Top 10 Threats to Transportation Budgets

In recent years, companies have experienced how badly going over their transportation budget can hurt. Although not to the extreme levels seen when pandemic freight rates reached unprecedented highs, companies continue to spend more than they expected on trucking logistics for many reasons. As a result, transportation costs have remained under scrutiny from the C-suite ever since.

In their quest to protect margins, companies are right to focus on transportation budgets. Transportation logistics can make up anywhere from 25% to 45% of the cost of goods sold. Here are the main reasons companies exceed their transportation budgets and tips for how to avoid them.

Ten Major Causes of Transportation Budget Overruns

1 – Low Tender Acceptance 

Low acceptance of contract rates by a primary carrier is a major threat to transportation budgets. Falling back on your number two, three, or four carriers brings the risk of higher rates and lower service. If shippers fail with their backup contracts and end up resorting to the spot market, the exposure to potentially high rates can also cause costs to soar beyond projections. 

Shippers can build performance requirements directly into their contracts. Including language like: “Carrier must maintain a minimum 85% tender acceptance rate on contracted lanes” can protect shippers against repeated low tender acceptance. Choosing carriers with high tender acceptance is critical during the RFP process. Not doing so, sets budgets up for failure. 

2 – Spot Rate Fluctuations 

Without a freight contract, shippers are at the mercy of rates on the spot market. When rates are low, there are benefits, but when they peak, they can spend much more than they projected.

Freight contracts protect shippers from unexpected spikes. Combined with accurate forecasting, contract pricing adds predictability to transportation spend. When negotiating contracts, shippers can include rate protection clauses that lock pricing for a set time with review triggers if market rates shift dramatically.

Low-volume routes, seasonal shipments, or irregular freight may not attract competitive contract bids from carriers. In these cases, building relationships with multiple carrier types becomes critical. Brokers often have better spot market access during capacity crunches, while asset-based carriers may offer more stability during rate spikes. The key is having options so you’re not forced to accept inflated rates from a single source when capacity gets tight.

3 – Supply Chain Disruptions 

Disruptions ranging from pandemics and hurricanes to port strikes and canal closures are a top reason shippers’ exceed their transportation budgets. Although events like these that spike rates and constrict capacity are outside of shippers’ control, there are certain measures companies can take to protect themselves.

Contract rates are helpful, along with building carrier relationships across different geographic regions and transportation modes. Negotiating a fair and stable price with a diverse carrier base, shippers can insulate themselves from exorbitant rates and other disruption risks.

4 – Over-Reliance on Single Carriers 

There are reasons shippers may be happy relying on a single carrier. Often, the last-minute nature of orders makes using the same carrier attractively convenient. However, extending that behavior can lead to runaway costs. 

“It’s prevalent for lower volume shippers who don’t do a formal request for proposal (RFP) to just rely on one or two carriers to accept the loads they come across” says Scot Van Zeeland, Sales Manager at WSI. “Unfortunately, these shippers often go over budget.”

The exercise of ensuring a fair price is critical for controlling costs. Without a general knowledge of where the market is and some healthy competition, shippers set themselves up for price gouging. Better forecasting can help shippers get ahead of orders and ensure there is time to shop around, compare bids, and negotiate.

5 – Inaccurate Forecasting 

Some transportation budgets are born to fail. Simply taking a yearly budget and dividing it by four ignores the cyclical nature of trucking. Consequently, you’ll always be under budget in slack periods and over during peak.

Many carriers make up to 50% of their revenue in Q4. Poor forecasting leads to poor planning and unexpected, last minute expenses. According to Van Zeeland, you could be paying 20% to 50% more for additional trucks you did not plan for. Shipper should consider the cyclical nature of their business down to the months, weeks, and busy days if needed.

6 – Accessorial Charges 

Additional and unexpected fees for detention, out of route, and redelivery can be considerable. Detention fees for multiple hours and multiple drivers when docks are backed up can add up. Instead, negotiate caps upfront and clarify advance notice requirements. Accessorials are largely avoidable or controllable through volume forecasts that ensure adequate warehouse staffing and communication that alerts shippers, drivers, and receivers of delays. 

7 – Retailer Chargebacks 

Fines for missed appointments, late deliveries, or other on-time-in-full violations from retailers can mount, especially if they become a habit. Missing delivery times at a Walmart or Target makes shippers subject to fines.

Mitigating the risk of chargebacks ties back to carrier performance and whether you have the right carriers hitting the right service metrics for you. Choosing the lowest-cost carriers can come with a service tradeoff that costs you more in the end. Track carrier on-time performance by retailer and drop any carrier below 90% before chargebacks become a pattern.

8 – Expedited Rates 

During peak season in Q4 when volumes surge, the need to make expedited shipments can cause transportation costs to spike. A lot of solo trucks become team drivers that can haul around the clock during the last 6-8 weeks of the year. But expedited rates are transportation budget-busters that can often be averted through careful planning.

When expedited shipments are unavoidable, call your regular carriers first. Existing relationships often get you 20-30% better rates than going straight to the spot market.

9 – Hidden Fees 

Trucking is a challenging and dynamic field, and there are legitimate reasons for unexpected freight charges to come up. The cost of surprise fees can be significant, and this is especially true in drayage, where shippers may have to pay for chassis rental, overweight permits, or escort fees.

Communication of potential fees in advance can help shippers minimize costs. Advance notice gives you options—reroute to avoid fees, get budget approval, or negotiate alternatives before you’re locked in.

“If you will be charged for a layover, you should know in advance, not after 8 hours of waiting. Without setting protocols in place, you’re opening yourself up for exploitation and fees” Van Zeeland says. In addition to clear communication standards, shippers can also request advance notice for extra charges over a set amount, with written approval required for fees exceeding their max.

10 – Fuel Surcharges 

Diesel is a significant cost of trucking and prices have risen 143% since 2020. When prices spike unexpectedly, shippers pay. Because there is not a clear industry standards, carriers can add surcharges that may surprise shippers.

Choosing a surcharge agreement that ebbs and flows with fuel prices is key, he says. A weekly or monthly adjusted surcharge protects you from overpaying. Especially for short hauls, Van Zeeland recommends flat rate agreements that protect you from unexpectedly high fuel surcharges. 

Taking control of your freight budget  

Recognizing these budget drains is the first step toward controlling your transportation costs. The most successful shippers take a proactive approach, building strong and diverse carrier partnerships, investing in accurate forecasting, and establishing clear protocols to minimize surprise fees.

Ready to stop budget overruns before they start? Talk to the transportation experts at WSI.