Understanding Freight Price Formation: Why It Matters for Your Business's Bottom Line
Secondly, transportation costs are subject to numerous surcharges, such as fuel surcharges, road tolls, and labour surcharges, which can vary widely between carriers and regions. Understanding these surcharges and how they are calculated can help businesses negotiate better rates and avoid unexpected costs.
Thirdly, knowing how transportation costs are determined can help businesses make informed decisions about their logistics strategy. For example, if a carrier's rates are based primarily on distance, a company may consolidate their shipments to reduce transportation costs. Alternatively, if a carrier's rates are based on weight or volume, a company may opt to use smaller or larger packaging to optimize its shipping costs.
Finally, understanding freight price formation can help businesses maintain healthy relationships with their carriers. By understanding the factors that influence transportation costs, businesses can have more meaningful discussions with their carriers and work together to optimize shipping efficiency and costs.
What does transportation cost consist of?
Carrier or freight forwarder cost components:
- Driver salary
- Fuel cost
- Truck leasing
- Truck maintenance
- Road tolls
- Carrier licenses
- Carrier liability insurance
Different surcharges on freight invoices?
Here are the most common surcharges in Europe:
- Fuel surcharge (BAF - Bunker Adjustment Fee)
- Road tolls
- Labor surcharge
- Hazardous cargo surcharge (ADR - Accord relatif au transport international des marchandises Dangereuses par Route)
- Thermo surcharge
- Tailgate surcharge
- Terminal fees - cargo handling
- Various error fees - waiting time, no loading reservation, lack of gate access permit, missing documents, required repackaging of goods
How quickly can I get a rate quote from a carrier?
The response time to a query can vary greatly depending on the carrier, shipping direction, and different freight managers. Depending on the carrier, the offer can come in a few minutes, and take a few hours, and it is not uncommon for the response to take several days.
Freight price management in Cargoson TMS
Cargoson TMS also includes a pricing module that allows businesses to manage their rate sheets and pricing agreements with carriers.
The system also provides businesses with analytics and reporting tools to help them optimize their transportation spend. Users can analyze their shipping data, track KPIs, and identify areas for cost savings.
Furthermore, Cargoson TMS includes a robust carrier management module that allows businesses to manage their carrier relationships and monitor carrier performance.
As a Cargoson user, can I configure my preferred carriers in the selection, upload long-term price lists, and make price inquiries? YES, you can!