Navigate Freight Rates: Factors that Affect Shipping Costs
Melton Logistics – 02/08/2024
If you’re looking to get your freight shipped for a good price, it’s important to know what factors can cause your shipping rates to increase or decrease. These price changes can come from several sources; some things you can control, like mode of transport and speed of shipment, but other things like weather and market conditions may be up to chance. Keep reading to learn more about what you need to consider and how to get the best price for your freight!
Mode of Transportation
The mode of transportation needed for shipping goods will affect your shipping costs. There are various options, including full truckload (TL), less-than-truckload (LTL), open deck, reefer, van, and even more specialized equipment. Each mode’s cost structure is based on capacity in the specific geographic region of the shipment’s pickup and delivery, length of haul, along with a combination of the other features listed below.
It is more cost-effective to ship in closed vans due to the physically demanding nature and safety risks associated with open-deck freight. As a result, it is more expensive to move a load from the same origin and destination on a 53’ flatbed than it is on a 53’ van.
If demand for trucks/drivers is high in your region, it will cost more to get your load covered. Inversely, if there is a low demand for trucks in your area, you could benefit from a price decrease in spot market rates on shipments while the demand is low. Supply and demand in your freight’s destination also factors into the cost. If the market is depressed in the area in which your load is delivered, the transportation cost will be higher as the carrier will try to mitigate lost costs by compensating for the empty miles they will travel to the reload area when they quote the shipment.
Urgency of Shipment
When a shipment needs to ship on the same day, this expedited shipping service costs more. While this can sometimes be unavoidable, shippers can save money by having their loads ready at least 24-48 hours in advance.
Length of Haul (LOH)
Generally, you’ll be charged for your freight based on the miles to its destination. Carriers figure cost by the mile by factoring in fuel costs, wear and tear on their equipment, and driver pay. The exception to this rule is loads that need to be moved less than 250 miles from their starting location. This type of haul is referred to as a short-haul and typically has a day rate or minimum charge attached to it. This means if you need to move freight for a distance shorter than 250 miles, you’re still charged for the whole day and not on a rate-per-mile basis. This is done to accurately compensate the truck driver for their work as well as compensate the carrier for the use of their equipment for the full day. Typically, anything longer than 300 miles is priced per mile.
The weather conditions along your route can have a strong impact on rates going into certain geographic locations. This is largely due to the safety concerns and effects on productivity caused by weather. For example, in the winter months, rates will increase going into the Northwest & Northeast due to the high levels of precipitation, freezing temperatures, and poor road conditions, all of which increase the chance of accidents & personal injury. This results in fewer drivers willing to drive in these conditions. When shippers have loads that must go into areas experiencing weather events, they should expect to pay more to attract a carrier to go to those areas.
Seasonal Demand & Peak Periods
Shipping rates can fluctuate during peak seasons, like holidays or special events, due to increased demand and limited carrier capacity. There are also regular shifts in demand during different times of the year – generally, the demand for shipping increases in the summer and drops off towards the end of the year.
Specific Requirements of Your Shipment
Does your load require specialized securement equipment, or an endorsement to haul? These have costs associated with them and reduce the number of drivers able to haul the shipment. Again, this is a matter of supply and demand. When there are fewer drivers, there is less supply to meet demand, causing the price tag to increase. Make sure you know beforehand which specialized requirements your shipment needs, if any.
Working with Melton Logistics
Our Account Managers at Melton Logistics have combined decades of experience and are ready to help you understand your shipping rates. We will pair you with one of our trusted carriers who will ensure your cargo is safely transported. If you’re ready to get your freight moving, submit a rate quote form or get in touch with one of our Account Managers directly.