How to Be Accurate in Your Freight Quote Calculations

A freight quote is the estimated price to ship a load of goods. In the past, a freight quote would be manually calculated by carriers or logistics providers taking into consideration a wide range of factors.

While your choice of shipping partner has a great impact on your shipping rates, there are some aspects that are consistent no matter who you choose to move your freight.

Route Optimization

A game-changing tool for field service businesses, route optimization takes into account all variables to generate a delivery plan that is both safe and cost-efficient. It factors in customer time windows, order quantity and weight, vehicle capacity and storage capabilities as well as egress/ingress restrictions.

It also considers business practices and policies, ensuring all deliveries are done within legal parameters. Route optimization software can also factor in weather conditions, traffic blockages and road closures to create an ETA for every delivery. Manual route planning cannot be done in this way, leaving room for human error and delay.

Using this kind of technology can cut planning time by up to 80%, reduce fuel costs and driver wages, and improve employee retention through fairer workloads and more on-time deliveries. It can also help businesses meet their sustainability goals, which are a key priority in today’s environment.

For example, for on-site service businesses like cleaning and waste management companies, route optimization can help them deliver more orders in a single day. This reduces operational costs and makes them more profitable, while creating a happier customer base. It can also help them cut down on maintenance costs and make their drivers more efficient by reducing driving times. It can even help them save money on fuel expenses, which is a huge savings in the long run.

Distance Calculations

For a freight quote to be accurate, you need to know how to calculate distances between two points. This is especially important when calculating for full-truckload (FTL) shipments, as they’re priced on a per-mile basis and can be subject to additional accessorials like fuel surcharges. This makes knowing how to do these calculations well an essential part of becoming a freight broker.

To calculate distance, you first need to identify the x- and y-coordinates of two points. Then, use the distance formula to find the length of the line that connects those two points. You can also use this formula to find the distance between a pair of three-dimensional coordinates, though this is less common.

This formula is actually a variation of the Pythagorean Theorem. It’s the length of the hypotenuse of a right triangle, with aa and bb representing the shorter sides and cc being the longer side or diagonal.

To apply this formula, you’ll need to subtract the x-coordinates of point A from the x-coordinates of point B. You’ll then square the difference and add the y-coordinates of point A to the y-coordinates of point B. Then, divide the sum of these numbers by 2 to get the length of the diagonal between the two points.

Carrier Negotiations

Carrier contracts often require negotiation to get rates that match your shipping goals. During negotiations, you’re competing against an army of carrier employees that are trained to maximize profit for their employer. Using comprehensive data, industry insight, and detailed analysis of your own shipping profile can arm you with what you need to secure agreements that meet your business objectives.

To optimize your freight costs, start with a solid understanding of what you currently spend on base rates and surcharges. Be clear about what you need to achieve in the contract, and prepare a list of “must-haves” and “nice-to-haves.” Review your shipping history and be prepared to walk away if the carrier refuses to give you what you need.

Negotiating with a clear understanding of what you need can help you set more realistic expectations and avoid getting sucked into the cycle of back-and-forth negotiations. Having an understanding of what you’re willing to accept can also help you negotiate more competitively.

To effectively negotiate your contract, consider setting a time limit on the process and be prepared to walk away from the table if the process gets too drawn out. Carrier account managers have your shipping history inside and out, so don’t let them take advantage of your good natured disposition by stretching the negotiating process. Consider bundling items that you’re able to agree on together, and focus on the items that can most positively impact your bottom line.

Pickup and Dropoff Locations

If your freight shipments require special handling or have unusual pickup/dropoff locations, you will need to tell your freight broker these details. If you don’t, the final bill could be much more expensive than you expect.

For example, you may need to use a lift gate at some of your pickup and dropoff addresses. This is an accessorial fee and must be added to your freight quote. It’s important to include these fees in the initial quote, so there are no surprises later.

Another important factor to consider is the density of your shipment. Unassembled furniture is denser than assembled furniture, which will lower your freight classification and save you money on the overall shipment cost.

Parcel is the most common form of freight shipment, and it’s used for a wide range of consumer goods, from shoes to electronics to home improvement tools. Parcel is also the most common form of freight shipped to businesses, with 80% of all business-to-business shipments delivered via parcel.

When arranging a delivery for your freight shipment, make sure to choose the most convenient pickup/dropoff location possible. Doing so can reduce the number of missed deliveries, which are costly for both you and your customer. It’s also a great way to provide a consistent and convenient pickup/dropoff experience for your customers.