Freight Shipping Rates: Tight vs. Soft - GoShip

Tight Rates vs. Soft Rates: How to React to Freight Shipping Market Shifts?

Posted on:
Jun 07, 2022

Modern logistics requires manufacturers and retailers to balance under different circumstances, including changing freight shipping rates. Learn how to do it within your budget.

Freight shipping rates cycle

The customer demand highs and lows drive the nature of freight rates from season to season. These shifts form a complete cycle of pricing policies in the supply chain and logistics during the year. Any business owner can go through the rollercoaster of freight rates affected by various factors, even when keeping your business stable.

Understanding the freight shipping rates cycle will help you recognize the early signs of market shifts and modify your logistics strategy dynamically.

Tight freight shipping rates

The tight market brings increased shipping rates due to the lack of moving capacity. When the demand for shipping exceeds the supply, delivering your items at reasonable pricing gets tough. Knowing that peak shopping seasons result in higher shipping rates, it’s vital to practice time management and budget planning before entering the tight market.

Soft freight shipping rates

The soft market makes carriers lower their prices to get a shipment and avoid downtime. It’s unprofitable for shipping services to give up loads even if they bring less income. During the soft rates period, you’ve got a better choice of trucks at affordable pricing. It creates an excellent opportunity for business owners to arrange a spot shipment without paying extra for the urge. 

How to predict freight rate changes?

Sometimes, it’s challenging to follow fast market shifts, which causes unwanted shipping expenses. There are several practices to help you cope with transportation rate fluctuations.

Follow customer demand

There’s a clear correspondence between demand spikes and transit pricing shifts in the logistics industry: when the request grows, so do the shipping rates and vice versa. It’s essential to examine the popularity of your products to see which of them empowers your supply chain. You’ll be gripping the best freight shipping offers previously outlining your sales.

Demand forecasting is an effective method of reacting to freight rate changes. Evaluating your sales analytics can often help you gain insight into future purchasing volumes and understand how many shipments you’ll have to complete. By doing so, you’ll get an image of the required capacity and will be able to plan your shipping budget more precisely.

Consider shipping seasonality

The shipping capacity grows and decreases appropriately to the transportation needs that rely straight on the logistics seasonality. For example, the quiet shipping season provides retailers with soft freight rates due to the lower post-holiday demand for transportation units and relative downtime that carriers experience. The following produce season causes increased shipping rates for those selling mainly foods and other edible perishable products.

Peak and holiday shipping seasons reach every business owner with their high rates and tight moving capacity. Since buyers are massively getting ready for holiday shopping, it might be challenging to get many last-minute shipments or arrange transportation on the spot. Plan most of your deliveries and calculate the approximate truck capacity you need to survive the most intense logistics seasons.

Still, it’s nearly impossible to organize all of your shipments in advance. Sometimes, you’ve got to react quickly to the market shifts and adjust your logistics strategy to customer needs. Studying contract and spot rates allows you to understand freight pricing options better and remain flexible during the busy moving season

Count weather conditions

Weather can be a significant contributor to shipping market variations. Not many carriers are ready to move loads in unstable weather conditions, which tightens the rates considerably. Although you can’t predict the natural obstacles emerging, especially during long-distance transportation, try to avoid the most difficult periods that automatically exclude a big part of available shipping services. 

If you still have to ship the goods despite the harsh weather, try to maintain communication with your carrier and develop a network of partners ready to cooperate. However, be prepared for possible shipping disruptions caused by weather. Often, they lead to heavy traffic and thus extend the delivery time. In case of immobilization, vehicles require time for technical service.

Observe transportation capacity

With various modern digital tools, you can monitor shipping capacity throughout the year and thus find reliable partners. It will help you understand how tight and soft markets affect trucking extents and book shipments at more beneficial rates. Therefore, you’ll always be able to get a suitable truck, particularly if your goods require special transportation conditions like temperature regulation, strong protection, etc.
The easiest way to get a tailored logistics experience is to connect with an expert shipping service like GoShip, which has many carriers centralized in one place. We can provide a wide choice of professionals that respond to your transportation requirements. Besides, you can compare the real-time shipping rates and get a free LTL quote in just a few clicks.

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