This is the same load I moved 3 months ago, shouldn’t my full truckload rate be the same?
No! In fact, quite the opposite is true. Unless your volumes are such you are able to secure year long contracted rates, the laws of supply and demand come into play quite frequently, requiring spot pricing. Many factors influence pricing, and over the course of the year, these factors can result in dramatic and sometimes sudden changes.
Spot Market Factors:
Lead Time/Day Shipped – Lead times can significantly impact full truckload pricing. According to a recent MIT study of 8,500 full truckload shipments, allowing for a 24 to 48-hour lead time directly lead to 5% difference in price or $42.00/load. This same study found that loads tendered on Wednesday-Friday were on average $17.00 higher than loads tendered on Monday-Tuesday.
Seasonal Freight – Two major trends during the year can strongly affect your pricing: produce season and retail season.
Produce Season – Which starts around April and ends in July, is the time produce harvesting hits. Even if you aren’t a produce shipper, you could be impacted by high demand for equipment. The most affected regions are Florida (spanning throughout the Southeast), Central California, Texas and Iowa, but there are produce seasons throughout the country all year long, so getting to know these can be quite valuable.
Retail Season – Generally from July to November, is when manufacturers and retailers are ramping up for the holidays. Imports increase, eating up dry-van and intermodal capacity around ports of entry, particularly in southern California.
Regional Capacity – Some areas of the country are considered danger zones for carriers. These are areas with relatively low levels of outbound cargo.
Weather/Climate – Severe weather and drastic climates can lead to changing market rates. The more northerly the lane, the more challenging/costly it can be to move the shipment in the winter.
Holidays & Weekends – Dispatchers have a responsibility to take loads that get drivers to their homes & families during a holiday. If freight must move over a weekend a carrier is likely to prefer a load with enough miles to keep the driver hauling at least through Sunday, as these longer hauls will generate more revenue.
End of the Month/Quarter – Not only do carriers have revenue goals of their own to hit, but they are also acutely aware that shipments being picked up/delivered at the end of a month or quarter often directly impact KPIs that companies measure, and will take advantage of this urgency by charging more than they typically would. Some drivers are also measured by the number of miles they haul in a month/quarter, so there can also be some urgency on the part of the carrier to get that driver longer-mile shipments at the ends of these periods.
How can I survive such a rapidly changing market?
Understanding the above variable market factors can go a long way in ensuring your freight costs stay under control. For instance, allowing for longer lead times will ensure a larger capacity available. Often times, same-day tendered loads will be booked on “last minute” trucks charging a premium. Understanding your market location and when the best time of year to ship raw materials/stock in larger volumes will allow you to avoid seasonal pricing. Finally, small shipping alterations based on distance or day of the week tendered can directly impact the price paid.
Freight Cowboy uses up to the minute market technology to accurately prepare for changing market conditions. In a rapidly evolving market, you are able to stay ahead of these trends and will be notified of any volatility providing more confidence in your own company’s achievement of specific goals. Contact us for more information.
