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Capacity in Seasonal Shipping: How It Affects Produce Season Prices & More

capacity rates produce 2015
Capacity is Key
***This is Part III of our blog series on shipping produce season 2015. Check out Part I where Andy discusses what kind of produce ships out of Texas, and Part II where Matt alerts you to some shipping changes to look out for this year. And download our 2015 Guide to Produce Shipping for FREE! We now know what makes up Texas Produce Season. But before we can really understand what that means for your Texas freight, we have to understand the concept of truck markets. As discussed in previous blogs, your full truckload rate is affected by many factors. But when we are talking about markets, it almost always boils down to capacity. It all stems back to the basic principles of supply and demand. If there are a lot of trucks wanting to go the same direction, the rates decrease. Conversely, if there are fewer trucks in the area, the rates will increase. The market is constantly fluctuating throughout the year as we progress through the different seasons (produce season and Christmas tree season) and these “seasons” carry a heavy effect on the key factor of the market:  Capacity. Capacity is based on a load to truck ratio. This means that if there are ten loads to every one truck in a specific market, that one truck can be more selective about which load he wants to take. Chances are he will take the highest paying load or the load that gets him closest to his next high paying load. This drives the overall spot market rate up, and the shippers and/or freight broker are forced to increase the offered rate in order to theoretically to win that one truck. On the other side if there are ten trucks to every one truck on a specific lane, the opposite occurs. All ten trucks will be fighting over that one load, causing the rates to decrease. This is a great position to be in as a shipper! At FreightPros, our truckload team is dedicated to reading the current market trends and negotiating the lowest rate possible for your freight. “But what factors determine the load to truck ratio?” you may ask.  The answer to that question is multifaceted. The most determining factor is how many loads are expected in the area. The flip side of that being, how many loads are shipping out of the city that your freight is delivering to? Carriers want to be confident that they will be able to find another good paying load as soon as they are done delivering your freight. If your load is delivering to an unfavorable location, such as a more remote city or a heavily saturated freight market, the carrier will likely try to negotiate a higher rate on your load. Delivering to a remote location almost always guarantees that carrier will have to drive empty (or “dead head”) to the closest large city to pick up another load. Chances are, the carrier will try to negotiate these “dead head” miles into your rate.  For example, if your load ships from Houston, TX to Macon, GA, that is only 933 miles. But the carrier will most likely have to pick up his next load from the closest large city, Atlanta, GA. This adds an additional 145 miles to the carriers trip, and these miles can affect the rate. Finally, the amount of carriers based in the area is a large determinant of capacity. This is tied into the factors discussed above, as most carriers want to be based in or around high-traffic areas. With a lot of carriers based around your freight, it helps ensure there are always trucks looking to take loads on their way out, or catch a “back haul” that will bring them home. So if your delivery location is in or close to a large metropolis (such as Los Angeles or Chicago), this back haul market plays largely in your favor. At FreightPros, we are dedicated to finding the lowest freight rate possible with only the most trusted freight companies and carriers. Our Truckload Team is well educated on the current truckload markets and armed with all the best negotiating tactics to play these markets in your favor. CC image courtesy Rego Korosi via Flickr

Wes Koch

Wes Koch is a member of the Full Truckload Team at FreightPros. When he is not booking freight, Wes enjoys almost any sport, traveling and just about anything to do with the outdoors. As a native of far south Austin, Wes could not imagine living anywhere else.

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