Nailing down the best freight rates is so critical, yet so challenging. The volatility of the freight market, the lack of transparency in freight pricing, and the intricate negotiation processes between shippers, brokers, and carriers all add up to create a complex freight pricing environment for shippers. But finding the right truck freight rates is paramount to maintaining efficient operations and a healthy bottom line.
That’s why Farelanes is introducing a three-part guide to helping shippers find the best freight rates.
In this first part of the guide, we’ll take a look at the obstacles standing between shippers and the best freight shipping rates for their businesses.
The Challenge of Finding the Right Freight Rate
Freight shipping rates are full of complexities. The freight market can go up and down in the blink of an eye. Carrier capacity is unpredictable and can change dramatically due to a geopolitical event, a natural disaster, or even a sudden surge in consumer confidence that leads retailers and manufacturers to ramp up their orders.
Furthermore, some shippers continue to rely on historical data rather than real-time information, making it difficult to assess current freight rates per mile accurately. They also use outdated, manual processes instead of up-to-date, automated solutions. Combined with the variable freight market, this can make finding the best freight rates a real challenge.
Shippers need accurate pricing to ensure the reliability of their freight shipping operations and the cost-effectiveness and competitiveness of their business.
Three Obstacles Standing Between Shippers and the Best Freight Rate
Anyone can come up with “a” freight rate. But finding “the” freight rate is more elusive, chiefly because of three obstacles:
Challenge 1: Market Volatility
Shipper demand and carrier capacity fluctuate constantly. Combined with external factors, this leads to changes in freight pricing and shipping rates.
Think about the trucking market, in particular. During the pandemic, a surge of smaller carriers entered the market as demand for online goods and trucking capacity skyrocketed. But for the last two years, those carriers have started to exit the market – either through bankruptcy or being absorbed by a larger company. Small carriers continue to leave, leading to shrinking capacity which will likely push up truck freight rates.
But this is all an assumption, and the actual rate of change in capacity, demand, and freight pricing remains to be seen. An external event — like the Baltimore bridge collapse or labor strikes at seaports — could also rapidly speed up, slow down, or reverse a trend. These rapid changes in market conditions create unpredictable pricing dynamics for shippers.
Challenge 2: Lack of Transparency
When it comes to freight pricing, fee structures are often opaque, and real-time data isn’t always available. A carrier or broker rate could have hidden fees. Given the long payment cycles, data and historical pricing can quickly become outdated.
This leads to challenges for shippers trying to access transparent pricing. If they can’t see everything that constitutes a freight rate, shippers are hindered in their ability to make informed decisions and negotiate fair shipping rates in the dynamic freight market.
Challenge 3: Complex Negotiation Processes
Supply chain networks are intricate with many players, from shippers to carriers to 3PLs to brokers. The negotiation process involves not only these stakeholders but also balancing factors like freight volume, route complexity, and carrier capacity.
Each player in the logistics network has a common goal — for freight to arrive safely and efficiently at its destination — but the priorities can be different. A shipper, for example, wants a competitive freight rate. A carrier might want the most efficient route and optimized loads that maximize profitability.
Finding a mutually beneficial agreement requires navigating market dynamics, operational constraints, and pricing complexities in the freight industry.
Looking Ahead: For Today’s Shippers, Finding the Best Freight Rate is Likely to Remain a Challenge
Going forward, the freight and logistics landscape will continue to be dynamic, and freight shipping rates will continue to fluctuate as supply and demand change.
Many analysts are starting to predict a turn in the freight market that favors carriers after we’ve been in a shipper’s market for many months. ACT Research anticipates rising freight volumes as retail sales, imports, and intermodal volumes grow. Rising demand, coupled with the continued exit of carrier capacity, could push up truck freight rates.
C.H. Robinson, however, is less bullish. The 3PL says spot rates are still below the breakeven point, and the carrier network is oversupplied. “The environment isn’t overly indicative of a shift in the market cycle just yet,” it said.
With so much marketplace volatility and big unknowns in the future, a trend is emerging of dynamic rate forecasts that could potentially revolutionize freight pricing. Dynamic forecasting is based on real-time data and predictive modeling. By using a dynamic rate forecast, shippers can navigate the evolving landscape of freight pricing effectively.
Tackling the Challenge of Freight Rates With Farelanes
Shippers need to find the best freight rates, but there are plenty of hurdles in the way to reaching that goal. Between market volatility, a lack of transparency, hidden fees, and complex shipper-broker-carrier negotiations, it may seem next to impossible to find the right freight rates.
While we at Farelanes have presented the challenges in part one of our guide, we plan to show you in part two how you can use innovative solutions to find the right freight rate for you.
At Farelanes®, we provide accurate and timely freight pricing data with accessible implementation, real-time market insights, and transparent methodology.
Farelanes® technology streamlines freight pricing and simplifies shippers’ decision-making by offering accurate rate updates and data analytics tools. It empowers them to optimize pricing strategies and navigate the complexities of the freight market with confidence and efficiency.
Farelanes® stands out by gathering, analyzing, and anonymizing lane data from banking and factoring institutions. Then, it’s hygiened, to provide a valuable solution for industry players seeking accurate and timely lane pricing.
But we don’t stop there. We need to offer more than transparent pricing. We offer accurate, transparent pricing in real time, not after the fact.
A lot of other companies claim to offer transparent pricing. We actually do it.
Farelanes offers a variety of lane pricing data to meet your specific needs:
- Silver: Unlimited line haul rates for city pairs, up to three favorite lanes, and up to 27 trailer types. Farelanes Silver gives you the information you need when you need it.
- Gold: When you need more, upgrade to Farelanes Gold…everything Silver offers, plus export Level II detail, lead times, fuel surcharges, and much more.
- Bulk Data Publishing: If you already run your own backend data system, our Bulk Data Publishing allows you to plug our feeds directly into your system, giving you unlimited favorite lanes, charts and graphs, miles, export data, and much more, via a flexible API that can adapt to whatever you’re running now.
The transportation industry lives in uncertainty; uncertainty as to when a load will arrive, uncertainty about shipment status, and, perhaps more than anything else, uncertainty as to whether or not you’ve got the right price for your freight. At Farelanes, our goal is to take the uncertainty out of freight pricing, providing growth-minded businesses with the right rate at the right time. Ready to give Farelanes a try? Get in touch today to service options. At Farelanes, we’re ready to deliver freight pricing data you can trust.
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