Freight rates will always be a headache for transportation companies, especially when the market is volatile, competition is high, and customer expectations are increasingly demanding.
For your business to maintain competitiveness and access fair freight rates that do not generate additional costs, you must thoroughly analyze the market and dive deep into understanding the carrier network.
The central aspect to consider is the following: rate selection must be a win-win situation for shippers and freight transportation companies.
How to maintain competitive freight rates?
Managing freight rates year-round is challenging as the market does not follow a straight line. But you can consider a couple of things to ensure competitive rates with your selected carriers.
- Data
With so many data points currently available, companies must be able to compile relevant information and use it for critical processes like freight rates. The more data a company has, the better. They’ll be able to analyze the situation better and make decisions that will impact their operations positively.
To ensure your freight rates are fair, you must analyze data from months back, even a year back, to ensure that your expectations are based on factual information from historical data. This data analysis must be thorough and specific. Review freight characteristics, lanes that are commonly used, origin and destination, and types of transportation. With all this information in mind, you’ll be able to request rates that reflect your freight’s specific requirements.
Besides comparing data to ask for fair rates, you must provide the data carriers need to ensure they understand your requirements and accept the service. Information such as origin, destination, weight, dimensions, special requirements, type of service, accessorial charges, and expected delivery time.
- Selectiveness with carriers
In many situations, it is natural for shippers to want to contract the cheapest carrier. But at the end of the day, lower costs may benefit your finances, but service levels might be affected. Therefore, companies must vet their carriers to ensure they access the best services at reasonable prices.
Taking the time to find a suitable carrier means that you’ll gain reliability and a transportation partner that will move your freight according to your specific needs. Once you find the right company to work with, you’ll be able to build a relationship with them. This will allow you to understand the carrier and come to agreements on freight rates and ensure financial stability, capacity, and business for the carrier.
Learn about the carrier you want to work with, their strengths, their weaknesses, their equipment, and how they handle difficult situations, and with that in mind, you can decide to work with them.
- Focus on service quality
As mentioned above, the lowest price can be attractive, but what’s critical is the service the transportation company will provide. At the end of the day, you want your transportation process to slow seamlessly, without any issues, and for your freight to be delivered on time. For this to happen, you must work with an experienced company that understands the business and can provide reliable services.
Understanding the importance of service levels will help you provide fair rates that consider it and choose carriers that will not let you down.
How can you get to know your carrier? By asking the right questions. Ask about their capacity, insurance, the technology they use, licensing, and other critical elements they should have for you to work with them.
- Understand the market
You need to understand the market to ensure you’re asking for a fair freight rate. Especially nowadays when the market is plagued with fluctuations and disruptions. Prices may go up at certain times of the year, and at others, they may go down. Therefore, with your understanding of the market, you must be able to plan ahead, so your business is not affected by higher prices. This will allow you to still ask for attractive rates for the carrier in peak season or when the market is loose.
- Partner with a logistics provider
As the market becomes increasingly complex, searching for alternatives is critical. Partnering with a third-party logistics company will give you access to industry knowledge, experience, technology services, and a vast network of vetted carriers for you to work with. 3PLs can bring new alternatives to the table and help you diversify your service offering.
At Logistics Group International, we focus on giving our clients the competitive edge they need to stay ahead of the game. We understand how the market works and will ensure you move your freight with the industry’s best and most cost-effective transportation companies.
Maintaining freight rates year-round is an arduous task. Still, it becomes easier when you use data, select suitable carriers, focus on service quality, understand the market, and partner with a logistics service provider.
