If you work in logistics, you know how much freight rates affect business. There is a fine art to get a fair rate. Shipments are more than simply moving goods from point A to point B. Many factors and costs need to be taken into account when calculating a rate. From detention fees to fuel cost, toll roads to a drop-off location. Small changes in a route can accumulate significant price changes.

To help you ensure you are always getting a fair rate for your freight shipping services, we have put together a quick checklist of things to look out for when negotiating your rates with shippers.

1. Work Out Your Operational Cost

Before you can start trying to get a fair cost on your freight rates, you first need to know your operational costs. You need to have a number in mind when looking at freight rates. Something below this number is not financially viable for you to take.

Low-paying freight contracts will often not be worth your time. When you subtract your operating cost, the little money you make on them means you can be working for pennies. Calculate your operating cost and work out a freight rate above this. That is the minimum you are happy to work for.

2. Check the Spot Rates

A spot quote is a one-time rate that a freight supplier offers to a freight shipper for moving their freight from location A to location B. A spot market index is a continual running breakdown of these freight rates.

By checking the spot market index, you have a clear picture of the average pricing for particular freight loads. If the offer you are given does not fall in the average but is below it, you can go back to the broker and see if they will increase the price for this load.

Freight Management, Inc. (FMI) has a Draydex™tool that has the industry’s best drayage spot market index and that you can sign up for, for free. Having access to this information will give you actionable insights and help you get a fair freight rate.

3. Check for Additional Freight Fees

Fees when shipping freight can add up and should be included in your freight rate. Some lanes cost more than others to run, and particular routes may require you to pay tolls. If you are transporting certain materials, you may need additional permits. These costs should be calculated before you negotiate a freight rate and add to the cost at the shipper’s expense.

It is also always a good idea to take a look into the shipper’s history. Are they known for having detention fees? If it has been in the dock too long when you collect the shipment, the shipper should honor the additional charges beyond the free time provided.

4. Verify Shipper Information

Before accepting any deals, you should always check the shippers’ details. Run a credit check and conduct a quick Google search. Verify that you are shipping freight for a legitimate company to avoid being scammed and not getting paid.

Check the shippers’ average days to pay. If they are late in paying or taking longer than you would like to wait out, you can go back and negotiate a contract where you will get paid fast.

One of the advantages of working with a 3PL company is that this step is often taken care of for you, or you are given added peace of mind around payments. For example, for FMI carriers, we make sure our top priorities include fair treatment and payments in a timely manner. We are a member of the TIA and currently maintain a $100,000 surety bond.

5. Ensure You Have Everything in Writing

Before you transport any freight, make sure you have a written contract with all terms clearly stated. It should include the freight rate you agreed upon and details such as the location of drop off, type of freight, and any other important information.

If you do not have a signed service contract for the haul, the shipper may feel the price is up for debate rather than originally agreed upon.

When you start negotiating your freight rates, go in prepared. Don’t take low rates, and remember to factor in all expenses for a shipment before accepting a contract. Don’t be afraid to take the information you have, such as the spot rate, to a shipper in order to get a better price. The worst they can say is that you can either accept the lower rate or move on and look for another shipment.

FMI provides the industry’s best spot market index.

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