Trucking rates? Are they predictable?

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Trucking RatesThere will always be those that think they can predict what the trucking rates will be and if you have a crystal ball, you may get close. Let’s face it, trucking rates change so fast that only a select few are able to keep up with it let alone understand how any why it changes so fast. I know, I can hear you now telling me through your computer screen that I am full of something or other and that you always get $2.5 or higher per mile on everything you haul. Believe me, I have heard this before and say well, good for you, that’s great but here’s a little reality check for you. Last year during the produce season, Refrigerated Trucking rates out of California were crazy high some as high as $5.25 per mile and rates into California were low but not as low as they have been in recent years. Why do you think that is? The most common answer I hear is the price of fuel or supply and demand. Now before you say anything, let’s look at this more closely. Fuel prices have gone up and have increased the rates in every sector of the freight industry but when they have leveled off or gone back down, the rates continue to rise or stay the same. Any idea why? It’s because this is what the market will bare. There is always going to be that one person or company that is willing to pay way more than normal to move their load which is generally produce. The reason for this is once the produce has been harvested the clock is ticking on the shelf life of the product. Ever go to a grocery store and see produce that looks like it’s been on the shelf too long? Well there you go, from harvest to end of shelf life is approx. 14 days and this includes the time of transport. Not a lot of time when you consider what has to be done to get it from the farm to the shelf of your grocery store. This process creates tension within the ranks of shipping. For an example, a refrigerated carrier is going to take a produce load that pays $3.5 per mile rather than a dry load that pays less. In this situation, anyone shipping dry freight will have to pay more to the carrier to compete with the companies shipping produce in order to get their products shipped. This happens every year and is the main reason the rates spike or increase. Once this happens it’s a snowball effect and then the word gets out and you can literally see the rates double over night. This typically happens when produce season arrives and will continue through the fourth quarter. So the questions remains, are trucking rates predictable? Well, it’s not an exact science but I think you get the idea of how rates increase and why. We can predict when this will happen but can’t predict the exact rate itself. Granted this is just one scenario but it is the main cause of freight rates increasing each year. Trucking rates themselves are not predictable but the shipping season is very predictable. Learn the shipping trends and you will learn to control your costs.