Freight rates fluctuate is a common thing. It’s no wonder that land freight is the most used freight operation in the U.S. Long haul trucking is an essential part of the economy in the country.
However, determining shipping rates for this common form of transportation can be difficult.
Here are 4 explanations of why freight rates fluctuate.
1. Fuel Prices
Give and demand, the US and global economy, and extreme weather conditions affect fuel prices. Crude oil prices are the best indicators of the price of petrol or diesel fuel, and these can fluctuate widely. Fuel accounts for about 32 percent of the cost of freight.
2. Labor Costs
28 percent of the cost of freight comes from labor costs. A shortage of long haul drivers caused by retirement drivers, driver retention factors, driver recruitment factors, and Federal Guidelines artificial demand can upset the balance of supply chain costs.
3. Truck and Equipment Costs
Truck & Equipment accounts for 28 percent of freight costs. However, due to higher truck technology-related costs, the outlook for the next few years will face an increase of 40 percent-50 percent.
4. Freight Class
Depending on your shipping location and the freight class your cargo falls below, freight rates may also drastically change. Therefore there is simply no “normal freight cost.”
A pallet of sponges and a pallet of window panes require specific transport and handling methods. That results in different classes of freight.