You’ll find that freight transportation rates are not the same when transporting freight year-round. They usually fluctuate depending on various factors, such as surcharges, demand, and seasons. To ensure your business is still profitable and you’re not as affected by these fluctuations, you must understand why they happen and how to manage them year-round.
Why do freight transportation rates fluctuate?
These are some of the reasons freight rates are constantly changing.
Supply and demand issues
Environmental, political, and economic matters
Overcapacity or lack of capacity
How to manage changing freight transportation rates?
Even though these changes may be out of your control, there are many things you can do to mitigate costs and avoid being affected by them. Let’s dive into a few:
Understand how the market works
Although this tip sounds obvious, it’s essential. You must understand how the market works, how it changes, and what you should expect to ensure you manage every obstacle in the best way possible. Understanding the market means you’ll know when peak season is coming and exactly what to do to stay on top of the demand. It also means you’ll know when it’s best to branch out and find strategic partners to help you make your process more efficient.
Build a strong carrier network
Creating a solid carrier network is critical. These selected companies will constantly work with you to ensure your freight is delivered safely and on time. They will get to know your business and know what works best for you. With time, you’ll be able to trust these companies and know which one to choose depending on your specific transportation need, ultimately saving you time and money.
Having this type of relationship with a carrier will help you then start building long-term agreements that are mutually beneficial. You will provide carriers with business, and they’ll provide you with cost savings.
Agree on freight rates with carriers for a specific period
As mentioned before, creating a robust carrier network provides many benefits. But a critical one is being able to negotiate arrangements with carriers. The market is constantly changing, and you’ll need to create special agreements with carriers to stay ahead. The best option is to negotiate freight rates for a certain period. The time this agreement will be in place will depend on your relationship with the carrier and the business you provide for them.
Finally, you must be able to plan your shipping. As you understand how the market works and know precisely when peak seasons start and end, you’ll be able to determine when it’s better to ship your goods. Shipping the bulk of your freight in off-peak seasons is a better strategy as you’ll be able to access the capacity you need quicker and at a better price.
Applying these simple strategies will ensure you’re not affected by the changing freight transportation rates. It’s a matter of understanding the market, building a solid carrier network, negotiating with these carriers, and being strategic about your shipping. Freight transportation rates will always fluctuate. That’s why looking for alternatives will help you stay ahead and continue providing quality services.