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The Key to the Right Freight Contract? Know Your Rates

Posted By Nick Wynkoop, Product Marketing Manager, Truckstop.com & Real Time Freight, Thursday, August 3, 2017

The best freight contracts not only save you money but can bring stability to your business. But the right rates aren’t always apparent. Even if you have a great system for pricing, you likely wish it was faster, more accurate, better organized, and easier to share internally. But if you’re like most companies, you don’t even have that luxury. Sometimes, you’re even guessing on what a good rate is, or on what a carrier or broker expects. Here are a few steps to creating a system to help you price your freight, grade responses to your RFP’s, and create contracts that benefit your business.

 

View Both Historical Data and Trends
The ability to get historical data and trends at the tip of your fingertips is a huge competitive advantage. Being able to go back on a particular lane and see 1) the carriers that have been used and 2) the past rates paid on the lane, gives you the ability to gain a better margin on freight. You are able to see where you have won or lost on a particular lane and work to gain better margins. Also, being able to see the rate changes on a seasonal level is a huge advantage when pricing an RFP. Many bids are applied for a 12-24 month period, and having the ability to look at historical trends and analyzing seasonality will let you price your freight needs in a more educated manner.

 

Customize for Confidence in the Market Rate
Confidence in the market rate is important to people seeking to consistently move freight. You likely use multiple rate sources (e.g. historical, market analysis, etc.) in order to come up with the "magical rate" to price your freight…but you frequently get back different information and don’t always know what to trust. By making early decisions about how you’ll process your rate data (i.e. more importance given to last year’s rates, less importance given to overall market trends, etc.), you will truly make data-driven rate decisions, instead of just using confusing and contradictory info to make an educated guess.

 

Maintain Urgency in the RFP Process
The ability to streamline the RFP process gives you a huge advantage when you head to the negotiation table. So, before you put out that RFP, keep this extra little edge in mind: maintain urgency. Are there timelines or milestones in the contract process? Does it keep both parties on track to negotiate? Is it a dedicated RFP process to keep other players from causing disruption later in the negotiation? Mutually agreed dates and timelines are vital to keeping a contract moving forward, and keeping the ball in your court.

 

Keep these tips in mind before you reach out to brokers or carriers, issue your next RFP, or sign your next contract. The results should not only save you money but build your business and strengthen your partnerships for the long term.

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