Full Truckload (FTL) transportation, or over the road (OTR) trucking is used when a company has a certain commodity that can be put fully in a trailer of a specific measurement (i.e. 48’ or 53’). 

FTL Rates

FTL rates can be calculated simply by using the cost it will take a driver to get from point A to point B (in miles). 

Other Rate Methods

Another method of rating could be a flat rate better known as a “door to door” rate. The commodity and weight of the commodity can impact the rate.

With that said, there are many aspects to think about when rating a shipment.

Using A Skilled Freight Shipping Expert Is Best

The best way to be a more skilled transportation pricing expert is to understand all the aspects that go into rating a shipment, then using that knowledge to determine strategic decisions for rating in the future.

The commodity of a shipment can play a huge role in determining the rate of a shipment. The carrier will always want to know what the commodity is because they need to know if it is valuable or not. Commodities with higher value will cost more than lower value commodities. Carriers also need to know the commodity because of the amount of cargo insurance they currently have. High value commodities call for higher amounts of cargo insurance ($200,000 or greater).

Determining the miles from the pickup location to the delivery location is crucial because that is one of the main aspects when rating a shipment – the cost per mile. Longer miles can cost more and sometimes about the same as shorter miles – depending on the lane, cost of fuel, and in-transit time. Not all lanes will cost the same, even if the miles are the same – keep reading to see why.

Contract rates are year-round rates that do not change until the next bid year. Since rates fluctuate each year, a new bid will come out to determine costs for reoccurring lanes. Having a good relationship with a carrier that can run reoccurring lanes often provides consistency and lower costs of the shipment. Spot quote rates are day-of or unique shipments that need to be shipped ASAP and will most likely cost more.

There are certain times during the year where freight costs will be higher than normal. For example, during produce season or during the holiday season. This is a prime example of supply versus demand.

From April to July, freight costs are higher in areas where produce is shipped. Common states such as Florida, Texas, Arizona, California, and Georgia are among the states that ship produce from April to July. Trucks are in high demand once produce season kicks off because when the crops are ready to ship, they must be transported quickly to retailers who sell them in stores. The costs for the trucks go up because shippers typically want refrigerated vans – which cost more to have the refrigerator run continuous in-transit. Therefore, rates during produce are higher than outside of produce season – demand for trucks rise and rates increase.

Other companies, such as retailers, see a rise in rates during Q3 and Q4 during the year as they need to prepare for special occasions like holiday (Christmas, Thanksgiving, New Years, Memorial Day, Labor Day, etc.) and other occasions like back-to-school. They order in larger volumes in which the demand for capacity and trucks are higher.

There are times throughout the year when natural disaster relief is necessary – mainly if a hurricane hits and medical supplies, food, and water need to be shipped where the disaster hit. The high demand of trucksincreases and the costs for these trucks increases because they are at risk to go to the disaster area and the capacity is lower.

There are a lot of carriers that will charge more for shipments that pick up from or deliver to unappealing places. How does one dictate what is unappealing to a carrier? If there are decent backhauls, easy appointment changes, easy to access for the driver, etc., these will appeal a carrier to take a load at a fair rate.

Shipments that have very strict pickup and delivery appointments, heavy commodity, dead area they are delivering to – which means no backhauls – carriers are more inclined to increase their rate in order to meet those strict demands.

Fuel is another main aspect for rating shipments. Fuel – which is diesel – fluctuates based on the price of diesel at the time of when the shipment needs to move. Carriers will constantly change their rate based off what the cost of fuel is at the time of moving the shipment. They could do a certain rate one week and go up or down on their rate the next.

Truck capacity to load ratio will always be changing throughout the year. As capacity can change seasonally, it can also change due to unique occasions like seasonal sales, natural disasters, etc.

Providing excellent transportation service is crucial. Every shipment needs a certain amount of attention, whether it being communication with the customer or attention to detail. There are many commodities that require exceptional service (meaning reliability and availability), in which will cost more than commodities that don’t require such high-quality service.

Accessorial charges are extra costs that are acquired when there is additional work apart from the driver getting loaded and unloaded. For example, detention, having/using a lift gate, unloading lumper fee, etc. These charges are billed separately from the line haul rate of the shipment. Accessorial charges can be avoided if there is enough lead time – it could be added to the line haul rate.

The amount of time given to plan for a shipment can go a long way to the customer. It can lower the cost of the truck and a lower rate can be given to the supplier (which is ultimately the goal of the supplier to lower costs). If there is no lead time, the cost of the freight can skyrocket, depending the time of the year and how imperative the commodity is to ship.

Looking at every aspect of providing the best possible rate for your customer takes strategy and planning. Quote quickly with enough lead time that the rates will be lower, and the truck cost will be lower. If you can get all the details of the shipment ahead of time, shipments can be taken care of quicker.

Determining a rate for a shipment can be difficult – especially when there are multiple carriers that are giving similar rates and mode options. Be competitive, but not in a way that you will lose money.