To say the freight market is strained right now might be an understatement. If you’ve experienced significantly higher rates and less reliability from your carriers, you’re not alone. As someone who is shipping freight, it’s critical to keep your finger on the pulse of what’s happening in the market in order to navigate the challenges that are coming with it. Let’s break down the factors that have led us here and what we can expect moving forward.

Key factors that have led to challenges in the transportation industry
Like so many other industries, freight transportation has been rocked by the COVID-19 pandemic and all of the cultural shifts that have come along with it. The pandemic not only created new challenges, but also exasperated existing pain points in the market – leading to the perfect storm. It all boils down to a case of supply vs. demand.

• Consumer buying is strong and is driving up demand. While the world was locked down, we weren’t spending money on vacations or going out to eat. In many cases those spending dollars went towards buying goods instead. Retailers are doing what they can to keep up with demand and as a result, have an increased need for trucks to deliver their much needed inventory.
• There is a truck driver shortage. The driver shortage is old news, but it is still very relevant now. Sometimes there just simply aren’t enough drivers available to take on new loads. For years, there have been more drivers retiring and leaving the profession than there have been new drivers entering the market. Unfortunately, the open road hasn’t been as attractive to this generation of the workforce as it once was.
• Building new tractors are constrained by parts availability. Not only is it hard to move freight with less available drivers, but now we are also seeing a limit on new trucks on the road. Supply chains for many goods have been seriously disrupted thanks to the pandemic, and parts that are needed to build new tractors are no exception.

How LTL carriers are responding
With such volatile market conditions, LTL carriers are forced to respond. As no surprise, a major course of action they’ve taken is to increase rates. Simple economics tells us that an increased demand means they can charge more for their services.

Not only are they increasing rates, but they’re also looking to shed less desirable freight from their networks. Loads deemed less profitable, or more trouble than they’re worth, are harder to get covered because carriers want to prioritize loads that allow them to work efficiently and profitably.

LTL freight observations from the front lines
Many of our customers are exhausted dealing with carrier issues. In a survey we conducted earlier this year, 78% of respondents cited rising shipping costs as a challenge they were currently facing. Along with that, 47% noted they were experiencing longer transit times and 36% were dealing with poor carrier performance.

Our team has also noticed several concerning trends pop up with freight carriers. As if raising base rates wasn’t enough, we’ve seen them put in extra effort to collect on everything they can. Accessorial fees that you may not have seen on your bill in the past are now showing up for services you’ve always received. The carriers just aren’t as lax as they may have been in the past for charging for these extra services.

Because freight networks are so strained, we’re also seeing an uptick in missing shipments. If this has happened to you, you know how stressful it can be. The carriers are also doing everything in their power to deny claims for both missing and damaged shipments. They’re wanting to see them filed sooner than ever before and are requiring a great deal of evidence.

Estimated transit times for LTL freight has never been guaranteed, but now more than ever, we’re seeing shipments miss that predicted window. Unfortunately, longer transit times and missed pick-ups are becoming extremely prevalent, again due to how ill equipped carriers are to meet the current freight demand.

What can you do?
You may want to live by the old adage about how you can’t change others, only yourself. It’s not within your power to control carrier performance or consumer demand, but you can educate yourself and act accordingly.

• Use a quality broker, like PartnerShip. While brokers have no control over what a carrier ultimately does with a shipment, a quality freight broker will provide the communication and creative solutions you need when caught up in an issue.
• Follow the tried-and-true best practices for overcoming capacity challenges. Expand your current carrier network, build in extra time at every step of the shipping process, consolidate your shipments, and consider alternative services. While it’s not always possible to implement these strategies, following them any time the market is experiencing tight capacity can be very advantageous to your operations.
• Become a shipper of choice. This means making your freight desirable to carriers. You probably aren’t able to change what you’re shipping, but there are some factors you can control. Being flexible with pick-up and delivery times, ensuring ease of access for the truck, and avoiding long detention times are all things carriers ultimately appreciate.

Moving forward
Back to school season is upon us and the holidays are right around the corner. In short, demand is not expected to drop anytime soon. Will the supply side be able to catch up? Not likely. Recruiting and retaining the needed labor force will continue to be one of the biggest challenges in the industry. And as we enter hurricane season and another COVID-19 surge, we could see even more network disruptions.

At this point, it’s important to manage expectations. You’ll want to budget for higher freight costs and be mindful of potential delays, so you’re not caught off guard. For everything in-between, our team has the expertise to help you navigate these challenges. Contact PartnerShip today and lean on us when you need it most.

Freight classification is a type of product categorization unique to freight shipping. It relies on four factors that help determine cost: density, stowability, liability, and handling. Once you have a general understanding of these variables, you can better calculate how your class (and cost) will be determined. 

One of the most common questions we get is from customers wondering why the heck their final freight invoice doesn’t match the rate they were originally quoted. It’s a valid concern because once you have that bill, it’s next to impossible to get more money from your customer and you’re going to be eating that cost. Your knee-jerk reaction may be to blame the carrier, but the real reason they are different may sting a bit – it’s usually a shipper error. Before you start pointing fingers, review these common reasons your bill doesn’t match that original quote.

Reason 1: Your product is classed incorrectly 

One of the most common reasons a quote differs from a final bill is because your product is classed incorrectly.  With classification being a huge factor affecting your freight quote, even a small error can impact your price. If you guess or miscalculate, your class may be way off. 

The issue may be that sometimes your product is difficult to fit in a particular NMFC category. Take glass jars for example. This type of product falls under NMFC code 87700. It’s not as simple as that, however. Because glass jars are typically fragile, they are broken down by volume, and depending on that calculation, the class can be anywhere from class 65 to 400. In an average freight shipment, that’s a difference of hundreds of dollars. Make sure you are utilizing ClassIT, and consulting freight experts if you have any questions on class, or how to properly calculate density.

Reason 2: A liftgate service inflated your bill

When checking your freight quote vs. invoice, unexpected extra services are the second most common reason for a mismatch. One example we see time after time is for liftgate service. If you didn’t specify you would need a liftgate when you got your quote, but then your carrier provides the service at pick-up, it will cost you. Additionally, if your customer doesn’t communicate they need one for delivery, that can be added on without your approval or knowledge, surprising you once you get the bill. 

Communication between both parties and ensuring you have the proper equipment can avoid this completely. Make sure you both understand that the added cost of an accessorial may raise your rate, but will help your shipment get where it needs to. Understanding that these types of special trucks equipped with liftgates are not as common, both parties will know they need to be requested on the front-side.

Reason 3: Too much time has passed

First and foremost, it’s important to know that a freight quote is an estimate to begin with.

So many factors can change - for example, fuel costs fluctuate frequently. Additionally, depending on when you are scheduling your shipment, peak periods can cause capacity issues, and this generally results in higher charges.

As a general rule, we like to inform our customers that quotes for standard LTL service are valid for about a week. That window is even tighter when you’re using time-critical services. If you’re wanting an estimate so you know what to bill a customer, build in some room for your final cost, or requote as close to the actual shipment pick-up date as possible.

Reason 4: Your delivery location has changed 

While not quite as common, sometimes a change in delivery address can affect the final cost of your freight. Changes may occur after a load is quoted or may have to be made while the shipment is already in transit. Reasons for this might include a location being closed, or a consignee that isn’t ready to receive the shipment.

LTL freight shipments can be rerouted, but that adjustment will definitely incur costs: distance and fuel will increase if the location is further out. On top of that, special service fees such as a redelivery charge or even location-specific fees like limited access could also be applied. Do your best to requote if any details of your delivery location change. If the change is made at the request of your customer, be sure to communicate that fees will apply. If you want to absorb those charges as a courtesy, be sure to build some room in your customer cost to begin with. Otherwise, make it clear who is responsible for those fees.

Reason 5: The wrong carrier picked up your shipment  

You’d be surprised, but the wrong freight carrier picking up an LTL load happens much more often than you’d think. We’ve seen customers quote a general rate with one carrier and then hand it off to whatever carrier arrives that day just to get it on the road and off the dock.  Your shipping department is likely very busy, but this sort of simple mistake can cost you so much time and money in the long run.

Not every LTL carrier has the same base pricing, and even accessorial costs fluctuate between carriers.

If you quote with one carrier, and hand it off to another, you could be paying much more if that carrier charges more for their services. Even worse, if you have negotiated pricing with one carrier, the incorrect one won’t know to bill using your discounts. Worst case scenario, you may be billed at full-cost. Make sure your warehouse team is aware of what carriers are to move which loads. Creating color coded carrier labels and marking your shipments can help ensure a quick once-over to avoid this drama completely.

Reason 6: You have a paperwork error that affects billing 

When comparing your freight quote to your invoice, also take a look at your paperwork and shipping documents. Billing errors and missing information can create an expensive and exhausting headache.

If you are arranging a shipment, and have special pricing or are using a third-party, make sure an accurate BOL states the correct carrier and “bill-to” party. If you are receiving the load, but responsible for the shipping arrangements, don’t leave it to the shipper to create the BOL. In doing so, you run the risk of an incorrect billing party or other inaccuracies that mean your discounts won’t be applied. Even after the fact, a letter of authorization (LOA) can sometimes fix this by informing a carrier of the correct billing party, but it’s not guaranteed and it definitely delays the process.

Final thoughts 

Don’t freak out if you’re seeing some discrepancies between your freight quote vs. your invoice. While they can be unexpected and troublesome, educating yourself and your customer about what can change your rate can help you make better decisions when planning your LTL load. Strong communication and a plan of action can help mitigate expensive invoice issues. If you have concerns about your freight quote vs. your invoice, PartnerShip can help dodge the guessing, help choose the correct services based on your shipping needs, and side-step costly errors.

Small businesses have it tough, and the fact that volume shipping discounts aren’t always an option makes shipping expensive. The good news is that small retailers have options to decrease shipping expenses without having to rely on volume discounts. Check out our helpful video to learn how.