In the world of steel sourcing, price per ton is only part of the story. Freight costs can quietly erode margin, delay delivery, or compromise quality if not planned properly. For purchasing specialists at service centers, understanding the true cost-to-land steel is not just a finance function—it’s a procurement imperative.
Why Freight Matters More Than You Think
Steel is heavy, bulky, and subject to regional logistics constraints. A load of hot-rolled coil or structural plate moving from a mill in Arkansas to a service center in Ohio might cost $80/ton in freight alone—sometimes more than the mill surcharge. Sourcing teams that focus only on base price often miss how freight differences between suppliers can add 5–10% to the landed cost.
Freight volatility is rising. Trucking availability has become increasingly unpredictable, diesel prices continue to fluctuate, and weather events regularly disrupt key lanes. Add in tight railcar supply and port congestion for import steel, and freight quickly becomes a critical cost variable.
Key Freight Variables to Monitor
Distance and Lane Capacity: A coil sourced from a mill 200 miles closer may cost more at the base price—but could yield a lower total cost per ton due to reduced freight charges. Route density also matters: high-volume lanes attract better rates.
Mode of Transport: Rail is typically cheaper per ton-mile but slower and less flexible. Trucking is faster and more responsive, but increasingly expensive. Smart buyers evaluate which suppliers offer rail siding or intermodal options.
Accessorial Charges: Detention fees, liftgate requirements, and handling surcharges can significantly inflate total delivery cost. These fees are often buried in the invoice—unless sourcing teams ask for full transparency.
Delivery Frequency and Consolidation: Small, frequent shipments might seem efficient for JIT inventory—but they often carry higher freight cost per ton. Consolidated loads reduce per-unit freight costs and provide better negotiating leverage with carriers.
Weather and Seasonal Disruptions: Winter storms in the Midwest or hurricane season along the Gulf can delay steel deliveries for days. Procurement plans that build in time buffers and consider seasonal lane reliability are more resilient.
Strategic Freight Planning Starts in Sourcing
Incorporating logistics into sourcing decisions pays dividends. For example, when bidding out a contract for hot-rolled coil, evaluate both FOB mill pricing and delivered pricing. Some service centers are moving to total-cost bidding models where suppliers must include freight in their quotes, allowing for apples-to-apples comparison.
Even more sophisticated teams maintain lane-specific freight benchmarks. If a supplier quotes $130/ton freight from Alabama to Detroit, but your internal benchmark is $95/ton for that lane, you’ve got room to negotiate—or flag inefficiency.
Don’t Overlook Import Freight Risk
Importing steel—whether coil from Korea or plate from Germany—introduces another layer of freight complexity. Ocean transit costs, port fees, demurrage, and inland drayage must be factored into the landed cost model. These variables are highly sensitive to geopolitical issues, container availability, and even customs policy.
Some buyers mitigate this risk by partnering with experienced import brokers or asking suppliers to quote DDP (Delivered Duty Paid) terms. This shifts some freight responsibility upstream and improves cost visibility.
Collaboration with Logistics and Operations
Procurement doesn’t have to own the freight plan alone. Cross-functional collaboration with logistics managers can unlock value. Joint sourcing initiatives—such as selecting vendors based on their proximity to rail hubs or intermodal terminals—can reduce transportation expense.
Additionally, purchasing teams should align order volumes with warehouse capacity and receiving schedules. There’s no value in securing low freight rates if your receiving dock is overwhelmed or can’t unload on time.
Final Thoughts
Freight is often overlooked in the steel procurement process, but its impact on profitability is real. For sourcing specialists, asking freight-related questions upfront, negotiating based on total landed cost, and building partnerships that optimize logistics can add measurable value to the bottom line. Steel may be priced by the ton—but it’s moved by the mile, and smart buyers plan accordingly
