Updated 1/21/2024
The final price of shipping cargo, or a freight rate, is one of the most important concerns for shippers. Even for seasoned shippers, landing a satisfying rate can be a challenge. The key to getting a good freight rate is understanding how the different freight rates are formed.
Truckload freight rate is the price shippers or brokers pay carriers to move their freight. It plays an important role when shippers are deciding on the carrier or company to help them move their freights based on their budget.
Before landing a freight quote, knowing the factors influencing full truckload rates and how they impact the final rate is essential.
While the final cost of shipment in Less Than Truckload (LTL) rates depend mainly on density and freight class, the cost of full truckload shipping freight is flat and mostly depends on mileage or door-to-door standard price. Commodity type rarely affects the shipping cost as long as there is sufficient freight to fill a 48 feet (ft) trailer.
Full Truckload Rates vs LTL Freight Rates
In trucking, there are two main shipping modes: full truckload and less than truckload (LTL). Though they share lots of similarities, the pricing for both modes is very different.
Full truckload rates do not depend on the density or commodity type – the main criteria here is mileage. That means distance primarily determines your freight rate. It doesn’t matter if you are shipping a truck of retail products or boxes full of feathers, the full truckload rate will still be the same for the same distance, season, and market conditions. It also doesn’t make any difference whether you’re moving a full trailer or if your freight fills only a half of it. If you rent a full truckload, you pay the price for the entire trailer capacity.
6 Factors That Affect Full Truckload Freight Rates
Knowing the factors that impact full truckload rates will help you understand rate fluctuations, make it easier for you to get a freight quote, and manage costs effectively. Below are the key factors.
Mileage
Mileage is the most influential factor in determining the cost of truckload shipping. The longer the distance to be covered, the higher the truckload freight rate.
However, it is possible to have different shipping costs for a similar distance because mileage isn’t the only factor influencing the freight rate.
Also, the destination of your shipment can significantly impact full truckload rates. The rate can increase significantly if your shipment’s destination is beyond the carrier’s service area.
Seasonality
There are 4 major freight types: Ground freight, air freight, rail freight, and ocean freight. Each of these freight types has its peak seasons, i.e., when mostly in demand.
These freight seasons significantly impact the fluctuation of truckload freight rates. The quiet season for the trucking freight industry is from January to March. During this period, there’s lesser demand for trucks, leading to a fall in freight rates.
From April, there is a seasonal spike where truck demand significantly increases. This causes the truckload capacity to shrink. Hence, the full truckload rates begin to increase.
For instance, the produce season starts at the end of April and reaches its peak throughout the summer, leading to high demand for refrigerated truck capacity.
Lead Time
The lead time is the general time it takes a shipper or broker to search and arrange the shipment ahead of the loading date. The greater the lead time, the lower the shipping cost because.
Longer lead times can significantly save costs for companies and increase the consistency and efficiency of carriers. Furthermore, longer lead times can lead to an increase in key performance indicator (KPI).
Fuel Price
Fuel prices also determine full truckload rates. Because fuel prices change regularly, these fluctuations are considered when calculating the freight rate.
Generally, the fuel surcharge is included in your freight quote, based on the current price per fuel gallon. Hence, it’s important that you consider it so you have an idea of the likely rate a carrier may request.
Shipping Time
The flexibility of your shipment also counts when the freight rates are calculated. If you are shipping long distances, it may be more beneficial for the driver to have a delivery window or longer transit time.
However, the more urgent your freight is, the higher the total shipment cost. Other minor factors influence shipment costs, like accessorial charges, service fees, etc.
Equipment Type
Specific equipment such as flatbed and refrigerated trucks are mostly more expensive than conventional dry vans because of their limited availability and the experience needed to operate them.
In cases of oversized load (when the shipment is wider or taller than 8.5 feet), there will likely be extra costs such as load permits and fuel for escort vehicles.
Ensure that you disclose your shipment’s exact size and handling requirements to help carriers book the ideal equipment and provide you with an accurate quote.
LTL Freight Shipping Rates
Less than truckload rates are a bit more complicated. Since there are several shippers combining their freight into a single trailer, quantity, size, and weight of your freight play an important role in determining the freight rate. The most crucial aspect of an LTL freight rate is freight classification. It’s a unique code, ranging from 50 to 500, which is mostly defined by a shipment’s density. The lighter your freight is, the more it will cost to ship it.
LTL rates are defined by the following characteristics:
- Weight
- Freight classification
- Density
- Distance
- Base rate
- Accessorials
How To Calculate (and Discover) the Best Full Truckload Rates
Most carriers determine their full truckload rates using mileage before considering other factors. Here’s how full truckload rates are calculated based on mileage:
- Firstly, they take the mileage between the loading location (starting point) and delivery location (final destination).
- After which, you can divide the overall rate by the number of miles between these locations to get the full truckload freight rate.
Overall Rate ÷ Mileage = Truckload Freight Rate/Mile
For instance, you have to transport a shipment from California to Miami. Based on your exact loading and unloading locations, the distance involved is around 2800 miles. Therefore, if the overall rate is $10,800, the truckload freight rate per mile is:
$10,800/2800 = $3.85.
This means that the truckload freight rate is $3.85/mile.
However, when other factors mentioned previously are considered, the rate will be slightly increased.
Spot vs Contract Rate
Apart from modes distinction, full truckload rates can be spot and contract. The main difference between these two rate types is the first one is a single-case rate, while the contract is long-term price agreement.
What is the spot freight rate?
Spot freight rates are a price that carriers offer for a current moment, and it’s the cost of moving your cargo from one location to another for once. Spot rates are usually given shortly prior to the planned departure, and can sometimes be lower than usual rates.
What is the contract freight rate?
The contract freight rate is discussed and agreed by both parties, which fixes your budget with a certain carrier for a long period of time. Usually, contract freight is signed for a year or more. It is determined by all the above factors as well as market conditions, and some additional factors.
GoShip stands out as a premier choice for specialized freight carriers, offering tailored solutions for unique shipping needs. Whether you require an LTL freight quote for smaller, less-than-truckload shipments, or a full truckload quote for larger, more substantial freight, GoShip provides reliable, efficient, and cost-effective options. With GoShip, obtaining an LTL quote or full truckload quote is a seamless process, making them a go-to partner for all your specialized freight shipping requirements.