4 Tips to Negotiate Freight Rate

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Freight rates are a crucial aspect of a trucking business, as they can have a big impact on your profits and overall financial performance. Even though the industry continues to deal with a growing number of issues, freight rates is one of the things you can still have control over. Here are a few tips on how to negotiate the best freight rates.

#1- Understand Your Operating Costs 

To give a little more background, your operating costs are the expenses you will be paying when hauling a load for one mile. In order to calculate this figure, you should take your total fixed costs and divide them by the total distance, in miles, of your trip. Getting these figures is crucial, because in order to keep your business profitable, you have to choose only the freight rates that pay more than your operating costs.

Once you have calculated these costs, the next step is to anchor your freight prices correctly. When you anchor, you are setting a price’s frame of reference; the higher your anchoring price—while still reasonable—the greater the chance of you landing the best freight rate possible.

#2- For Round-Trips, Check Load Rates

When it comes to freight rates, they vary by state, and the variation in rates can have an effect on your business. For example, if a location pays well to transport a load but greatly decreases its rates for the return trip, you will be aware to negotiate for higher round-trip rates ahead of time.

If it seems that a round-trip job is not possible, you should then negotiate the highest pay possible for the trip to a destination and settle for a break-even price for your return trip to keep losses in your business at a minimum.

#3- Look for High Load-To-Truck Ratios

Load-to-truck ratios provide information on the level of demand that exists for trucks relative to the number of available loads in an area. To give you the most room for negotiation freight rates and increasing your profits, we recommend looking for work in locations with high load-to-truck ratios. Because of the high demand for truckers, you will be in the best position– not only will you get the best rates, but you will have many job opportunities too.

#4- Notice the Load’s Times

When a load has been on the load board for too long, shippers and brokers become frustrated and desperate for a trucker who will make the delivery for them. For this reason, paying attention to load board wait time is key for negotiating the best prices—so you can sweep in and provide your services to the anxious shippers that have a short pick-up time window looming.

Though these tips can help you, negotiating load rates can still be challenging, but most importantly, time-consuming, leading to downtime on the road. As an owner-operator, you know that wasting time on the road can really affect your profits and your business. So, our best recommendation for you and your business is to find a good dispatcher that will take care of finding load jobs and negotiating rates for you. 

Here at Simplex, we provide quality dispatching services to help you out with this. Contact us today to take your business to the next level.