Tips for Negotiating Freight Rates

Tips for Negotiating Freight Rates

You found a load on a load board that meets your business requirements.  The next step is contacting the broker to negotiate the freight rate. Rates listed on load boards are rarely “all-in”. “All-in rates” cover the hauling cost as well as assessorial fees and fuel surcharge. Brokers generally offer lower rates because that is how they make money. Do not be afraid to ask for a better freight rate, especially if it is good for your business. But don’t just pull a number out of a hat either. Be smart about your negotiations by paying attention to market trends and broker information.

Know Your Operating Cost

Before doing anything, you need to know how much it costs to run your business.Keep this amount in mind when looking at freight rates. Generally, accepting rates below your operating cost can hurt your operation and may even put you out of business.  Do not be afraid to turn down low paying freight.

Pay Attention to the Drop-off Location

Some areas have reputations for low-paying freight. For example, getting good rates going into Florida is easy; getting those same rates coming out is a different story. If you know you probably won’t get a great rate on your next load, you can prepare. Negotiate a higher rate going into the low-paying area to help cover the cost of getting out. Be careful about hauling into low-paying areas too often. Low paying freight is still risky.

Identify the Load-to-Truck Ratio

Pay attention to the number of posted trucks in your lane. They are going to want the same loads you do and influence the truck demand in your pick-up area. If there is a large number of loads and a small number of available trucks, you have room to negotiate a higher rate because your truck is in high demand. Low rates happen when there are not enough loads to go around. You can check the number of posted trucks with a quick search on your load board.

Look Up the Average Spot Rate

Load boards generally post the average spot rate for a particular load. Does the rate listed fall within the average? Remember, do not be afraid to turn down low paying the freight. If the rate is low, see if the broker will come up in price.

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