Things to Consider When Researching Freight Rates
When researching freight rates, your mission is to get the best rate possible for your shipping needs. One way to do this is to understand what goes into shipping rates. Consider the different variables that affect rates and how these relate to your shipments.
A common myth is if diesel prices go down, so does the cost of shipping freight. There are many other aspects beyond fuel costs, such as FMCSA regulations and seasonal demands. Also, if you have a contract with a carrier that is providing you with ongoing freight services, chances are you’ve locked in a linehaul price which would have a fuel surcharge component which would reflect the price at the fuel pumps.
The type of freight hauling service you need also impacts the overall freight rates. For specialized freight including oversized loads, tanker hauls, or refrigerated freight, you can anticipate paying more. These types of hauls require more time and attention, as well as specialized equipment that comes at a premium. If you are dealing with flatbed freight or basic dry van box trailers, especially if the freight is no-touch drop-and-hook, you stand to save the most money on shipping rates.
LTL Versus Truckload
Another myth is that you must fill a truckload with 26 pallets single stacked to get a load out. Thanks to the boom of e-commerce, the bandwidth of LTL carriers has increased. LTL shipping is more accessible due to supply and demand among shipping customers in both the commercial and residential sectors. That means you no longer have to wait until you have enough freight to fill a truckload in order to save money on shipping rates.
Consider the cost savings and faster turnaround time you can achieve if you opt to ship using LTL freight services. Your products get to customers quicker, whether you are distributing to warehouses, retailers, or directly to customers. This enables your business to make more money faster and keep your products on the move.
Time of the Year
Certain seasons incur a spikes in shipping. The holiday season and summer months are the two busiest times of the year for carriers. Yet you will also see an increase in freight demand in the spring as agricultural commodities pick up. In the instance of a natural disaster, such as hurricanes or tornadoes, this also drives up the demand for freight haulers. If you want to avoid freight spikes in the spot market, here’s a good rule of thumb. Avoid shipping at the end of the month, right before a holiday, or at the end of a fiscal year.
Hours of Service Rules
This brings us to the most important aspect of any freight rates. The driver who will be transporting your freight is regulated as a commercial vehicle operator by the Federal Motor Carrier Safety Administration. The FMCSA mandates regulations on truck drivers to ensure their safety and the safety of others. One of the most recent regulations that were put into effect was the Electronic Logging Device mandate.
With the ELD mandate, trucks are now tracked electronically to determine when the engine is running and when it is shut off. These actions are logged into the ELD system along with the driver’s hours of service. Hours of service rules are another regulation by the FMCSA that determines when a driver can operate a truck. Before the ELD mandate, drivers were able to use paper logs that could easily be altered to reflect their driving times. Now all drivers are strictly regulated according to when they can drive.
What does this mean for your shipping rates? If you have a load that needs to go 400 to 800 miles, depending on the hours of service rules, your freight may spend an extra day on the road. An extra day increases the amount you will pay for the total freight cost.
All of these factors can change the price of freight from one minute to the next. It is important to understand these variables so you can be prepared for sudden spikes in pricing.