Are your products transported by truck? In that case, the shipping cost takes a big chunk of the product pricing. Whether you outsource the services or have your own fleet, you need to understand which factors affect the costs. And don’t forget that trucking and truck freight rates aren’t the same. The carriers define truckload freight rates, and the trucking rate applies to you as a business owner.
How to calculate trucking rates
The freight and trucking costs are essential for businesses, so you would want to understand the math behind them and break them down into chunks to help you define the best trucking rate per mile. The trucking freight rates are calculated on a per-mile basis, so the most important factor is the number of miles between the initial point and the final destination. It is very important to have an accurate average rate per mile and correct information for the current rate so that you can calculate the best trucking rate per mile. Then, predict your shipping costs, provide quotes, and negotiate.
Truck freight rate
The truck freight rate is the amount that a shipper or broker will pay to a carrier. There is a large number of small trucking companies that have 1-2 trucks. Therefore, there are considerable fluctuations in prices. How do we consider this advantage or problem? The domestic market is quite competitive, so you can grasp the opportunities. The secret is to have insights into the market and stay up to date with the latest information.
Factors that define truck freight rates
The factors that define the rates are density, weight, distance, classification, and base rate. Some of them are fixed and the others are prone to variations.
- Distance: since the costs are calculated per mile, the distance between the starting point and destination is crucial.
- Weight: The weight is another important factor. Heavier shipments will end up costing more than lighter ones.
- Density: The shipment volume and the space it takes in the truck is another factor that impacts the price. You can calculate the shipment density by dividing the weight by its cubic feet.
- Base rate: The base rate consists of fixed and variable costs. The fixed ones are equipment leasing and insurance, while the variables include gas and labor.
- Freight classification: according to the NMFTA, there are 18 classes of shipments that affect the rates.
Type of truck
- Next, we want to go deeper into how the type of truck impacts the rates. Every type of freight requires a specific truck type. Transporting perishable food isn’t the same as transporting large construction equipment.
- Heavy trucks: The per-mile costs are determined by the fuel, insurance, maintenance, and highway tolls.
- Flatbed trucks: The national average rate is $3.14 per mile and can vary depending on the location.
- Refrigerated trucks: They are equipped with a refrigerator unit for mining proper temperature for perishables. This increases fuel consumption, so the prices are higher.
- Dry van: With the non-temperature controlled trailer, they are a benchmark for calculating the average cost per mile.
Trucking per mile rate
Tracking the mileage is determined by the fuel insurance, repairs, and roadway tolls. Since July 2021, the tracking rates per mile have been stable.
- Dry Vans: $2.30 to $2.86 per mile
- Refrigerated Trucks: $3.19 per mile (varies by location)
- Flatbed Trucks: $3.14 per mile
- Heavy Haul Trucks: $2.95 to $3.76 per mile
Final take
The trucking industry brings so many challenges and businesses need to be flexible enough to overcome them. Companies need to understand the trucking landscape and decide what best fits their needs.
