In this scenario, freight forwarders are an excellent option. It’s important to remember that roughly 80% of the market capacity is provided by fleets of 10 or fewer trucks that quickly become overburdened, particularly during peak seasons.

Working with a logistics provider, such as RedBird, will ensure that your shipments arrive on time and in pristine condition. As a large organization, we have over 25,000 customers across the nation. Building strong relationships is the core of our approach and we collaborate with over 34,000 carriers and have more than 600 distribution centers across North America. This enable us to always provide great route coverage and handle any special requirements, such as dry van, refrigeration, flatbed, climate-controlled loads, expedited freight, and intermodal shipping.

Large third-party logistics providers will also have a more comprehensive supply chain system and freight solutions that can further improve your efficiency, customer satisfaction, and cost savings. Depending on your needs, you may be looking at warehousing and inventory services, supply chain consulting, network optimization, reverse logistics, final mile, residential, white-glove deliveries, drop trailer programs, and other services.

Shipping My Freight on Time

Making sure that your truckload partner will deliver your shipments on time is essential. You should check their prior history online and see how frequently they miss their delivery dates. Customer review sites will help you gauge this information, and aid you in developing a better picture of how helpful their customer service really is.

Ideally, your logistics service provider will allocate an account manager to handle everything from scheduling to invoicing and everything else in-between. Dealing with a dedicated account manager instead of an entire customer service team will help streamline processes and communication.

Tracking Your Shipments

Trust and transparency are essential in a long-term relationship with any business partner, motor carriers included. Therefore, your freight service provider should offer you the ability to track your shipment while in transit, all the way to the delivery location. By choosing a provider who utilizes the latest and most reliable tracking technology, you can be sure that the location of your goods is never unknown. 

Getting The Best Full Truckload Freight Rate

Since FTL freight shipping involves using the entire truck for your shipment, freight class doesn’t impact the truckload rate. Therefore, it’s much easier to calculate your truckload rates than it is for LTL shipments. As long as your shipment is under 45,000 pounds and has adequate insurance coverage, you’ll either be presented with a cost-per-mile-traveled or a door-to-door rate. In either case, there are several variables that can influence your truckload contract rate. Among these, we can include the following:

  • Total Mileage – The total distance traveled will influence the final rate.
  • Trucking LanesTrucking lanes are the origin-to-destination routes routinely served by the truckload carriers. Basically, the higher the truck volume circulating in these lanes, the lower your costs will be.
  • Seasonality – Peak seasons will see an increase in shipping demand, meaning that the trucking supply will drop and freight costs will typically increase.
  • Order Attractiveness – Things like undesirable loading and unloading facilities, isolated regions, the shipper’s and consignee’s reputation and other factors can sometimes incur a premium.
  • Lead Times – This is the amount of time you give your logistics partner to prepare for your shipment. The more time they have to plan, the better they are able to optimize their shipments, resulting in a lower shipping cost. 
  • Fuel Surcharges – Truckload rates will also be influenced by the fluctuations in diesel prices.
  • Accessorials – Any additional work or services, such as in-house or white-glove deliveries, truck driver unloading, packing, unpacking, as well as long haul fees or extra pick-ups, will typically increase your quote.

Spot Rates vs. Contract Rates

Having a truckload contract rate with your carrier will help them further plan their operations, as opposed to one-off or day-of orders. As such, spot rates will tend to be more expensive than contract rates. Having a standing relationship and a regular shipment schedule with a trucking company helps to bring costs down overall. 

In addition, some carriers may, for instance, be optimized to carry covered freight loads. In this case, they may charge higher rates for other types of loads that for them are, non-standard loads. To be aware of your final costs, it’s best that you go over all surcharges and fee structures. As a general rule of thumb, if two carriers charge the same rates, but one of them has an additional fee for some limited access shipments, the one that doesn’t charge the additional fee is usually the superior option.

Carrier Safety Rating

Another factor to be mindful of when searching for a future truckload partner is their safety rating. By researching your prospective shipping partners and performing your due diligence you will be best equipped to make your decision. When it comes to freight companies’ safety, the Federal Motor Carrier Safety Administration (FMCSA) has a searchable database that contains numerous valuable insights about carriers. Known as SAFER, this database will provide you with every carrier’s adherence to the Federal Motor Carrier Safety Regulations (FMCSR).

The safety rating of each carrier is based on their Safety Review (the carrier’s knowledge of FMCSR regulations) and Compliance Review (the carrier’s compliance with these regulations). Based on these findings, each carrier will be classified as either:

  • Satisfactory – No evidence of substantial non-compliance with safety requirements.
  • Conditional – The carrier was out of compliance with one or more safety requirements.
  • Unsatisfactory – Substantial noncompliance with safety requirements.

Carrier Insurance

In addition to safety, you should also know from the start whether the carrier has insurance and what the coverage will protect. The minimums, according to the United States Department of Transportation, must include the following:

  • Basic Liability Insurance – This is a mandatory motor carrier insurance. It will cover damages the truck causes to other people or their property.
  • Physical Damage Insurance – A more comprehensive policy, this also covers damage incurred from a collision, weather events, or other nature-related circumstances. It will also cover things like theft and fire. 
  • Motor Truck Cargo Insurance – In addition to the above coverage, this policy will also cover the cargo within the truck. Depending on the insurer, there may be some exceptions to what can be covered, such as live animals, contraband, or items not under the bill of lading (BOL). Covered amounts will also depend on the insurer but can sometimes be up to the entire shipment value plus other risk expenses. 
  • Carrier Liability Insurance – This cargo coverage is required by the FMCSA, but the carrier liability is limited to 10 cents per pound. In most cases, this will not cover the cost of the entire shipment.

Tips for Finding the Right Truckload Carrier

It may be tempting to go with the cheapest carrier option available on the market. Yet, this may not always be the best option for your business. It’s best that you compare the risks, service level, and the costs to determine your ideal cost-to-value ratio that will best meet your freight needs. Having a reliable logistics partner will mean less worry, less stress, and happier customers. 

Another piece of useful advice is to look for simplicity in the level of service and support received. It’s important to remember that every time your shipment is handled, there’s an additional chance for damage, routing errors, loss, theft, or incidentals, such as bad weather. If the carrier has an on-time delivery rate of 90% or above, you are dealing with a professional who knows how to streamline and optimize their processes. 

Also, take a closer look at the carrier’s customer feedback and transaction history. Do they have a positive reputation with past customers and fellow transport companies? Any reliable truckload company should be able to provide you with positive references from their past and current customers, or you can check the Better Business Bureau website to see if any complaints have been made against them. 

Finally, we recommend that you work with a large and established truckload carrier because they likely already have the network, infrastructure, and supply chain solutions to cover all of your needs and requirements.

Allow the experts at Red Bird Logistics to manage your truckload shipments. We have extensive experience in the trucking industry which is how we are able to collaborate with over 20,000 companies, while providing our customers with end-to-end transit solutions and affordable prices. Feel free to check out our logistic services and supply chain solutions to see if they might be a fit for your needs. 

Request a quote today or contact us directly if you need any additional information! 

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