Cargo - Shipping Costs

Shipping Costs

Often, an LTL shipper may realize savings by utilizing a freight broker, online marketplace or other intermediary, instead of contracting directly with a trucking company. Brokers can shop the marketplace and obtain lower rates than most smaller shippers can obtain directly. In the LTL marketplace, intermediaries typically receive 50% to 80% discounts from published rates, where a small shipper may only be offered a 5% to 30% discount by the carrier. Intermediaries are licensed by the DOT and have requirements to provide proof of insurance.

Truckload (TL) carriers usually charge a rate per kilometre or mile. The rate varies depending on the distance, geographic location of the delivery, items being shipped, equipment type required, and service times required. TL shipments usually receive a variety of surcharges very similar to those described for LTL shipments above. In the TL market, there are thousands more small carriers than in the LTL market. Therefore, the use of transportation intermediaries or brokers is extremely common.

Another cost-saving method is facilitating pickups or deliveries at the carrier’s terminals. By doing this, shippers avoid any accessorial fees that might normally be charged for liftgate, residential pickup/delivery, inside pickup/delivery, or notifications/appointments. Carriers or intermediaries can provide shippers with the address and phone number for the closest shipping terminal to the origin and/or destination.

Shipping experts optimize their service and costs by sampling rates from several carriers, brokers and online marketplaces. When obtaining rates from different providers, shippers may find quite a wide range in the pricing offered. If a shipper uses a broker, freight forwarder or other transportation intermediary, it is common for the shipper to receive a copy of the carrier's Federal Operating Authority. Freight brokers and intermediaries are also required by Federal Law to be licensed by the Federal Highway Administration. Experienced shippers avoid unlicensed brokers and forwarders because if brokers are working outside the law by not having a Federal Operating License, the shipper has no protection in the event of a problem. Also, shippers normally ask for a copy of the broker's insurance certificate and any specific insurance that applies to the shipment.