7 Factors that Influence the Freight Rates

The trucking industry is an industry that is very unpredictable and has many factors that can change the costs of shipping. Looking from the outside in, you wouldn’t even realize how complex the industry is. Depending on the state you're in, the cost of gas, and the demand for the route or commodity, the freight rates can vary from low to very high. Like most prices, freight rates mostly are influenced by demand, but there are some other factors such as diesel prices.

Gas Prices

Gas Prices have gone up in the last year or so and this affects the freight rates significantly. In California the Average cost of diesel is $6.100 as of May 2022, while the average semi truck fuel tank is 120-150 gallons this means a typical fill up in this market will cost around $730 - $900. This outrageous cost does indeed affect the shipping costs.

Commodity

What your shipping really does matter. Depending on the commodity drivers will have different rates. For example, hazardous materials will definitely cost more than non hazardous. But hazardous materials are not the only commodity that will put a hole in a shippers pocket. Oversized loads like houses and heavy duty equipment such as tractors will also be more expensive

Freight Size & Weight

Oversized loads are much more costly. Not only does the driver possibly need special permits, but these loads are not commonly sought after. Sometimes they even have to close the roads in order to move these loads. These loads are looked at by many as inconvenient, but some drivers specialize in them.

Distance

Distance is kind of a no brainer. Loads going further are obviously going to be more expensive to move.

Shipping Mode

Shipping mode in simple terms is how full the trailer is. A Partial Truckload is a load that doesn’t fit the entire trailer, this means you can put multiple loads in one trip. Full Truck Load is exactly what it sounds. The load takes up your entire trailer. Less than a truck load is pretty much like a partial load, except if you are taking multiple shipments, the freight may need additional stops, special handling, or be offloaded separately.

Demand

Depending on the commodity, the origin & destination and the amount of drivers a lane can become oversaturated making the rates go down. If you have ever heard of supply & demand, this is a similar concept. the more drivers going after a load, or willing to take the load, the demand will go down and the rate doesn’t have to be as high, because there's always another driver who might take a lower rate and vice versa. If the lane has no drivers, the shipper may need to pay more to find someone to take the load.

Origin & Destination

Some lanes are worth more. Geography does indeed make a difference, in the trucking industry there is lanes that are despised by some drivers. Other than lanes be tricky to cover, some destinations are even harder. Covering Loads originating, or delivering to military bases, government locations, and the ports are generally harder to cover.