Freight rates are a hot topic in the freight industry. The question of “what’s fair?” has long been debated, but the debate is getting louder and more frequent as shippers look to find ways to reduce their costs while maintaining or improving their service levels. You must know what you’re doing regarding freight rates because if they’re set too high or too low, they could have severe consequences for your bottom line.
If you’ve ever wondered how freight rates get set, this post is for you! We’ll take an in-depth look at the 6 steps involved in setting accurate and fair freight rates for your business so that it doesn’t cost more than expected. Let’s dive right into them:
Determine your transportation spend
You may also want to consider overhead expenses like rent or utilities as part of your total transportation spend; these will be listed under “Other” in our example below. If any taxes are paid on new equipment purchased for the business, then include those amounts here as well – they will not only factor into our calculations. Still, they could also impact them if they’re omitted initially! Cek ongkir pandu logistik here.
The first step in determining freight rate is how much you spend on transportation. This can be done by recording all expenses related to shipping and receiving, including fuel, vehicle operating costs and maintenance, labour costs associated with handling packages or transporting cargo (e.g., drivers), insurance premiums, etc.
Identify transportation lanes
The next step is to identify all your lanes: those that you are in control of and those that are not. This can be done by looking at your current contracts, checking with contractors who have been working for you recently, or asking someone on staff in the freight department if they know of any other information about these lanes (such as their status).
Analyze your historical freight rates
You can’t do much about the past, but you should at least be aware of its impact on your future. The best way to do this is by analyzing your historical freight rates and seeing where there’s room for improvement. This will help you plan for future events in a more effective way.
You’ll need to review all of your past shipping data, including:
- How often did you ship items?
- What was their weight (or volume) at different times during the year?
- Who was responsible for shipping these items? Was it one person or multiple people?
Once those details are sorted out, take note of any significant changes between periods like holidays or seasons when deliveries may have been delayed due to weather conditions. These could lead to periods where prices were higher than normal because demand was higher than usual—but don’t forget that sometimes things happen outside our control too! If there’s one thing we’ve learned over time here at [company name], nobody knows everything—even if they claim otherwise (and sometimes even if they don’t).
Audit carrier contracts and rates
You should audit your carrier contracts to determine if they are fair, accurate, and legal. Compare contract rates to market rates by using all available information, including those obtained from other carriers who may have access to the same data as you do (i.e., public or private documents). Suppose discrepancies exist between what your company agreed upon in its contracts with carriers and what other companies have paid them for similar services over time. In that case, there has likely been some form of fraud occurring within your organization’s transportation department. For this issue to be adequately resolved, we recommend conducting an audit of all past years’ invoices from each carrier involved in providing transport services for freight shipments originating from/destined towards each facility being serviced by the said party(ies). We also recommend preparing spot quote requests (SPQs) which will allow us access to our clients’ files; however, SPQs should only be distributed when necessary since doing so opens up opportunities for fraudsters who might try intercepting them before delivery occurs!
Compare your contract rates to market rates.
When comparing contract rates to market rates, you should look at the same factors that all carriers do. For example, if a carrier offers an advertised rate of $100 per ton and another offers $105, you can negotiate a better deal by offering them $105 as well. Suppose one carrier’s contract rate is higher than another’s but still lower than the market price for transporting your cargo from point A to B (i.e., Indonesia). In that case, it may make sense for both parties to continue working together so everyone gets paid fairly for their services.
If both parties agree on a fair value for freight transportation services but still feel like there could be room for negotiation on some aspects (such as terms or conditions), such as how many hours each day/week/month etc., then these issues can also be discussed before signing anything finalizes into place
Negotiate new contracts with carriers
Once you have the best rates available, it’s time to negotiate. Negotiating is an art form, and every company has its way of doing it. The first thing you need to know is that there are no standard answers to every question and every situation; each carrier will have its way of doing things, so don’t expect any technique or tactic to work for everyone.
When negotiating with carriers, be sure not only to get the best rate possible but also to ensure that those rates are fair and accurate. In other words: make sure they pay what they owe! This means being willing (and able) to walk away from a deal if necessary—and sometimes, walking away isn’t easy when everything could fall apart at any moment due to missed deadlines or equipment problems caused by poor planning by your shipper (or even just bad weather).
If you follow these guidelines carefully and take the time to do a thorough freight rate audit, you’ll be on your way to getting accurate rates. We know this can be overwhelming initially, but our advice will help make your job easier. As always, remember to stay positive and don’t give up!