How To Optimize Contract And Spot Freight Market Rates
Lets start off with some questions, as they will impact the answers to the guide on how to optimize your companys use of the contract and spot freight rate markets:
Are your freight lanes impacted by peak capacity demands during the year?
Are you willing to take the risk on price fluctuations?
Does the contract price include a capacity guarantee throughout the year, without a general rate increase ?
There are several other questions to ask, but the above three are a good start and the answers are yes, probably not if the CFO has their way, and maybe.
Yes, is the answer on every lane for the first question. Add to it, capacity is also impacted by weather and other situations a freight provider cannot always predict that will throw a lane out of kilter and drive fluxuations in rates one direction or another.
The reality is to optimize around a contract and spot freight market for price benefits alone require a shipper to break the law of supply and demand, which has not been done since it was first discussed by John Locke in 1691.
Keep in mind also that price is not the end all be all, which we were reminded through a blog from Seth Godin entitled ‘Sort by Price is Lazy’.
The reality is buying based on price or alphabetical, is the best way to purchase a product or service.
TMS Used in the Operation
Basic Business Footprint
The questions that go unanswered in a spreadsheet are:
the cost to operations
accessorial to the P& L
Freight Spot Rate Basics
Freight and logistics work has many tie-ins to various economic concepts. It is a key leading indicator of the direction of a countrys economic growth or contraction, and as you will find, is the basis for spot freight rates.
Spot rates are market driven by the most fundamental economic concept: the law of supply and demand. Under this concept, as demand goes up on a constant of supply the economic value of the commodity will rise, and in times when the demand goes down there is the opposite effect. Freight is more complex than just a simple demand slide up and down the supply curve because on any given day the supply of freight equipment in a given freight lane can also increase or decrease causing not only a slide on the demand curve, but also a shift in supply.
Another way to put it is under the law of supply and demand, price is determined by the interaction of supply and demand: an increase in supply will lower prices if not accompanied by increased demand, and an increase in demand will raise prices unless accompanied by increased supply.
It concludes that in a competitive market, the unit price for particular goods or services, will vary until it settles at a point where the quantity demanded will equal the quantity supplied, resulting in economic equilibrium for price and quantity transacted.
How Much Money Does A Person Working In South Africa Make
Average Monthly Salary139,000
A person working in South Africa typically earns around 31,100 ZAR per month. Salaries range from 7,880 ZAR to 139,000 ZAR .
This is the average monthly salary including housing, transport, and other benefits. Salaries vary drastically between different careers. If you are interested in the salary of a particular job, see below for salaries for specific job titles.
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International Removal Costs And Prices To Usa In 2020
*Box shipping prices are based on self pack
All quotes are estimates including door to door delivery. Actual rates will depend on such factors as packing materials required, actual volume and current exchange rates.
Move costs include full export standard pack and wrap service for household belongings including furniture.
The Over The Road Income Model
The transportation industry treats professional truck driving as piecework.Where most non-salary employees earn their income by the hour, truckers do it by the mile.
You will see pay listed as cost per mile or CPM, which is the rate that you earn behind the wheel. The CPM and the number of miles you can drive in a day determine your earning potential of your OTR job.
Speed limits, negotiating city streets and time at the loading dock, waiting to load or unload you have very definite limits to your income. State and Federal regulations that regulate interstate trucking also place strict limits on how many hours you work.
In reality, with waiting times and heavy traffic, you will most likely find that a realistic distance that you can cover in a day is around 450 miles.
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How And When Should You Pay These Customs Fees
This depends on how your goods were shipped.
1. If shipped via postal service, such as China Post/Hong Kong Post/EMS.
You need to pay the mail carrier and/or go to your local post office to pay any duty and processing fees owed when your package arrives at that post office.
2. If shipped via courier service, such as DHL/UPS/TNT/FedEx.
The delivery courier will either bill you for the duty they paid on your behalf or require payment on delivery.
3.1 If no arrangements were made to forward the goods to your door, you will need to either clear them through customs yourself, in which case you will pay duty directly at the port or airport where your goods arrived. Alternatively, you will need to arrange for a broker to clear your goods. If you hire a broker, they will bill you for their services and any duty they paid on your behalf.
3.2 If arrangements were made to forward your goods to you, you will be billed for any duty owed, and for the services of the broker who cleared them from the entry.
Monitor Contract Opportunity Sites
The federal government uses a couple of different sites to post FEMA loads.
- Federal Business Opportunites A load board and portal that lets vendors review opportunities over $25,000.
- FedBid An online marketplace connecting sellers to federal and commercial opportunities.
- DHS Advance Acquisition Planning System A place to find DHS contract opportunities.
- It also pays to monitor various other online load boards.
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How To Get High
The most important job for any owner-operator or small fleet owner is finding the best-paying freight loads to haul. For many, this task is the most difficult part of owning a trucking company. Unfortunately, many truckers and owner-operators go out of business because they dont know how to find good loads. This article shows you how to get high-paying freight loads. We cover:
Freight Contract Rates Vs Spot Rates
Logistics and supply chain decisions have a direct impact on a companys bottom line and its success to achieve a competitive advantage in the markets they serve.
One such decision companies confront is the question of utilizing the freight spot market or negotiating the freight contract pricing market for their freight and logistics cost and pricing execution strategy.
Both freight spot and contract rates offer shippers a different value proposition, with contract providing the year-long security of price and capacity, while spot is there to assist shippers when their contract carriers are not enough or there is a special need to move freight on a lane a contract price has yet to be negotiated.
Understanding when to employ each will provide the best road to success.
Some believe the spot rate market is a place to save money, but well get to that idea shortly but until then lets jump into the discussion on contract and spot freight rates.
A spot freight rate is the price a freight service provider offers a shipper at a point in time to move their product from point A to point B.
A contract rate is the rate a motor carrier, freight broker or logistics service provider agrees to use when moving a shippers freight for a set lane and its freight characteristics over a set period of time.
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Every Product Travels On Some Type Of Truck
There’s not just one kind of truck, nor is there an “average truck driver.” As consumers, we tend to have the most direct contact with the parcel and delivery workers from UPS, FedEx or Amazon who drop off our packages. But they’re just a subsection of the trucking industry.
There are trucks that haul combined shipments from different businesses and those that transport specialized or dangerous goods like heavy equipment, trash, gasoline or chemicals. There are local and regional drivers who make short trips to service stores and retail outlets. Then there are port truckers who collect cargo in the colossal shipping containers at the docks, and intermodal workers who move freight between different modes of transport, like rail, ship and plane.
Traffic delays are a regular frustration for truckers, like those waiting here to enter the Port of Long Beach to pick up loads. Most long-haul truckers get paid by the mile, not hourly.
If you’re on a barren highway at night and you see a halo of headlights, or you’re boxed into the slow lane on the interstate by an 18-wheeler, it’s probably an over-the-road driver. These long-haul truckers spend weeks or months crisscrossing the country over vast distances from production sites to distribution centers. They’re carrying what are called “full truckload” shipments of more than 10,000 pounds on a 53-foot trailer, which will be either a “dry van” or a “reefer” .
Truckers Move America: Did You Know
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A Strategy To Find Loads And Get You Started
The best long-term strategy to build a profitable trucking business is to find your own shipping clients and work exclusively with them. You should focus your efforts on this objective. However, its not your only objective.
Meet with freight brokers and determine which ones could make good prospective partners. Working with brokers can help you fill up your schedule during slow times.
Lastly, if all else fails, consider using a load board. Just remember that load boards are very competitive so you wont get paid as much as direct shippers and brokers. Load boards can be a good solution for the short term while you build other, more profitable sources.
Register As A Government Contractor
The government often outsources its shipping and hauling needs. Opting to haul government freight can open more load opportunities. You can deliver loads for almost any type of government, whether its a local government, state, federal, or a specific branch, such as the Department of Defense .
The easiest way to get government contracts is to partner with a company that already hauls government freight. But if you want to maintain your independence, you can register as a government contractor yourself.
For more information about becoming a government contractor or acquiring government trucking contracts, visit the U.S. General Services Administration website. Keep in mind that the government might have stricter guidelines about delivering some loads, such as requiring you to be a fleet owner. You might also need to meet the requirements set in the Service Contract Act of 1965, which helps determine wage rates, performance expectations, and more.
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Should You Work With Freight Brokers
Having a few freight broker contacts helps keep your trucking company moving during slow times. However, working with a freight broker comes at an expense. You are sharing the revenues with them, so you will likely earn less than if you were pulling loads directly for shippers.
Keep in mind that finding good and reliable brokers to partner with can be as difficult as finding direct shippers. However, direct shippers will likely pay you high rates per mile.
Trucking Demand Will Be Increased
Before you begin, know that the demand for trucking will be high for some time after a natural disaster. Its a great opportunity to help those deeply affected and in need, while taking on new contracts and expanding a trucking company. Be prepared to be busy, if you want to be. Hours of service are often suspended for these types of hauls, but its not guaranteed, so double check before you start.
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What Type Of Client Do You Want
Before you start looking for high-paying loads, define the type of client you want. This ideal client is determined by the industry you are supporting and the lanes you plan to work.
Many owner-operators skip this step assuming that it is unnecessary. They know a good load or client when they see one, so why bother writing it down?
Knowing your target client gives you a clear perspective on what you want. More importantly, it helps you develop a plan to find them. This step is critical and takes only a few minutes.
Here is how some truckers define their ideal client. Obviously, add or remove items to suit your needs:
Obviously, no client is ever truly perfect, but you should be able to find clients who are very good and pay good per-mile rates. That is how you grow a trucking company and make it successful in the long term.
Licenses Certifications And Registrations
All long-haul truck drivers must have a commercial drivers license . Qualifications for obtaining a CDL vary by state but generally include passing both a knowledge test and a driving test. States have the right to refuse to issue a CDL to anyone who has had a CDL suspended by another state.
Drivers can get endorsements to their CDL that show their ability to drive a specialized type of vehicle. Truck drivers transporting hazardous materials must have a hazardous materials endorsement . Getting this endorsement requires passing an additional knowledge test and a background check.
Federal regulations require CDL drivers to maintain a clean driving record and pass a physical exam every two years. They are also subject to random testing for drug or alcohol abuse. Truck drivers can have their CDL suspended if they are convicted of driving under the influence of alcohol or drugs or are convicted of a felony involving the use of a motor vehicle.
Other actions can result in a suspension after multiple violations. The Federal Motor Carrier Safety Administration website has a list of these violations. Additionally, some companies have stricter standards than what federal regulations require.
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S Of Transportation For Military Cargo
Our vast network of general freight carriers each offer specialized methods of transportation including but not limited to: sea cargo container shipping, air freight shipping, ground service by a common carrier, LTL trucking, truckload trucking, domestic and international shipping, business and residential relocation or moving services, furniture moving services, door-to-door transport and more.
Top 5 Highest Paying Trucking Jobs
Have you been considering making a career change and becoming a truck driver? Or are you currently a truck driver looking for ways to increase your pay potential? If so, you are probably wondering what the highest paying trucking jobs are, as well as which are the highest paying trucking companies. In this article, we will cover the top 5 highest paying CDL jobs, with mentions of a few of 2021s best paying trucking companies in the US at the end.
Below is our list of the current highest paying trucking jobs in the US. Please note that compensation for a given trucking job can differ from state to state and the below is just a general list of what jobs tend to pay better than others.
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