Why We Don't Do Long Term Contracts or Freight Quotes
The extreme market volatility we are seeing over the last 2 months is exactly why we refuse to entertain long term freight contracts or freight quotes. I was recently asked to provide a freight quote for the duration of 2026 on a few lanes, and I respectfully declined the work. I did offer to quote the existing lane for the current quote, and take it week by week as is how we operate, but this offer was decline as the customer wanted a quote today that would last through the year. I have met many brokers in my career that use this method to secure a customer and every single time it has back fired on them. Freight rates change constantly. If the fuel goes up rates change, if new regulations are imposed on the industry, rates change. If there is a market boom due to increased GDP in the economy, rates change. Every load tender we issue, every freight quote we provide to our existing customers, all have the stipulation attached to them that our freight quotes are good for 7 days only. It would be so easy to land 5 or 10 new customers using the guaranteed, long term freight quote method and it's usually the brokers or even carriers that use these methods that boast the most about how easy it was for them to obtain new customers and contracts. At the end of the day though, these are the same businesses that usually end up in the RED when volatility strikes. Freight rates have sky rocketed over the past couple months, and our rates to our customers have reflected that. Operational costs to carriers are up due to surging fuel prices, and capacity is down due to reinforced industry regulations, creating turmoil throughout the entire industry. Do my new prices guarantee me work? Absolutely not. If anything, customers have been either holding off on non-perishable freight, or searching elsewhere for the cheaper prices, usually winding up with a sub par carrier who create hardships for them due to poor service quality. The companies who are locked into fixed price long term contracts, or even those with fuel surcharges included in their contracts are the ones hurting the most right now. Even with a fuel surcharge included, its not enough to keep up with the current freight rate surge and these agents are literally going into the red just to move the load and keep their customers orders fulfilled. This is not a winning business model for a freight broker or a direct carrier. Yes you will lose freight opportunities during rate spikes, but making no money is better than losing money no matter which side of the freight industry you are on. Yes it is in your best interest to cut your profit margins during times like these to keep your customers as happy as possible, and to keep some form of revenue stream coming in, but you cannot sustain as a company with a business model that is losing you money day after day, especially if the upward trend is a long lasting one and there is no market correction. At the end of the day Stay Away from long term rate contracts! Your business will thank you later.