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Kinghood International Logistics Inc.

Add:16851 Knott Ave, La Mirada CA 90638

Contact:Robin  Yan

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US Shippers Seek Truck Rate Deals Now Before Potential Spike
Kinghood International Logistics Inc | Updated: Feb 20, 2017

The first quarter may be a slack season for truck freight as the industry catches its breath after the frenzied winter holidays and gears up for the spring surge in home goods sales, but US shippers are moving quickly to seal new pricing contracts with trucking companies.

  Eager to avoid potential rate increases in the second half of the year, shippers are sitting down with trucking providers now to talk pricing. And they’re putting more business up for bid to protect savings gained in last year’s weak freight market, when their pricing muscle was mighty.

  As truckers push for higher rates, shippers also will bid more frequently, reconfiguring shipping networks and looking for savings by shifting freight among various modes. Shippers are finding they have to stretch further when reaching for trucking savings in 2017.

  That stretch could entail some big changes. Shippers that hit roadblocks in talks may need to rethink the way they contract motor carriers. They may have to look beyond rates for new ways to optimize freight flows, cut costs, and be a so-called shipper of choice to their trucking partners.

  For now, “we’re just swamped with bids,” Ben Cubitt, senior vice president of engineering and strategic carrier management at logistics company Transplace, said in mid-January. That’s after Dallas-based Transplace handled a record number of bids for shippers in 2016. 

 “What we saw last year was that lots and lots of shippers went to bid. Any shipper that regularly went to bid did, and some shippers that usually don’t put their freight up for bid did, too,” he said.

  After that burst of bidding, “We thought it would calm down” in the first quarter, Cubitt said.

  No such luck. Shippers can read the writing on truck stop walls: Spot market truckload rates have been rising, while truckload contract rates have been flat. That’s usually a sign contract pricing is about to rise. Most indicators point to a healthier US economy and higher freight demand ahead.

  “Aggressive shippers are trying to get two-year contracts” from trucking partners, Cubitt said. “There’s a belief we’re in a price escalation phase. People want to lock in. When we get new customers, their first question is can they bid freight for two or three years and lock rates in.”

  In the truckload business, one-year contracts are still more common than long-term deals. Trucking analysts are projecting truckload rate hikes ranging from 1 to 3 percent, which could help propel less-than-truckload and intermodal rail pricing higher as well. “We’re seeing a bit of urgency to go to bid now, with old and new clients, based on expectations of reduced capacity in truckload and other surface markets in 2017,” said Brian Broadhurst, vice president of transportation solutions for Spend Management Experts in Atlanta.


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