In recent months, fuel prices have plummeted. One of the most common questions we get here on the Truckload team is, “Why haven’t my full truckload prices showed a significant decrease if fuel prices are they lowest the’ve been in almost ten years?” Well, I’m glad you asked.
Though truckload rates are influenced by fuel prices, they’re not the only factor. Hypothetically, if fuel prices are low, the carrier has less fuel expense and should charge less to haul your freight. Hence, lower truckload fuel prices. But there are several other factors that need to be taken into consideration. Such as:
Capacity
A huge percentage of your full truckload rate is based on capacity. This means that if you are shipping out of a freight capitol, there will be a large number of carriers in the area, as well as plenty of loads to keep them busy. Getting your freight covered out of a carrier-saturated market takes some serious coordination, but is very manageable for an organized freight broker.
On the flip side, if you are shipping out of a remote area, finding a carrier can not only be trickier, but also pricier. There’s a chance your broker will have to use a partner carrier out of a neighboring metro area or freight market, and those extra miles would have to be added to the trip.
The third part of the capacity equation is your freight’s destination. If it’s going from middle-of-nowhere Nebraska to say, Los Angeles (where there are plenty of loads shipping out), you could see a better rate because your load is providing a golden path out of a less-than-favorable location, to a “hotter” location where the carrier is better suited to find a good load out. It is all a game of position. Carriers want to take loads that put them in the best position to find another good paying load, and find it quickly.
Driver Shortage
When the economy took an ugly hit, many drivers on the road were forced to sell their trucks, and pursue other endeavors. Things are improving economically, but a shortage still exists. And because of basic supply and demand, rates have increased.
Emissions Legislation
Nationwide emissions legislation has become more strict, forcing carriers to purchase newer and more expensive equipment in order to access freight markets across the country. These additional maintenance and repair costs have increased the carrier’s cost of operation. In turn, carriers have tried to adjust to these increases by increasing their rates
Driver Regulation
Finally, due to stricter (now fluctuating and slightly confusing) regulations regarding driver’s hours, carriers are unable to complete as many loads in a week as they were once able to. This also contributes to an increase in rates.
Hopefully this blog helps clear up some of the confusion between fuel price and truckload rates. Here at FreightPros, you can always be confident that the truckload team will go to bat for you in getting the best rate possible. We are experts at locking down our partner carriers at the fairest rate possible and pass those savings on to you.
Get a quote today, and be sure to check out our new truckload video: Shipping Detention with Matt Harrington.