Author Archives: Isabel Hall

Shipping Temperature-Sensitive Freight in Summer

As summer approaches, manufacturers of temperature-sensitive goods are preparing for the logistical challenges that come with protecting their freight in warm weather. These goods must be kept at specific temperatures, and even a slight temperature change could result in spoilage, product loss and major supply chain disruptions.

Shipping coordinators who work with cold supply chains during the summer must make freight decisions that ensure loads arrive to their destination safely – or partner with an experienced 3PL like Red Kite who can.

Here are some important factors that all shippers need to consider before coordinating refrigerated – or “reefer” – transit for temperature-sensitive goods in the summer.

Plan Ahead

Reefer trucks are in high demand during the summer. Many businesses, such as pharmaceutical and food manufacturers, require reefer trucks to safely transport their freight in warm temperatures. Additionally, produce – which is commonly harvested during the summer months – requires reefer trucks to prevent spoilage. This high demand causes reefer capacity to tighten and makes it more difficult for shippers to secure load coverage, especially when providing carriers with short notice.

Shippers should coordinate reefer transit for temperature-sensitive freight well in advance of deliveries to ensure they do not miss key deadlines and can keep their supply chain running smoothly. If shippers are unsure of exact delivery dates at the start of summer, they should provide carriers with their forecasted reefer needs so carriers can plan ahead for transporting their loads.

Some goods, such as beverages, can withstand warmer temperatures. However, during extreme heatwaves, manufacturers of these goods may need reefer trucks to keep their products safe. Rather than waiting to coordinate reefer transit during a heatwave – when capacity is more likely to be full – shippers should monitor weather forecasts using resources like the National Weather Service and be prepared to coordinate reefer transit as soon as a temperature spike is predicted.

While shorter lead times make it more challenging to secure reefer transit, 3PLs – like Red Kite – can use their extensive carrier connections to partner shippers with a reefer carrier, even within tight markets.

Use LTL Shipping Cautiously

LTL can be a cost-efficient solution for many shippers, especially those with smaller or irregular shipments. However, LTL transit can put temperature-sensitive freight at greater risk for spoilage. Multiple delivery stops, paired with freight loading and unloading, means freight will likely be exposed to warmer, unsafe temperatures.

Before coordinating LTL services for reefer trucks, shippers should see if the carrier has measures in place to protect freight during unloading at delivery stops, such as refrigerated docks or the use of thermal blankets. While these methods can help protect some goods, loads that are particularly sensitive to temperature changes may not be able to ship safely with LTL services.

Be Prepared for Reefer Trailer Failures

While not common, it is important for shippers to prepare ways to keep their freight safe in the event of a refrigeration system failure.

Refrigeration systems use fuel to keep internal trailer temperatures at a controlled level, which requires drivers to refuel frequently. While reefer drivers are typically attentive to their fuel levels and trailers, untrustworthy carriers may have untrained drivers who do not monitor refrigeration equipment or who even turn off the refrigeration system to conserve fuel.

Shippers should prepare for potential equipment failures by discussing a plan with the carrier to protect products if the refrigeration system malfunctions. Requesting an electronic log of trailer temperatures for the duration of the delivery can also help shippers catch and notify carriers about any unusual temperature changes.

Working with a professional, trusted carrier can reduce the possibility of equipment failures as well, since these carriers have drivers trained to haul temperature-sensitive loads and closely monitor reefer trailers. 3PLs like Red Kite, for example, have diligent carrier vetting and monitoring processes to ensure they are partnering shippers with reliable carriers.

Provide Detailed Shipment Requirements

Providing details about a shipment’s requirements up-front will help inform carriers about the temperature range necessary to keep the load safe, as well as any special handling or equipment required. By providing these requirements in advance of a delivery, carriers will have the necessary information to keep freight safe.

These details should also be included in a shipment’s bill of lading so drivers can reference load requirements during their delivery as needed.

Partner With A Team of Logistics Experts

Between securing load coverage, finding a trusted carrier and keeping loads damage-free, navigating the logistics of temperature-sensitive freight during the summer can be challenging. This process is also time consuming and can take shipping coordinators away from other important tasks.

By partnering with a 3PL for reefer transit, however, shippers can utilize a team of logistics experts who offer the following benefits:

  • Extensive carrier networks that can be used to secure short-notice reefer transit on a variety of lanes.
  • Knowledge and expertise of temperature-sensitive freight transit, which allows 3PL teams to provide shippers with supply chain suggestions that can protect their cargo and help shippers communicate load requirements to carriers in a detailed manner.
  • Strong carrier monitoring process to ensure shippers are partnered with trustworthy, knowledgeable reefer truck drivers.

With a dedicated team of logistics experts and a reliable carrier network that spans across North America, Red Kite can use its connections and expertise to find reliable reefer transportation solutions that will allow your temperature-sensitive shipments to be delivered damage-free and on-time during the summer months.

Contact us or request a quote today to learn more about our reefer freight solutions.

Truck Driver Safety Tips for National Safety Month

Every year, the National Safety Council recognizes June as National Safety Month to build awareness about key topics impacting safety both inside and outside of the workplace.

Driving, one key focus area of this year’s National Safety Month, is a particularly important safety topic for truck drivers. With jobs centered entirely around driving, truck drivers must watch out for common road hazards while also operating large, heavy trucks.

Brushing up on driving safety is important for all drivers – even those with years of experience – to ensure they have the knowledge necessary to do their jobs safely. Here are some of Red Kite’s driver safety tips for carriers to practice during National Safety Month and beyond.

Avoid Distractions

Driving requires full focus on the road, and distractions like eating can take attention away from driving, increasing the risk of an accident.

One of the most common – and dangerous – distractions that drivers face is cell phones. While it is illegal for drivers to text and drive, drivers should avoid the temptation to send a quick message by putting their phone away. Drivers should also use hands-free device to take phone calls so they can keep both hands on the wheel while driving.

Before heading out on a delivery, drivers should place anything that could potentially distract them out of sight. If drivers find themselves in a situation on the road where they need to do something that would distract from driving, they should pull over or stop at the nearest exit so they can safely do so.

Monitor Weather Conditions

Hazardous weather conditions like heavy rain or snow can make roadways dangerous. To prepare for inclement weather in advance, drivers should check weather reports before heading out on the road so they know what to expect. Drivers should also monitor forecasts when traveling to their destination in case conditions change.

Drivers who encounter severe weather during their delivery should slow down and leave extra space between themselves and the vehicle in front of them so they can safely stop if roads become slick or visibility is reduced.

Drive Defensively

While important for all drivers, defensive driving is especially crucial for truck drivers. Trucks are large and difficult to stop, so it is important that truck drivers drive defensively and be aware of their surroundings to better prepare for roadway hazards.

Truck drivers should regularly check their truck’s surroundings – including blind spots – and scan ahead by 15 seconds. Drivers should also try to avoid driving directly next to other vehicles so they have space for an “escape route” in case of an emergency.

Check & Maintain Your Truck

Equipment failures are unexpected and can be dangerous if they occur on the road. Regular truck inspections, however, can help drivers be proactive in spotting signs of equipment problems. Before driving, drivers should inspect the following parts for any malfunctions:

  • Tires
  • Underneath the truck’s cab, for signs of leaking oil or coolants
  • Fluid levels
  • Brakes
  • Horn
  • Mirrors
  • Load securement

If a driver notices anything unusual during their inspection, they should contact dispatch immediately and wait until the equipment problem can be addressed before driving.

Slow Down

Trucks are high-profile vehicles and susceptible to turning over, particularly on turns and curves. If a truck driver goes around a curve too quickly, they risk tipping the truck over.

To ensure their truck does not tip, drivers should approach all turns and curves slowly. While this may require drivers to go slower than posted speed limits, it is better to be cautious than to risk an accident. Drivers should always follow the posted truck speed limits on highways as well, especially in work zones, where lanes are often narrow and can suddenly shift.

Take Breaks & Get Adequate Rest

Truck drivers spend hours on the road each day, which can be mentally fatiguing. Once drivers become fatigued, their ability to stay focused on the road diminishes, and the risk for an accident increases.

When drivers start to feel tired or find they are having trouble focusing on driving, they should pull over and take a break to boost their energy by taking a quick nap, stretching or eating a light snack. Healthy lifestyle habits can also help truck drivers feel more energized and prevent fatigue on the roadway, such as getting adequate sleep, eating healthy and exercising.

 

These are just some of the practices that truck drivers can implement and follow to be safer on the road. For more resources on driver safety awareness and training, visit the National Safety Month website.

Strategies For Reducing Freight Costs

Controlling freight costs is a priority for many businesses. However, it can be difficult for shipping coordinators to identify areas of their shipping process that can be changed to reduce costs, especially those at smaller businesses who may not have the time or resources to do so.

It is important that shippers understand the key areas of their supply chain that can be adjusted to maximize cost savings – or partner with a 3PL like Red Kite who does – to successfully lower their freight costs. Here are some of the key strategies that shippers seeking to reduce freight costs need to consider.

Build Strong Carrier Relationships

Having strong ties with a few key carriers is important when negotiating freight rates. Carriers are more willing to reduce surcharges or accessorial fees for shippers they regularly work with, and good carrier relationships give shippers greater leverage when negotiating rates.

Shippers who use different carriers for each load are less likely to build these important relationships, making it more difficult to negotiate freight costs. Therefore, shippers should identify a small group of trusted carriers and build those key relationships.

Partnering with 3PLs like Red Kite – who have strong connections with a network of carriers – may also help shippers reduce their freight costs. Due to these relationships, 3PLs have strong bargaining power with carriers and can negotiate lower freight rates.

Consider Contract Freight

Many shippers – especially smaller ones – elect to use the spot freight market to find coverage for their loads. However, contract freight can offer freight savings for shippers who send regular volumes of freight on a specific lane.

Unlike spot rates, which rapidly change depending on market conditions, contract rates are locked in for a set period of time, typically a year. Contract freight can protect a business’s primary shipment volume from unexpected rate increases and reduce freight costs in the long run.

Related: The Difference Between Spot Freight Rates and Contract Freight Rates

Increase Shipment Lead Time

Lead times have a major impact on freight capacity, and therefore freight rates. Providing carriers with shorter lead times means capacity will tighten, and shippers will pay more for freight. Providing carriers with advanced notice for a shipment, however, means shippers will likely be booking a load when capacity is not yet full and pay less for freight.

Even if a shipper is unable to increase their lead time due to manufacturing materials that require JIT shipping or short lead times, such as building materials, 3PLs – like Red Kite – can use their carrier network to find affordable coverage in tighter capacity markets.

Optimize LTL Shipping

While LTL shipments can result in lower freight costs for smaller loads, LTL services are complex. Shippers who are inexperienced in LTL shipping or who make a freight classification error can end up paying extra.

Before arranging LTL freight, shippers should ensure they do the following to fully utilize the cost savings LTL can provide and avoid hidden fees:

  • Maximize load weight. Heavier shipments typically have lower base rates than lighter shipments.
  • Ensure freight is classified correctly. Incorrectly classifying a load means the carrier will need to re-classify the freight. If the load falls under a different freight class, shippers face extra expenses.
  • Consider negotiating freight all kinds (FAK) with a carrier. If a load contains freight from multiple classes, classifying as FAK puts the entire load under one class and may result in cost savings.

Experienced LTL logistics experts, such as Red Kite, can also assist shippers with optimizing their LTL load. 3PLs are highly knowledgeable about how LTL rates are calculated and can help shippers maximize cost savings for smaller loads

Related: Calculating Less-Than-Truckload Freight Rates

Ship Off-Peak

Shipping during peak days or times means freight services are in high demand, which will tighten capacity and drive rates up. Shipping off-peak – days or times when freight services are in lower demand – means truck capacity, and therefore freight rates, will be lower.

Carriers often provide lower freight rates for off-peak loads to help fill their shipping schedule as well, which can result in even greater cost savings.  Shippers should factor peak times into their delivery schedules and consider shipping on weekends or overnight if they are able to do so.

Track Market Conditions

Market conditions have a major impact on freight rates, particularly in the spot market. For example, manufacturing activity was very strong in 2018. Most manufacturers require flatbed trucks to transport raw materials – such as steel and other metals – as well as finished goods. This increase in flatbed demand resulted in higher spot market freight rates.

Monitoring market conditions can help shippers gauge the future direction of rates and enables them to make informed decisions about what will offer the most cost savings. For example, if demand for reefer services is weak, food and beverage shippers may choose to frequently use the spot freight market instead of locking into a contract and take advantage of lower rates.

To help shippers keep track of the market conditions influencing the freight market, Red Kite publishes a monthly market report that discusses the latest shipping indicators and trends. Sign up to receive the report below.

Utilize Carrier Backhauls

When a driver delivers a load, but does not have a backhaul – a load that can be transported from a driver’s destination back to their origin – carriers still need to cover fuel expenses, driver wages and other operational costs. For this reason, carriers will charge lower freight rates for return loads to ensure they avoid having an empty truck.

Shippers can utilize backhauls by partnering with a carrier based near their load’s ship-to point, as this means that the load is likely a return load for that carrier. Shipping on a lane that a carrier regularly services also makes that carrier more likely to find a backhaul. When a carrier does not have a backhaul load, they may charge higher rates to offset the time and resources used to drive to their next destination without a load.

3PLs can also assist with utilizing carrier backhauls. Red Kite, in particular, was founded on the principal of utilizing backhauls to benefit both the shipper and the carrier.

Read more about Red Kite’s founding

Partner with a Trusted 3PL

3PLs are comprised of logistics experts who coordinate shipping for businesses. With their supply chain expertise and strong carrier relationships, 3PLs can negotiate lower freight rates and identify areas within the supply chain where shippers can streamline costs.

When seeking a 3PL to assist with your freight needs, it is important to consider 3PLs who are trustworthy, knowledgeable and have a wide, reliable carrier network. Red Kite Freight Solutions has decades of combined experience in logistics and a trusted carrier network that spans North America. The Red Kite team uses its expertise and connections to find cost-effective freight solutions for a variety of loads, from raw materials to finished goods.

Contact Red Kite today or request a quote to see how our team of logistics experts can help you find cost-effective freight solutions.

In the News: COVID-19’s Impact on Shipping

As the COVID-19 pandemic continues to disrupt supply chains across the globe, shippers are keeping a close eye on the latest headlines to gauge the pandemic’s impact on freight.

Red Kite Freight Solutions is actively monitoring COVID-19 news to keep shippers informed on how capacity or freight rates could be impacted. Here are the top trends our team is currently watching that all shippers need to be aware of.

Trucking Volume, Capacity on the Decline After Peaking in March

When COVID-19 cases started increasing in North America during March, we saw trucking volume spike due to the increased demand and manufacturing of essential goods, such as paper products and medical supplies. However, as manufacturing activity and consumer buying patterns begin to slow, we see that trucking volume is on the decline.

According to data from FTR, trucking volume for reefer, dry van and flatbed services fell in late March and early April. In particular, we saw a sharp decline in flatbed volume as manufacturers who use these services slowed production in response to economic impacts of COVID-19. A survey conducted by CCJ also found that 55% of carriers reported seeing declines in freight volume over the last month. At Red Kite, we closely watch trucking volume because the number of loads shipped impacts freight capacity, and therefore the ability for shippers to find load coverage.

We have seen declining load-to-truck capacity as a result of falling trucking volume as well. Capacity data form DAT – shown in the chart below – found that load-to-truck capacity steadily declined for flatbed services from mid-March to early April. Even though we saw load-to-truck capacity for dry van and reefer services increase in late March as demand for essential goods skyrocketed, capacity levels are now beginning to fall.

Monitoring freight capacity is important because capacity influences the direction of spot rates. If there are more loads than trucks available, rates will rise, and if there are fewer loads than trucks available, rates will fall. With truck-to-load capacity beginning to decrease, shippers can expect freight rates to drop.

Freight Rates Continue to be Volatile, but Show Signs of Stabilizing

We watched freight rates fall and rise in March as freight demand and capacity rapidly changed. When COVID-19 cases began spreading across the US in early March, we saw demand for dry van and reefer services increase as consumers stocked up on essential goods like paper products, tightening capacity and driving freight rates up.

After this initial increase in demand, we watched freight rates drop before rising again in mid-to-late March as states began announcing stay-at-home orders in response to COVID-19. This created a spike in consumer demand for essential goods and shipper demand for freight services that transport these goods.

In early April, however, we saw freight rates drop as manufacturers slowed or halted production of goods deemed non-essential. This led to decreased demand for dry van, reefer and flatbed services.

The chart below shows the national average rates for each of these services so far this year, as calculated by DAT. Rates have a major impact on the freight decisions shippers make – such as whether to use spot freight or contract freight – which is why Red Kite keeps a close eye on the current market rates.

Even though freight rates were volatile in March, industry experts believe we can expect to see spot rates begin to stabilize. After the initial slowdown of manufacturing activity and consumer purchases steadied, experts say we can expect to see rates hold at a consistent level over the next couple of months.

Oil Price Feud, COVID-19 Create Volatile Fuel Prices

Starting in early March, we watched crude oil prices across the globe begin falling as an oil price war broke out between Russia and Saudi Arabia. Lower crude oil demand due to the COVID-19 pandemic also contributed to falling diesel fuel prices, which decreased nearly 30 cents per gallon from early March to early April, according to the U.S. Energy Information Administration.

While diesel prices are expected to remain relatively low amid soft demand, we could see prices go back up as the crude oil pricing feud ends. On April 9, Saudi Arabia and Russia reached a tentative deal to decrease oil output to about 8.5 million barrels per day, following the path of other OPEC members who announced production decreases.

Factors that influence diesel fuel pricing are important to monitor because the cost carriers pay for fuel is often passed along to shippers in the form of a fuel surcharge. With fuel prices predicted to remain low over the next couple of months, we can expect shippers to see lower fuel surcharges.

Monitoring Shipping Market News and Trends

COVID-19 can create rapidly changing shipping conditions, and it is important for shippers to stay on top of the current news and trends that could impact freight rates or capacity, as these trends could impact their shipping strategy.

To make it easy for shippers to monitor these indicators, Red Kite publishes a monthly Shipping Market Report to keep readers informed about the factors shaping freight rates and capacity. Sign up below to receive future reports.

Red Kite Freight & COVID-19: Keeping Our Partners Safe

To Our Readers,

As the COVID-19 pandemic spreads, the world around us is changing rapidly. Our priority during this time of uncertainty is to balance the well-being of our customers, carriers and employees while continuing to provide products and services to essential sectors.

We wanted to communicate the steps we are taking to maintain operations while cooperating with efforts to reduce the spread of the virus.

Per the guidance provided by the Department of Homeland Security, CISA Department, Red Kite Freight Solutions provides specifically stated freight transportation support services to the below designated sectors (among others):

  • Energy – Oil/Gas/Wind/Solar Generation and Transmission Sectors
  • Transportation Systems Sector
  • Communications Sector
  • Defense Industrial Base Sector
  • Emergency Services Sector
  • Water and Wastewater System Sector
  • Chemical Manufacturing Sector
  • Critical Manufacturing Sectors

We Are Open for Business

First and foremost, Red Kite’s operations are running as normal and our staff still is available to assist customers and carriers via phone and email. Our commitment to providing you with the freight transportation services you need with exceptional customer service remains the same.

Additionally, we continue to publish our monthly Shipping Market Report to keep readers informed of news and indicators shaping the freight shipping industry. Read this month’s report here or sign up to receive the report in the future.

We Are Committed to Protecting our Carriers

Freight carriers play one of the most crucial roles in the fight against this pandemic. They are working hard to deliver the goods needed, when and where they are needed. We are committed to the safety and well-being of our carriers and are working with them to communicate any new policies or procedures our customers have put into place to reduce exposure risk.

We are committed to providing superior service, product quality and support during these uncertain times. We will continue to monitor the situation and communicate any developments as they occur.

Regards,

Lacey Jackson

Founder & Logistics Manager, Red Kite Freight Solutions

The Difference Between Spot Freight Rates and Contract Freight Rates

Shippers have many important decisions to make when coordinating shipments, including whether to use the spot market or sign a contract with a carrier. It can be challenging to determine whether spot or contract freight is best for a particular load, so it is important that shippers understand each method – or partner with experienced logistics experts like Red Kite who do – to help guide their decision.

Spot freight is a one-time rate given to a shipper by a carrier for a single delivery, typically provided near or at the time of the load’s shipment. Spot freight rates are subject to daily change and fluctuation.

By contrast, contract freight is a fixed rate that is negotiated between a carrier and shipper for a specific volume range over a set period of time, typically a year.

Many shippers – especially smaller ones – often default to spot freight, but there are many advantages to contract freight or using a combination of both shipping methods.

How are Spot Rates Calculated?

Spot rates are calculated using the economic principle of supply and demand. In the shipping market, supply and demand is represented by capacity, which is the number of trucks available to carry freight at a given time.

Freight capacity varies between different lanes – a route regularly serviced by a carrier – and trucking services, so rates are typically different across the market. With capacity constantly changing, spot rates can vary from hour to hour as well.

If there are more shippers in need of freight than there are trucks available, capacity will tighten, driving spot rates up. However, if there is an excess of trucks and a lack of shippers in need of freight, spot rates will fall.

Economic and market factors such as GDP growth and manufacturing activity can indicate the future direction of spot rates, but do not always indicate the direction of rates for individual services or lanes.

For example, let’s say that GDP is growing at a rapid rate, but markets that use flatbed trucks – such as lumber or steel and metal materials– are softening. This would increase capacity for flatbed services, causing rates to fall despite a rising GDP.

The opposite can be true as well. Continuing our flatbed truck example from above, if the economy is slowing, but lumber or steel and metal products are in high demand, capacity for flatbeds will likely fall and rates will increase.

How are Contract Rates Calculated?

Unlike spot rates, which can change within a matter of minutes, contract rates are fixed for the entire period of a particular contract. In addition to establishing a set rate, contract freight also sets standards for other factors, including a minimum freight volume the type of freight that is shipped and the lane on which the freight is shipped.

Contract rates are typically higher than spot rates at any given point because they are negotiated to include other variables that factor into freight costs, such as fuel surcharges and additional carrier services. Spot rates do not include these variables, and they are added as a separate freight charge.

Learn more about the variables that factor into calculating full truckload rates or less-than-truckload rates.

Determining Whether to Use Spot or Contract Freight

Now that we discussed how spot and contract rates are calculated, let’s look at which factors should be considered when choosing the best method for your shipment.

Market Outlook

The overall trucking market outlook can indicate whether spot or contract freight offers shippers the most cost savings.

If the market outlook points towards capacity being tight over a long period of time, shippers may choose to lock in a contract with set rates before prices on the spot market increase. However, if market outlooks indicate slowing freight demand in the future, shippers may choose to use spot freight and take advantage of lower prices.

The amount of risk a shipper is willing to take with changing rates also plays a role in the choice between spot or contract freight. Larger shippers with a high freight budget, for example, may be more willing to risk spot market volatility in case rates drop. Smaller shippers who do not have the financial means to risk changing freight rates, however, may choose to go with the consistent pricing that contract freight offers.

Shippers should regularly monitor the key market indicators that influence freight rates and capacity to gauge whether spot or contract offers them the most cost savings.

Red Kite publishes a monthly newsletter that highlights trucking outlooks, fuel costs and more to keep shippers informed about trends that could impact capacity and rates.

Carrier Relationships

With only one dedicated carrier handling all loads, contract freight shippers are able build a strong relationship with that carrier. This is important for loads that require extra attention or care from a carrier – such as fragile loads or just-in-time shipments – as partnering with a trusted carrier helps shippers ensure their sensitive loads are delivered safely and on-time.

It is more difficult for shippers to develop strong carrier relationships through spot freight as they may work with different carriers for each load. Working with different carriers also means service and expertise can vary for each delivery, putting sensitive loads at greater risk of damages or missing a delivery deadline.

3PLs like Red Kite, however, can help shippers find experienced, reliable spot freight drivers, since they have experience working with a deep pool of carriers. 3PLs take out the confusion and difficulty shippers are faced with when buying freight services.

Freight Volume

Since contract freight requires shippers to ship a minimum freight volume over a set time period, shippers who have consistent freight volume may find contract freight more cost-effective than spot. Shippers with infrequent freight needs, however, may have more difficulty meeting the obligations of contract freight and find more flexibility with spot freight.

Combining Spot and Contract Freight

Even though some shippers may find one shipping method to be better suited to their freight needs, most shippers use a combination of the spot market and contracts in their freight purchasing strategy.

For example, shippers who have a particular load that goes over the volume specified in their contract or an unplanned one-off shipment may turn to the spot market to find a carrier that can transport the extra tonnage.

Conversely, spot freight users may find themselves regularly shipping a consistent volume of freight. They, therefore, might switch to contract freight if it allows them to cut freight costs. Experienced 3PLs, such as Red Kite, can also help shippers evaluate their freight needs and determine whether switching to contract freight from spot freight would be more cost-effective.

Finding Cost-Effective Spot or Contract Rates for Your Load

Whether a shipper uses the spot market or a contract for arranging freight, it can be challenging for shipping coordinators to find cost-effective solutions, especially when the process of finding a carrier takes them away from other essential tasks. By partnering with a trusted 3PL, however, shippers can utilize a team of logistics experts to find cost-effective, trustworthy carriers for both their contract and spot freight needs.

Red Kite specializes in finding both contract freight and spot freight for its customers. With a trusted carrier network, Red Kite can partner shippers with a reliable carrier who ensures their loads arrive at their destination safely and on-time.

Contact Red Kite or request a quote today to get a competitive rate for your spot or contract freight needs.

Trucking Industry Insights: February 2020

As supply chain disruptions from the coronavirus spread across the globe, freight capacity and oil demand could be volatile in the near term. During this time of market uncertainty, it is important to partner with a trusted 3PL, such as Red Kite, to find reliable coverage for your load. Here are the top metrics and headlines our team is watching this month.

Industry Indicators

ATA Tonnage Index: 117.4 (January 2020)

Trucking tonnage rose 0.1% in January amid soft manufacturing activity. Tonnage is up 0.8% compared to the same time a year ago and has increased 0.6% over the past two months.

Diesel Fuel Price: $2.890/Gallon (Week of 2/17/20)

The U.S. average retail price of diesel fuel dropped 2 cents a gallon in mid-February. Diesel fuel costs 11.6 cents less than it did the same time a year ago.

DAT Dry Van Spot Rate: $1.87/Mile (January 2020)

Dry van spot rates dropped month-over-month in January. However, experts believe rates may have hit their bottom in the near term and may be on the rise ahead of spring.

DAT Flatbed Spot Rate: $2.17/Mile (January 2020)

Flatbed spot rates increased month-over-month in January as higher oil production and construction of the Keystone XL Pipeline increased flatbed demand.

Trucking Industry News

Coronavirus Impacts on Global Supply Chain

The deadly coronavirus could have a significant impact on freight volume entering the U.S. from China. Wuhan is a major industrial and transportation hub, and production disruptions may cause supply chain disruptions across the globe. Due to both the coronavirus and trade tensions, analysts expect the U.S. to see softer freight volumes in Q1 of 2020.

Oil Demand to Decline for First Time in Decade

The International Energy Agency expects oil demand to fall in the first quarter of 2020, which would mark the first quarterly fall in a decade. Demand in the first quarter is expected to fall by 435,000 barrels per day compared with the same period a year ago.

Trump Signs USMCA Agreement, Ratification Progress Continues

At the end of January, President Trump signed USMCA into law. USMCA, which replaces NAFTA, includes tougher rules on automobile production. While Mexico and the U.S. have ratified USMCA, Canada parliament is still in the ratification process.

Get Key Trucking Industry Insights Each Month

Freight rates and demand constantly fluctuate due to economic and market factors. The Red Kite team closely monitors these factors and publishes a monthly newsletter that highlights shipping conditions, fuel costs, trucking outlooks and other important market indicators to keep shippers informed about trends that could impact freight rates and capacity. Sign up today to receive!

Calculating Less-Than-Truckload Freight Rates

With multiple shippers sharing the space and cost of a single truck, less-than-truckload (LTL) is typically cost-effective for smaller loads. However, complex variables, such as freight class and density, can make it challenging to calculate freight rates. It is important for shipping coordinators to understand these variables – or partner with an experienced 3PL like Red Kite who does – to find the most cost-effective solution for their LTL load. Here are some of the key factors used to calculate LTL freight rates that all shippers should know.

Weight

LTL carriers set base rates that are determined by weight and charged per 100 lbs. Typically, heavier shipments have lower base rates than lighter shipments, such as those in the example base rate table below:

Weight Rate
0-499 lbs $55
500-999 lbs $40
1000-1999 lbs $35
2000-4999 lbs $30
5000-9999 lbs $20
10,000-20,000 lbs $18

Shippers can use carrier base rate tables to determine the most cost-effective weight for their shipping needs and adjust their load weight as needed. Working with 3PLs knowledgeable about LTL carrier base rates, like Red Kite, can also help shippers make strategic load weight decisions.

Base rates can be calculated by multiplying the rate specified for a weight range by the number of 100 pounds that are in a load. A load that weighs 780 lbs has 7.8 “100 lbs,” so the rate for the weight range it falls under would be multiplied by 7.8 to find its base rate.

Let’s say, for example, a shipper’s load weighs 495 pounds. The load would fall in the “0-499” range in our example table above at a base rate of $55 per 100 lbs. To calculate the load’s base rate, the shipper would multiply $55 by 4.95, getting a total rate of $272.25.

If the shipper adds 5 pounds to their load, it would be bumped to the “500-999 lbs” range and have a base rate of $40 per 100 lbs, for a total base rate of $200. By adding just 5 pounds to their load, the shipper saves about 26% on their base rate.

Density and Dimensions

The density and dimensions of an LTL load are used to determine freight class – a load classification system that factors into rates – so it is important for shippers to ensure they calculate these measurements correctly. Providing incorrect dimensions or density could result in the carrier needing to reclassify your freight, which results in extra time and charges.

Density of a shipment can be calculated using the following steps:

  1. Measure the length, width and height of the shipment – including the pallet or skid – to determine its dimensions.
    • Ex: A load measures to be 40” x 50” x 45”.
  2. Multiply the shipment’s dimensions (length x width x height) to calculate total cubic inches.
    • Ex: 40x50x45= 90,000 cubic inches
  3. Convert the measurement into cubic feet by dividing the total cubic inches by 1,728, which is the number of cubic inches in a cubic foot.
    • Ex: 90,000/1,728 = 52 cubic feet.
  4. Finally, calculate density by dividing the shipment weight – including weight of the pallet or skid – by total cubic feet.
    • Ex: A load weighs 600 pounds and is 52 cubic feet. 600/52= 11.5 pounds per cubic foot.

Freight Class

To establish standardized, consistent freight rates for LTL shipments, the National Motor Freight Traffic Association (NMFTA) created a classification system – known as the National Motor Freight Classification (NMFC) – which groups goods and materials together based on density, stowability, handling and liability.

Before exploring the different freight classes, here are definitions for each factor used to determine freight classification:

  • Density: How compact and heavy a load is.
  • Stowability: How easily a load can be stacked and stored on a truck and how at-risk it is for damaging the loads around it.
  • Handling: How much handling a load requires and how easily it can be loaded and unloaded from a truck.
  • Liability: The probability of a load being damaged or stolen while in-transit.

The NMFC has 18 different freight classes, ranging from Class 50 to Class 500, which can be seen in the chart below. Higher freight classes contain loads that require more time, resources and attention to transport. These classes are charged at higher rates to cover the expense of the additional resources necessary to move their loads. Lower freight classes contain loads that can be transported with minimal resources and are therefore charged at lower rates.

NMFC Freight Classes

Class Cost Examples Weight Range Per Cubic Foot
Class 50 Lowest “Clean Freight” i.e. fits on standard shrink-wrapped 4×4 pallet, very durable Over 50 lbs
Class 55   Bricks, cement, mortar, hardwood flooring 35-50 lbs
Class 60   Car accessories and car parts 30-35 lbs
Class 65   Car accessories and car parts, bottled beverages, books in boxes 22.5-30 lbs
Class 70   Car accessories and car parts, food items, automobile engines 15-22.5 lbs
Class 77.5   Tires, bathroom fixtures 13.5-15 lbs
Class 85   Crated machinery, cast iron stoves 12-13.5 lbs
Class 92.5   Computers, monitors, refrigerators 10.5-12 lbs
Class 100   Boat covers, car covers, canvas, wine cases, caskets 9-10.5 lbs
Class 110   Cabinets, framed artwork, table saw 8-9 lbs
Class 125   Small household appliances 7-8 lbs
Class 150   Auto sheet metal parts, bookcases 6-7 lbs
Class 175   Clothing, couches, stuffed furniture 5-6 lbs
Class 200   Auto sheet metal parts, aircraft parts, aluminum table, packaged mattress 4-5 lbs
Class 250   Bamboo furniture, mattress and box spring, plasma TV 3-4 lbs
Class 300   Wood cabinets, tables, chairs setup, model boats 2-3 lbs
Class 400   Deer antlers 1-2 lbs
Class 500 Highest Low density or high value i.e. bags of gold dust, ping pong balls Less than 1 lbs

Freight All Kinds (FAK)

When a shipper has goods or materials in single load that span multiple freight classes, the shipper can negotiate with the carrier to classify the load under one freight class, known as freight all kinds (FAK). Negotiating FAK for a load can help shippers place some of their goods in a lower freight class, therefore lowering their rate. 3PLs like Red Kite have strong relationships with carriers and can use their relationships to negotiate FAK deals that help shippers control their freight costs.

Distance/Origin and Destination

Long distance deliveries, which are usually over 500 miles, require extensive time, labor and fuel to complete. To cover the expense of these resources, carriers charge higher freight rates as the distance of a delivery increases. An LTL shipment to a neighboring city will typically cost less than a shipment to another state.

The origin and destination of an LTL shipment can also impact rates. Some carriers only cover certain geographical regions or major transportation hubs. If a shipper’s load is delivered to a remote region that a carrier does not service, it will need to be transferred to another carrier mid-route to reach its final destination.

Load transfers increase both freight costs and the risk of damage. Shippers who partner with well-connected 3PLs may be able to find a single carrier who services remote origins and destinations. Red Kite, for example, has a wide carrier network across North America and can use their connections to find a carrier who services remote regions.

Extra Services

Additional services required by a carrier, such as weekend deliveries or lift gates, require extra resources and labor. The costs for these resources will likely be passed along to a shipper in the form of a higher freight rate. Shippers sending loads to difficult receiving locations, such as a place without a loading dock, may also pay a higher freight rate to compensate for the extra time a driver spends making a delivery.

Finding the Best Freight Rate for Your LTL Load

Even with the cost-savings that LTL services have, it can be difficult for shipping coordinators to find and negotiate the most cost-effective rate for their load. With all the complex factors used to determine LTL rates, it can also be time-consuming for shippers to calculate rates. Partnering with a trusted 3PL, however, allows shippers to have a team of logistics experts coordinate their LTL freight and control freight costs.

Red Kite Freight Solutions has strong relationships with a network of carriers, giving our team the ability to negotiate fair, competitive LTL rates. The Red Kite team understands the complexities of LTL rates and ensures our customers receive the most efficient solution for their unique shipping needs.

Contact Red Kite or request a quote today to get a competitive rate for your less-than-truckload freight needs.

Calculating Full Truckload Freight Rates

Full truckload shipping rates are complex and difficult to calculate. Rates constantly fluctuate due to changing demand and capacity, and other variables – such as mileage and lead time – also factor into freight rates. Therefore, it is important for shipping coordinators to understand these variables – or to partner with a knowledgeable 3PL like Red Kite Freight Solutions who does – so they can make informed, cost-effective shipping decisions. Here are some of the key factors used to calculate truckload freight rates that all shippers should know.

Mileage

Long-distance deliveries require more time and resources than short-distance deliveries, so carriers charge more for high-mileage deliveries. Long-distance trucking services typically start at 500 miles and above, so shippers can expect to pay a higher freight rate for a shipment across the country than a shipment to a neighboring city.

Diesel Fuel Price

To help cover fuel expenses, carriers typically include a fuel surcharge in their freight rates. Semi-trucks get anywhere from 4-8 MPG and can have a high per-mile fuel cost depending on diesel prices and distance traveled.

Let’s say, for example, a truck gets 6 MPG and diesel fuel costs $3.07. The average per-mile fuel cost ($3.07/6) for the carrier would be about $0.51. For a long-distance delivery of 500 miles, the carrier would pay $255 for fuel and likely pass along some of that expense to the shipper.

Fuel surcharges are based on the market price of diesel fuel and may fluctuate from week to week. As fuel prices go up, the surcharge will increase and as fuel prices drop, the surcharge will decrease. To track current national and regional diesel fuel prices, visit the U.S. Energy Information Administration website.

High-Volume Lane

Whether or not a shipper’s delivery is along a high-volume lane – a route regularly serviced by a carrier that typically includes major metropolitan areas – also impacts freight rates.

Carriers dedicate many trucks to servicing their high-volume lanes, giving them the resources to transport multiple truckloads at a given time. This keeps costs down for shippers booking a load along a high-volume lane. Capacity is tighter for shipments delivered outside a high-volume lane, as carriers tend to dedicate fewer trucks to servicing these areas. The smaller truck supply makes these shipments more competitive and expensive for shippers to book.

High-volume lanes also have a higher chance of offering the carrier a return load. If a driver delivers outside a high-volume lane and has a low chance of having a return load, the carrier may increase freight costs to offset the time and miles spent driving to the next load. 3PLs can help shippers find transit within a high-volume lane to increase the chance of a return load and lower costs. Red Kite, for example, specializes in finding return loads for both drivers within and outside of high-volume lanes.

Type of Truck

Market demand, capacity and operational fees are different for each type of trucking service, contributing to different freight rates for reefer, flatbed and dry van services. Reefer and flatbed transit, on average, tend to be more expensive than dry van services due to the driver expertise and resources needed to transport loads like building materials or food and beverage products.

Shipment Lead Time

Lead times are important when booking a load. When a shipper provides a carrier with longer lead times, it gives the carrier more time to find a driver to transport the load. When a shipper provides a carrier with a shorter lead time, however, capacity is tighter, and the carrier may have more difficulty finding a driver to deliver the load.

Freight rates increase when capacity is tighter, so booking a load with a shorter lead time means a shipper will pay a higher freight cost than they would if providing a carrier with longer lead times. Shippers who partner with 3PLs, however, may still be able to keep freight costs down with a short lead time. 3PLs like Red Kite have connections with a variety of carriers and can use their relationships to find good rates in tight capacity markets.

Weight and Load Size

Weight and load size are also factored into truckload freight rates. Oversized loads, for example – loads that exceed a road or highway’s size and/or weight limit – require permits, experienced drivers and other resources. Carriers charge higher freight rates for oversized loads to cover the additional expenses associated with hauling them.

Any load that exceeds a road or highway’s size and/or weight limits is considered an oversized load. As a rule, loads over 46,000 lbs, wider than 8 ft. 6 in. or taller than 13 ft. 6 in. are considered oversized. Heavy equipment, like bulldozers or forklifts, is an example of a good that typically falls in the oversized load category.

Extra Services

Loads or deliveries that need specific actions or attention from a carrier – such as a delivery within a tight timeframe or a delivery of fragile goods – tend to require more time and resources. Carriers may charge a higher freight rate for the extra time and resources necessary to fulfill a shipper’s unique shipping needs.

Loads delivered to difficult receiving locations, including places without a loading dock, limited hours or congested loading docks, are more challenging and time consuming for drivers. As a result, carriers will usually charge shippers more for freight delivered to a difficult receiving location.

Market Conditions and Other Factors

Baseline freight rates are set based on market conditions and rise and fall as demand and capacity change. Higher demand and tighter capacity typically cause increases in freight rates, while lower demand and looser capacity lead to softening rates.

Economic conditions and manufacturing activity are some of the market factors that influence freight demand and capacity. When manufacturing activity is high and economic conditions are favorable, shipping activity tends to increase and as a result, freight rates are usually higher in a growing market. When manufacturing activity and the economy slow, so does shipping activity, and freight rates will decrease.

Red Kite publishes a monthly newsletter for customers that highlights shipping conditions, fuel costs and trucking outlooks to keep shippers informed about trends that could impact freight rates and capacity. Sign up to receive today!

Other outside factors that can impact freight rates include:

  • Season: Some industries that use truck freight are season-oriented. For example, the agriculture industry tends to be active during summer, causing an increase in freight demand for agricultural goods. Because these goods are shipped on dry vans or reefers, capacity for these services tends to be tighter in the summer, leading to increased freight rates.
  • Region: Trucking demand and capacity is different for each region of the U.S., leading to varying rates across the country. If capacity is tighter for flatbeds in the Midwest than it is in the South, for example, flatbed freight rates will be higher in the Midwest.
  • Severe weather: Severe weather events like hurricanes or snowstorms can impact a carrier’s ability to deliver loads and tighten capacity, causing a temporary rate spike.
  • Receiver rejecting orders: If a shipper sends a carrier to the wrong address or a receiving location that is closed, the carrier will have to return the freight to the shipper or to another facility. These shipping errors result in lost time and miles for drivers, and carriers will likely charge shippers for the wasted resources.

Finding the Best Freight Rate for Your Load

It can be difficult for shipping coordinators to find the best freight rate for their load, especially when their shipment requires a tight delivery frame or another specialized service. Partnering with a 3PL, however, can allow shippers to lower their freight costs. 3PLs have strong relationships with various carriers, which gives them the ability to negotiate freight rates to ensure their customers receive a competitive rate.

With a strong carrier network, Red Kite Freight Solutions can find a solution for your shipping needs, no matter how complex, at a fair, competitive rate. Our experienced team is committed to finding the most strategic and beneficial freight solution for each customer because when you thrive, we thrive.

Contact Red Kite or request a quote today to get a competitive rate for your full truckload freight needs.

Trucking Industry Trends to Watch in 2020

As 2020 begins, shippers and carriers will keep a close eye on market conditions to gauge this year’s trucking outlook.

The Red Kite team regularly watches industry trends to ensure our customers get fair, competitive rates based on current market conditions. Here are a few trends our team will closely watch that could shape trucking in 2020.

Manufacturing Activity

2019’s Manufacturing Activity

In 2019, manufacturing activity softened amid trade tensions, slowing business confidence and economic uncertainty. We saw the IHS Markit US Manufacturing PMI drop to 52.4 in December of 2019 from 54.9 in January of 2019. In the second half of 2019, we watched manufacturing PMI begin to edge upwards as business expectations for 2020 improved, primarily due to favorable financial conditions and easing trade tensions.

 

2020 Manufacturing Outlook

According to a report published by the Institute for Supply Management (ISM), we can expect manufacturing activity to increase in 2020. Purchasing and supply executives in the manufacturing sector predict that revenue will be higher this year and are optimistic that manufacturing activity will be stronger in the first half of 2020 than it was in the last half of 2019. Executives also believe overall business prospects will increase this year.

The manufacturing sector is important for us to watch because trucks regularly ship loads used in a variety of manufacturing applications; the level of manufacturing activity can have a major impact on overall freight volume and demand.

Trade Tensions & Tariffs

We watched trade tensions between China and the U.S. escalate last year as new tariffs went into effect. At the end of 2019, President Trump announced that Phase 1 of a trade deal with China will be signed on Jan. 15. President Trump also stated he will travel to Beijing later this year to continue talks, indicating that we could be closer to seeing a final U.S.-China trade deal.

Tariffs and trade policies often influence manufacturing activity – trade tensions can put a pause on business investments and new orders. Because the manufacturing sector is so closely tied to truck volume, our team keeps a close eye on any policies and indicators that impact manufacturing activity.

Hours of Service (HOS) Rule Changes

In 2019, the Federal Motor Carrier Safety Administration (FMSCA) proposed a rule to modify five existing HOS rules. According to the FMSCA, we will see the rule changes allow drivers more flexibility in managing unexpected road conditions, such as traffic congestion, while maintaining current safety limits on driving time. The changes will also give drivers the ability to split their off-duty time and allow for more flexible breaks.

Proposed HOS Changes

Modifications What Would Change
30-Minute Break Rule Break requirement would be tied to 8 hours of driving time without an interruption of at least 30 minutes. Break can be taken by a driver using on-duty, but not driving, status.
Adverse Driving Conditions Exception Maximum window for permitted driving would be extended by 2 hours.
Off-Duty Break Off-duty break of at least 30 minutes, but no more than 3 hours, that pauses a truck driver’s 14-hour driving window would be allowed. Break would be allowed if a driver takes 10 consecutive off-duty hours at the end of their shift.
Short-Haul Exception Lengthen driver’s maximum on-duty period from 12 to 14 hours. Extend operating distance limit from 100 air miles to 150 air miles.
Sleeper-Berth Exception Drivers could split required 10 hours off-duty into either an 8 and 2 split or a 7 and 3 split, either in sleeper-berth of off-duty. Hours would not count against 14-hour driving window.

The FMSCA plans on enacting the rule modifications quickly, but experts believe we will not see the changes go into effect until later this year.

Trucking Indexes

FTR Shippers Conditions Index (SCI)

The SCI is one of the trucking condition indexes the Red Kite team closely follows. SCI provides insight into market conditions for shippers and measures favorability based on freight demand, freight rates, fleet capacity and fuel price.

Shippers conditions were favorable throughout last year, largely due to lower freight rates and demand. FTR’s projection shows we can expect shipper conditions to remain positive during the first half of this year, but conditions will slightly decrease due to firming carrier capacity utilization.

FTR Trucking Conditions Index (TCI)

Another index we closely follow is the TCI, which measures market favorability for carriers based on  freight volumes, freight rates, fleet capacity, fuel price and financing.

Trucking conditions were mostly unfavorable in 2019 as a softening manufacturing sector contributed to lower freight volume and demand. According to FTR’s projection, we will see a neutral TCI reading during the first half of this year.

Navigating the 2020 Market

Manufacturing activity, trade news and trucking regulations and indexes are just a few trends the Red Kite team will watch in 2020. It can be challenging to predict trucking conditions and outlooks, but following market and economic indicators helps give us an idea of how freight demand and rates could be impacted. By monitoring these key indicators, we hope to provide valuable insights to our customers and help them find the best transportation solution for their unique shipping needs.

Contact Red Kite or request a quote to see how our experienced team can help you navigate the 2020 shipping market.