Freight shipping is the transportation of goods, cargo by different routes such as air, sea and water. From rare and very expensive to well-balanced and cheap, the freight market has changed a lot in recent months, and getting truck freight rates that are profitable is extremely tough.Â
After the covid-19 pandemic and the lockdown there has been a drastic turmoil in the trucking business due to which freight rates have been affected a lot. Today’s dynamic logistics and supply chain environment requires strategic planning. Execution of strategy; measurement to targets; analysis against industry benchmarks; and continuous improvement.
Here are some tips to follow that will help you to get the best truck freight rates!
1. Know your operating cost
If you don’t have the data about the profitability of your business then it is impossible to negotiate freight rates. Operating cost refers to the cost that has been used to run the business, as a carrier it refers to fuel charges, preventative maintenance of trucks and driver salary. You need not want to take the freight which might leave you and the company at loss. However to build trust among the clients and have their business for a longer run, sometimes a little loss on one load can be beneficial for future business orders.
2. Keep looking for unconventional orders
When freight rates dip on your regular routes, be ready to switch away from your comfort zone. Always keep looking for other routes where you can make more profit by getting higher truck freight rates. Moreover, unconventional orders such as seasonal shipments, contract logistics, home moving, perishable goods transport, medical transport and others. These shipments will give you a chance to make additional profit as these shipments are time-bound and hence ready to pay a little more than average market freight rates.
3. Build a diverse fleet
When you have a diversity of vehicles in your fleet, you can earn in different freight markets, instead of depending on a specific market. Sustainable business owners typically build fleets of heavy goods vehicles, light good vehicles, passenger transport and mining vehicle. Having diversity in your fleet gives you more venues of earnings and hence you can sustain through a down market better than those who have only one type of vehicle in their fleet.
4. Make a Charming Online Presence
Business, especially the newly established ones, can come in a position where it would be difficult to say no. Situations like getting desperate for orders and getting them at the sake of heavy loss or booking loads quickly without seeking details as driver and idle truck costs are high,are very common. A person can get into these temptations, but keeping in mind about your profits/loss you can easily decide to say ‘NO’.
Why? One of the reasons related to the above is that you know your operating costs and don’t want to lose money. If the loss is beyond your tolerance, you should not accept the burden.
5. Be a good negotiator
To become a good negotiator you should have knowledge about your services in depth. Communicate with the client about all the accessorial charges, extra costings such as tolls, lumpers,fuel surcharge,detention. Try to reflect upon these unavoidable charges in order to make your client believe about the transparency of your trucking services.Â
6. Find a consolidation plan
Combining your LTL shipments with partner companies can prove to be beneficial in terms of shipment cost. Shipping to the same location in partnership with other companies can save reduce fleet shipment cost along with other independent costs.
7. Ship more product, less often
Encourage customers to place bulk orders. It is much cheaper to ship 6 pallets at once than to ship 2 pallets every 2 days. However, retailers tend to be on the lookout for smaller shipments more frequently, so they should be encouraged to stock more than they need. One option is to share your fare savings with retailers. Another option is to consider vendor-managed inventory, where the retailer is not billed until the product hits the shelves.Â
8. Build relationships
Use your interpersonal skills when negotiating fares to build positive long-term relationships. Training to build positive connections and shared interests can help avoid future delays and price increases. It is especially important to remember that supply and demand between shippers and carriers are constantly changing, hence it is your close relationships which can help your clients to choose you above others.
Many of these solutions seem obvious, but shippers often ignore them and end up paying more freight than they need. This can happen if there is a down market at that particular time or the company is not getting many orders in comparison to their competitors. As you can see, determining truck freight rates requires a lot of work. Providing details upfront means less back and forth, orders can be processed faster, quotes are more accurate, and often cheaper.Â
Follow the above and get the freight rates you want.
