Is Your Broker Guesstimating Your Freight Quotes?
When you partner with a broker, you choose one that you believe is getting the best rate for your shipment. But how do brokers come up with a freight rate in the first place? It usually happens one of three ways.
Seasoned brokers know their industry well enough to make a pretty good guess as to what the rate should be on a particular shipment on a certain lane. They combine industry knowledge and historical data—usually stored in their head and not on a computer—to come up with a base number. Then they add a little bit—or a lot—extra to cover any fluctuations in price over the course of the contract and to round up to a nice whole number. The resulting rate may be fairly accurate, or it may not. The problem is that many brokers do not have the technology to leverage data and historical pricing when providing quotes.
Check & Call Backs
To get a more accurate price, a broker might check load boards like the DAT and call carriers to understand what they would charge for that particular load at that particular time. This is a time-consuming process, but ultimately yields a fair market price that accounts for current market conditions. The problem is that when you have freight waiting to be shipped, you don’t have time to wait by the phone to get a quote.
Sophisticated brokers have advanced transportation management systems that can provide an accurate, fair market quote—instantly. A robust TMS can capture current market pricing and compare it to historical cost data in real time so you don’t have to wait. With more accurate pricing, you’ll save money. Sophisticated brokers with data-driven pricing can quote you $378 for a load that most brokers would round up to $400. Twenty-two dollars may not sound like much, but over the course of many transactions it adds up.
In addition to data-driven pricing, a broker with an advanced TMS can capture carrier data as well. With an internal carrier scorecarding system, not only will you get the best price but you’ll also get highly qualified carriers hauling your freight.
Ask Your Broker How They Quote
How does your broker determine pricing? It’s worth asking. Redwood is powered by a team of logistics experts and LoadRunner®, a proprietary TMS that uses pricing algorithms and historical cost data to provide instant, accurate quotes. Contact us today for accurate pricing on a lane.