5 Reasons Your Freight Rate Might Change
When you call up a broker or receive a completed RFP, one of the biggest factors in choosing a 3PL for your freight is price. But what exactly influences the price of a freight quote? Many new freight shippers are surprised by how widely their quotes can vary from month to month. Let’s dive into how a broker arrives at a price.
There are five main factors that influence freight quotes.
1. Fuel Costs
The cost of fuel to get your freight where it’s going changes just as often as prices change at your local gas station. Partnering with a broker that can instantly offer alternatives, such as rail and intermodal, can be helpful when trying to keep freight costs down.
Rain, snow, sleet and more can change freight quote prices wildly, especially in areas with unpredictable weather.
3. Seasonal Demand
When it’s produce season, capacity shrinks, causing freight quotes to rise. In addition, certain areas around the country may have unusually high or unusually low rates during produce season. An experienced 3PL may be able to suggest cost-saving measures, such as swapping out a dry van for a reefer.
4. Historical Cost Data & Pricing Algorithms
How much the lane has cost in the past will be a good starting point for pricing the lane today. By utilizing a cutting-edge transportation management system, a broker can base their freight rate on data instead of a best guess.
5. Load to Truck Ratios
If there are a lot of loads, but only a few trucks to carry them, you’ll be forced to pay a premium. Alternately, if there are very few loads, shipping companies can negotiate the most competitive freight rate. A broker can help you navigate both scenarios. When rates are high they can tap into private fleets to unlock hidden capacity. When rates are low a technology-driven broker can match your freight with the best carrier for the job by using an internal score carding system.
The Price is Right
These factors are the biggest freight quote influencers. It can be a lot for one shipper to take into account when trying to find a carrier. Who has time to run a company, AND look through thousands of carriers across the nation to find the perfect one at the right price? Nationwide brokers take on that job.
The best brokers know which carriers are hungry for your freight and what time of year that freight will be most in demand. A lane that’s bad for your local carrier may be ideal for a carrier in your broker partner’s network. Top tier brokers work with you to craft innovative solutions to lower your freight spend. Read our latest transportation brief to learn about just one of these solutions.