Received a quote and noticed that it’s only valid for 30 days? Or perhaps you’ve called back to pay for a quote, only to be told that the 30-day period has passed and the price has changed.
What’s going on?! Why do freight quotes have an expiration date?
We’re here to explain. Let’s go.
Freight Quotes: An Explanation
We’ve all gotten quotes for various services before, right? Insurance, carpentry, plumbing… Well, a shipping quote isn’t much different.
Freight quotes outline how much it’ll cost to get your goods from their point of origin to their destination based on the information you, the shipper, and the carrier or broker gave.
You can receive and compare quotes from different forwarders online, and each should outline exactly what it’s covering and how; surcharges, add-ons, and so on. The quote should feature information about where your cargo is being shipped to and from, the mode of transport and type of packing, and full shipment details, like weight, dimensions and a description of the goods.
What Factors Affect A Shipping Quote?
Numerous elements influence the cost of shipping cargo.
Mode Of Transport
The type of transport you choose will have a huge impact on your quote price. For example, we know that sea freight tends to be the cheapest way to import and export goods, but how cost-effective it is depends on other factors, too.
Speed Of Service
How quickly does your consignment need to get to its destination? If the answer is yesterday, expedited shipping could be for you. But this method, where your cargo is given priority handling during transit, is far more expensive than standard shipping, bumping up your quote significantly.
Shipping Rates
Freight rates themselves can vary significantly due to cargo type, shipment weight and density and container cost. You can read all about what determines freight rates in more depth here.
Other Considerations
As well as everything listed above, a freight business must cover its own costs, including admin fees, general business costs, marketing, employee wages and, hopefully, make a profit.
So What Changes A Rate After 30 Days?
It’s not that 30 days is some kind of magic sweet spot. In fact, a quote can be issued, and the very next day, something could happen that causes costs to spike. In this instance, we’d be the ones out of pocket.
30 days is just a common holding term for most quotes across many industries. It’s a way of having the customer’s back, limiting confusion and encouraging business. Some companies that suffer from fluctuating costs only offer 7-day quotes to try and avoid such an issue – you might have seen these before.
And it’s also important to note those costs can also go down.
What Could Happen To Impact Rates?
There are plenty of factors that could cause rates to rise or fall at any point.
Exchange Rates
The exchange rate, telling us at what rate one currency can be exchanged for another, changes daily. This impacts freight rates because international payments sit behind plenty of shipments, and they happen at different points of the journey.
Most carriers impose a CAF, or Currency Adjustment Factor, to simplify this, which is a surcharge added to the invoice. This accounts for changes in the exchange rate and enables clients to be billed in local currencies, and carriers can charge different percentages of CAF depending on the trade lane and currency pairing. Find out more about how the exchange rate affects freight rates here.
Fuel Costs
If you drive a vehicle, you’ll have experienced the sometimes volatile fluctuation of fuel prices. This happens in the shipping world, too. So it makes sense that a spike in fuel costs influences shipping rates because carriers have to spend more to perform the same service.
Economic Change
We have recently seen world economics impact freight rates in real-time. The war in Ukraine, for example, is putting further pressure on the shipping sector, which has resulted in port congestion and longer transit times.
War affects shipping in many ways, the most notable being shipping routes being shut off and areas of the ocean, land and air becoming impassable or unsafe to enter, meaning alternate routes need to be found.
The cost of living crisis can also come under fire. Rising costs of essential goods, as well as a reduction in shipping capacity still ongoing since the pandemic, means that shortages of goods and supply chain issues are rife.
Unanticipated Issues
Sometimes, something happens that is out of anyone’s control. And boy, does it makes waves in the shipping industry.
The Suez Canal is a 120-mile-long artificial waterway that provides vital passage for an average of 50 container ships every day. And in March 2021, it was blocked for 6 days by one single ship.
This blockage affected more than 300 vessels and reportedly held up an estimated £7.6bn of trade each day the canal was impassable. That translates to over 5 million pounds of trade lost every minute!
Strikes
A lack of workers across the sector, from truck drivers to rail workers and postal staff to warehouse employees, can negatively impact rates. Fewer staff members are available to help pack, unload, check documents, clear cargo through customs and get it moved on to free up port space = huge delays for your goods.
Container Shortages
There are still not enough containers in the right places worldwide. Strikes, world events, lack of digitisation and driver shortages are just some of the reasons why you’ll end up paying more to get the shipping space you need.
Want to know more about container congestion? Read this blog.
Why Limited Validity Matters
Shipping quotes with limited validity might seem frustrating. You might wonder why you can’t expect the same great shipping rates next month that you’ve experienced this month.
In reality, quotes having an expiration date protects everyone involved; you, the client and the business you’re using to ship your cargo.
The window gives you ample to gather and compare other quotes to make sure you’re getting the most bang for your buck. It also means you’re safe from big, unexpected jumps due to market and exchange rate changes, and these can happen in an instant.
And finally, limited validity benefits you because you don’t end up stuck paying a higher rate if there’s been a downshift in prices.
Shipping Quotes With Expiry Dates Work In Your Favour
Rates can change on a dime – and this year has really demonstrated that. Having 30 days fixed for your quote means you can shop around and get back to whoever you select in good time.
Wondering what determines freight rates and how you can lower yours? Get in touch with Millennium for expert advice from our friendly team.