Why Are Rates Lower in Certain Places?

Certain regions in the United States experience seasonal demands that can cause rate spikes. For example, Texas, Florida, and Georgia will experience rate spikes in the Spring when seasonal produce begins to ship. These spot market truckload rates must take into account the flood of truckloads in the area, considering that these loads are time-sensitive. You can expect to see rate spikes of 20-40% during this 90-day period in those regions.

Additionally, before holidays and “end of month” and “end of quarters” time periods, you will see freight availability trending upward. This also causes spikes in the spot market.

Another thing that can really affect rates is the capacity dynamics: the number of loads vs. the number of available trucks to haul them. This is supply and demand. If there are 100 loads and 500 trucks, companies will compete for those loads, taking lower prices because they must get trucks moving and out of those areas. On the flip side, if there are 500 loads and 100 trucks, shippers will compete for trucks, allowing for more money to haul their freight so that they will be the first to get trucks into their docks.

You also have to keep in mind top four things that freight rates are based on: Size/weight, Freight Class, dimensional weight and distance being traveled. If what is being hauled in is some heavy construction materials for their local projects but coming out is a load of miscellaneous light weight products, there rates are not going to be the same. Also, the distance has the be taken into consideration. Did you travel 1000 miles going into the east coast, but the load you took out only 600? Then these rates are not going to be the same.

Another thing that effects freight rates is trying to stay competitive within a region. The rates are often set by the industry and you have to stay within a competitive range to be able to obtain the loads.

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