Article: It's Still Not Too Late To Take Advantage Of Lower Shipping Freight Rates

By John Danielsen, ChemLogix, Director of Operations

The decline of freight rates over the past year in all modes of transportation offers logistics departments in virtually every industry an opportunity to reap significant savings. Shippers who have not rebid or renegotiated freight costs over the past year should strongly consider doing so now to lower their existing rates. But don't wait too long or you'll miss an opportunity to take advantage of significant freight rate reductions offered in the market place today. There are already market indications that some freight rates have begun to stabilize for some modes in select regions.

The initial decline in freight rates coincided with the rapid decline of business in the commercial marketplace in early 2008. As freight volumes and load counts plummeted, so did freight rates. Some carriers were forced to place trailer assets or rail cars in storage because of non-usage. Many carriers were forced to sell excess trailers to help reduce overhead expenses. By mid 2008, freight rates in all transportation modes were in decline. An imbalance in imports vs. exports in the United States offered shippers a unique opportunity, not only secure export containers, but to negotiate much cheaper rates for international freight.

LTL load counts and rates were slower to decline than other modes during the recent market decline. Shippers tried to offset operating costs by reducing on-hand inventories and ordering smaller shipment sizes. This caused a reduction in normal full truckload freight and an increase in LTL freight. The increase in LTL freight helped to offset, to some degree, the decline in LTL freight caused by the down turn in market conditions during 2008/2009.