You’ve found the perfect freight forwarding company that meets your shipping requirements, but are receiving the best rates for that shipment process? Most freight forwarders will provide you with a base rate. However, you should settle for it. This is where freight rate negotiation takes place. Before signing the contract, make sure you negotiate the price of the shipping.
There are a lot of factors that will help you negotiate the freight rates properly such as knowing the specific costs of the shipping, the cost of the shipping during the peak seasons, the loading and unloading costs, or any other hidden costs. Many business owners don’t have proper knowledge in these areas. Therefore, they consider contacting a broker who would negotiate the freight rate for them. Even though brokers offer lower rates, you should always ask for better rates. Here are the top 4 tips that will help you negotiate the freight rates.
Know the Operating Cost
Before you sit at the negotiation table, you need to determine the operational costs of your business. Determining the amount of money to run your business will help you implement cost-saving strategies appropriately. Make sure you consider the amount of operational cost while looking at the rail freight rates. Accepting freight rates that are way below your operating cost will ultimately hurt your operation. This step can also damage other aspects of your business and create financial problems. Don’t hesitate to turn down the low-paying freight rate contracts.
Consider the Drop-Off Location
This is one of the most important freight rate negotiation tips you need to remember. Some areas have comparatively low-paying freight rates. For instance, you will get good freight rates will shipping goods to Florida. However, shipping something out of Florida is a different story and you might receive lower rates. If you know that the freight rates for your next shipment won’t be a great one, make sure you take relevant preparation. Negotiate higher freight rates for shipping goods into the low-paying areas to cover the returning cost.
Ask about the Fees
Some lanes are costlier to operate than the others. Make sure you know if the roads are assisted with any type of tolls. Are you transporting hazardous materials that require a special permit to operate on the road? Do you have to pay lumpier fees? Is the shipper proposing long detention times? Will the broker propose an accurate detention rate? As per Tafs, the detention rates cut the profits of the shipper.
Determine the Load-to-Truck Ratio
Pay close attention to the quantity of posted trucks in your lane. Sometimes you won’t have a higher number of trucks available for your next shipments. This will influence the demand for the truck in the particular area. If you notice a large number of loads and a relatively small number of available trucks, make sure you negotiate higher rates than usual as the demand for your truck is higher. The primary cause of lower rates is the lack of board. Make sure you check the number of available trucks before going to the negotiation table.
These are the top 4 tips that will help you negotiate better freight rates. While negotiating the freight rates, don’t hesitate to ask questions. And if you have any other queries, comment below.