Freight Cost Explained

Freight Cost

Freight Cost Explained

Freight cost has been a very difficult and touchy subject to a lot of US company’s in the last year. Since the beginning of coronavirus, our logistics system has changed the amount we pay for freight in every aspect. From short to long distance shipping, from LTL to FTL, from expedited to rail. We are seeing a constant increase in price. Before we go into the explanation of freight costs jumping in the last year, it is important to learn the fundamentals of shipping freight in the U.S.

Things to Consider

The standard $2.00 to $2.25 a mile doesn’t apply to all shipments. There are a few constraints to consider.

  1. Distance.
  2. Location
  3. Capacity
  4. Size
  5. Service
  6. Speed

Distance is a very important factor in price. Coast-to-coast shipments are cheaper per mile than local runs. It is important to remember, whether you are going a long ways or running 50 miles down the road, you will still be paying for the drivers time.

Location is another factor that impacts the price. We get a lot of shipments that pick up in Wyoming, Colorado, Utah, and other states that do not have a very dense population. This can cause the rate to come up because drivers tend to be situated around bigger cities where loads are most likely to appear. We would essentially have to pay them to drive out and get the shipment (deadhead). This rule also applies to deliveries in remote areas. If you are 200+ miles away from a major city, be  prepared to pay a little more than the usual rate.

Capacity is the final constraint to consider/understand. Driver’s are constantly moving all over the country. When you have a surplus in one city, then the price goes down. The drivers will compete for loads. If you have a shortage of drivers in a city, then the price goes up because the driver will have their pick of the lot. The highest paying freight will be moved first.

Size can mean a few different things. We can be talking about 1 pallet of light filters that any standard LTL service could complete, to oversize shipments that need permits, escorts, and sometimes even bucket trucks to move powerlines. Obviously the cost for the two is dramatically different because of the level of skill, knowledge and experience needed. Consult with an expert to find the most cost effective way to get any sized shipment from point A to point B.

Service is one of the most difficult things to find the the freight world. A lot of LTL companies, Freight Brokers, and FTL Carriers don’t rely on good service to keep them going. Their thoughts are “they need us, we are essential to make things work.” Which is why Service has been lacking in the freight industry. If you are looking for dependable service around the clock, you may find yourself paying a well experienced firm more to get it. Unfortunately, everyone else is after these company’s as well, so make sure you treat them right.

Speed impacts the cost of freight dramatically. You can save tons of money putting your shipments on the rail and waiting 1-3 weeks for it to arrive. Or on the other side of things, you can higher an expedited specialist that will get it picked up right away, put it on a plane and fly it across the country, get it picked back up and deliver within a DAY. They spare no expense as their only constraint is TIME. Most people pay for something in between the two, so that their freight doesn’t kill the bank and at the same time delivers in a timely manor. Consult with your freight guy to find the most optimal path for your company. They should have your best interests in hand.

Freight Cost Conclusion

We hope that this article sheds some light on shipping partial loads, LTL loads, Full Truck Loads, Rail Loads, Air Freight, oversize and heavy haul loads. There’s obviously a lot more than we stated in this article, but it is a good starting position to get your mind in the right place. Use this information to help your logistics provider make the right decision for your company and your shipment. You can tell them more precisely what you are looking for to get the job done on time and on budget. If you are looking for that team, Fide Freight is there for you. We are a family-owned company based out of Grand Rapids Michigan. Our team is focused on giving our client and above and beyond experience. Try us out by requesting a quote below!

(313) 651 7080

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