Understanding traffic lanes is one of the most important things every new freight broker agent or new owner-operator has to learn. The movement of freight within the United States runs on shipping lanes, or traffic lanes, and lanes are the basis of what it costs to ship products and what loads pay the trucking company that moves them. Moving freight from one state to another on approved interstates, highways and other DOT-approved roads is called a traffic lane or shipping lane.
The direction the freight is going, how easy the drop-off location is, and how much freight is available to pick up afterward largely decide what a lane pays the carrier. Trucking companies are always looking for the next load after the first one delivers. That's what draws multiple carriers into certain regions, and it's what sets the value of a lane and what it will pay carriers who want to deliver there.
Deadhead
Another factor to consider is deadhead. You'll hear the word every day in freight, and it can be confusing. Deadhead is the empty distance between where a truck delivers its last load and where it picks up the next one. Many freight brokers and owner-operators consider deadhead the make-or-break point, because carriers don't want to spend time and fuel driving empty to the next load.
Good brokers and dispatchers work hard to keep deadhead down. A good traffic lane has less deadhead because freight is more available, which makes the next load easier to find. Texas is a good example. Many carriers try to keep deadhead short, often under 100 miles, because the Hours of Service (HOS) rules limit how much driving and on-duty time a driver has for pickup and delivery before a 10-hour break is required.
Choosing your lanes
Every new freight broker agent and owner-operator has to decide which traffic lanes work best from where they are, and build their business from there. Brokers need to talk with carriers and understand where they want to run and which regions they're comfortable in. Freight agents and brokers should listen to the carrier's needs, because without the carrier you can't move the load.
Traffic lanes affect the cost of moving freight for several reasons. Below are two of the biggest. Knowing what drives the cost will help you understand the rates to move freight.
Two key factors that affect lane rates
1. State locations, regulations and highway systems
Where the lane runs matters. Driving through the Rocky Mountains costs more than running the flat interstates of Texas. Florida is another example: it's a peninsula, so in most cases a truck leaves the state the same way it came in. Terrain affects fuel economy, and fuel is one of the biggest costs on any load. Fuel tax rates also differ by state (carriers report them through IFTA), and toll costs vary by state and highway. The more tolls a truck has to pass through, the more the carrier will need in rate.
Carriers also look at how far the drop-off is from a good lane or interstate. If a driver has to go an extra 25 miles each way through a few small towns, that affects the rate too. Carriers want to deliver with ease and pick up with ease. Knowing these states well is where a freight broker agent can offer real value to carriers. Congested highways, multiple tolls and hard-to-reach drop-offs decide whether a load is worth it to a carrier. Plan around those issues and the load works better for everyone.
2. Availability of freight
Lane prices are driven by the number of loads available in an area compared with the number of trucks available to move them. Florida is a good example. A load into Florida often pays more than many other states, because there are fewer loads coming out. Coming out of Florida usually pays less, because there are more trucks than loads. That makes it a shipper's market going out and a carrier's market going in.
Texas is another example. Freight coming out of Texas often pays well because there's plenty of it, so there are more loads than available trucks and a carrier can usually find a decent load going out. Going into Texas, the picture flips, and freight often pays about average. The same cycle plays out in every state, and every broker and owner-operator has to learn each market.
Other factors
There are many factors in traffic lanes, and it helps to work with people who know them well. Beyond the points above, weather and time of year matter. Seasons affect shipping, and each season brings different freight from different industries.
Getting help with lanes
LFS's dispatch service (8% of each load's gross) includes freight research and lane planning.
Whether you're starting out as a freight broker or trucking company, or you've been in freight for a while, knowing your traffic lanes and how to use them makes a real difference to your margins.
Read more on 5 key areas freight brokers must understand about traffic lanes.
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