Quoting Freight
Quoting Freight.
Sounds easy enough. Right?
Maybe not.
When it comes to shipping freight, Quoting is one of the more difficult facets in the process. It includes so many variables that a broker must think about and base decisions on. Constant changing markets, predicting the future, and handling anything and everything that could happen in the process. Which brings us to likely the most commonly asked question when quoting freight:
How far out should I have someone quote my Freight:
The answer to that depends on a few circumstances. a few commonly used time frames that are used pretty regularly used to quote freight on:
- 3-7 days
- 2 weeks
- 30 days
- Quarterly
- Bi-quarterly
There are benefits and drawbacks to both short and long-term time frames:
- 3-7 days :
- This would be the shortest time frame that is regularly used when quoting freight. Brokers can book same day when needed, but do not prefer it. Most like to know a few days before to plan. This is a short enough turn-around that brokers can essentially guarantee the freight quote. However, the short term turnaround can also pose the risk of struggling to find a truck for tougher loads. This is generally used by both bigger companies and smaller companies, although most bigger companies prefer a long range to quote their freight in.
- 14 days:
- These short Term time frames are the best way to almost guarantee a rate for your load. By doing this, you are able to dodge the volatility of the market, as you are able to get up to date rates on freight. Quoting only two weeks out on a regular basis also gives companies the ability to be more flexible on their product shipments. They can plan two weeks ahead instead of 6 months. This tends to be better for smaller companies that don’t have as much contracted production or ships by-need. Bigger companies can still ship products short-term, but it tends to be a little more expensive for them. Most brokers are more than happy to quote something two weeks out and bind their word to that quote.
- 30 days:
- 1 Month is a fairly regular time period to quote freight for. Many businesses, big and small, plan up to a month ahead. This period allows for some future planning for shipping to customers or whoever the product needs to get to. It also allows the flexibility to throw some shipments in without having to try and predict months in the future. For the most part, a broker will quote up to a month for freight and not require a contract. Past 30 days though, that likely will change.
- 3 months:
- The next big step would be quarterly. Quarterly means you would be receiving your freight quotes only 4 times a year. This duration of time is usually only utilized by large, established companies with logistics departments and data scientists. It’s easier for such businesses to predict for the long-term versus a smaller company.
- In the case of a 3-month quoting period, there is usually a contract involved. This kind of duration shows mutual trust between broker and business. This is the beginning of a risk area where someone could experience a market flip that makes it tougher on either broker or customer.
- 6 months:
- 6 months is a long-term freight quote. You need a trusting and established relationship between broker and customer before entering into anything this extensive. Companies with existing long-term contracts with distributors and logistics data scientists may schedule their freight up to 6 months out. The reason for this is usually to have a set (rough) budget for their logistics department and try and save money by beating the rates.
- Half a year out poses a considerable threat of a potential market flip. This is always a threat, but the looming doom lessens quite a bit with a good relationship with your broker. Quoting your freight out any further than 6 months poses similar risks of market flip and is usually utilized by larger companies as well.
- Quoting Freight, as said before, is an increasingly tough thing to do.
One thing that brokers have to keep in mind is the volatility if the market. As we’ve seen in the past couple years, the market is anything but predictable. Brokers and Brokerages have to think about worst case scenario when putting together this information. They will usually build-in worst case scenarios into their freight quotes for a company, so the funds are there in case they are needed. The brokers will utilize a couple of key pieces of information to give a good future rate.
One easy one is past data: what did the market do last time there were similar signs to today. They will also utilize current fuel prices and a fuel surcharge to base the rates on.
Something else brokers think about during the process. Is it a desirable load:
- Pickup/drop-off times–some pickup and drop-off times are more favored than others. Obviously, a truck driver would rather drop off a load at 6PM rather than 3AM. These things are universal.
- Is there an appointment able to be made: Without an appointment, a load is not attractive to anyone driving a truck. An appointment means they can get there, get loaded/unloaded, and get out. No appointment means they could be waiting for hours and hours to get access to the facility.
- Load Details- what is the weight of the load? What kind of trailer/equipment does the freight require? Some types of freight and weights are more profitable than others and drivers will see the same thing.
One of the most important things to take into account is the broker you are choosing. The best way to move your freight is to have a good relationship with your said broker. An open line of communication is a huge help in making sure your freight arrives on time. Think about it like this: when the market turns, a broker you have a good relationship with may contact your company saying, “hey I need to increase the budget for these loads this month.” If you and the company helps them out, and the market flips the other way, there’s a very good chance that broker will give some of the extra budget back instead of making insane profits. This does not happen unless you have a very good and trusting rapport between broker and customer. The ability for a broker to get on the phone and call up the customer right away when something happens, and vice versa allows for a great setup for the success of your company.