Insights & News

Freight Costs Are Increasing. Here’s Why (And What You Can Do About It)

Open road ahead

Posted On May 2, 2018

According to the U.S. Freight Bank Payment Index, first-quarter freight spending in 2018 is higher than it’s ever been since the Index started collecting data in 2010. Spending was up 1.4% compared to the fourth quarter of 2017, and 24.5% annually. In other words, it’s getting more and more expensive to ship your goods using both less-than-truckload and truckload shipping.


A hot domestic economy is driving increased demand. That, coupled with the ongoing truck driver shortage, means that the supply of carriers is down while the demand for those carriers is increasing. When supply is low and demand is high, prices always increase—and the dynamics behind the increased costs aren’t likely to change anytime soon. In the Freight Bank Payment Index report, American Trucking Associations Chief Economist Bob Costello wrote that, “The continued growth in the spend index both sequentially and year-over-year reflects a tight truck market, likely the tightest ever since trucking was deregulated in the early 1980s.”

Costello’s assessment explains what those of us in the logistics, supply chain, and freight business already know: Driver shortages and increased freight costs are likely to be the new normal, at least until the driverless trucks we’ve been promised finally hit the road. Simply waiting and hoping for freight costs to drop won’t work.

Instead, your shipping department needs to rethink the way you approach transportation management. Leveraging technology is a good first step. Flat World Supply Chain’s less-than-truckload (LTL) solutions that help you attain optimum service performance, leverage volume to ensure competitive prices, and optimize multiple base rates are all ways to better utilize a company’s resources.

And our solutions don’t begin and end with technology. Our platform is supported by dedicated account management and personal service motivated by a relentless focus on excellence.

Of course, Flat World Supply Chain offers solutions for truckload (TL) shipments, too. Our technology helps provide clients with the optimum combination of capacity, price, and ease of engagement, and our team helps remove the hassle of obtaining transportation services for your full truckload and inter-modal shipments.

Freight isn’t the only part of your supply chain feeling the pressure that results from supply not keeping pace with demand. Space within containers is increasingly at a premium, which requires shippers to be a little more creative—or, as we like to put it, play a real-life, high-stakes game of Tetris when filling containers. Our Pipeline™ Transportation Management System (TMS) will help improve cube optimization, helping you keep a little more of your shipping budget in your company’s pocket and a little less in the pockets of carriers.

The report from the U.S. Freight Bank Payment Index is not an anomaly. The words “highest annual spend ever” that were included in this quarter’s report are likely to be included in every quarter’s report, at least for the foreseeable future.

But that doesn’t mean your company can’t remain competitive even as rates increase. The Flat World Holdings family of companies (Flat World Supply Chain, Ram International, Ram Custom Crating, Prologue Technology, and Flat World Hospitality) combine groundbreaking technology with a culture focused on excellence—and we’re here to make sure you continue to thrive in the new “normal” that exists in your supply chain.