Truckload Pricing By Jon Weingarten
Rate Per Mile vs. Truckload Rate
Which is best for you?
At Willson Logistics we are able to provide you tailored pricing based on your preference. Here are the factors to consider when you are evaluating a quote.
The standard practice for pricing full truckload freight is the rate per mile. This allows freight forecasters to create logistics rate forecasts based on fixed costs rather than variable or one-time charges. The most common variable charges are the fuel surcharge (which changes weekly) and accessorial charges. By separating these costs a freight forecast can be built that can evaluate all charges individually to determine which bids have the most value for the lowest rate.
Rate per Mile – Pricing full truckload rates at a rate per mile creates a standardization that is simpler for freight forecasters to analyze multiple bids on each lane. It is analogous to other standard pricing structures like price per square foot in commercial real estate or price to earnings ratio in stock market valuations.
Truckload Rate – Alternatively some companies choose to want their pricing by truckload rather than per mile. The truckload rate may or may not be inclusive of fuel surcharges,
Fixed operating costs vs. variable fuel costs – Trucking companies measure costs on a per-mile basis. This includes driver pay and benefits, repair and maintenance, tires and insurance costs. The total estimated costs for all of the fixed expense categories of operating a truck are then divided by the estimated miles a truck drives in the same time-frame – usually based on annual numbers.
Fuel expenses account for almost 25% of the per-mile operating expense of a truck. However, oil and diesel prices are highly volatile and outside the control of trucking companies. This is the main reason why fuel costs are not included when pricing trucking on a rate per mile.
Fuel surcharges are usually tied to an underlying index that is reset weekly. The most popular index is the U.S. Department of Energy’s (DOE) diesel fuel updates, which are published each Monday. For loads originating in Canada the index mainly used is the FCA which is also published and adjusted weekly by the Freight Carriers Association of Canada. The fuel surcharge is then adjusted for that week’s loads and charged on a per-mile basis.
We offer customized solutions and white glove service for all your transportation needs. And because we are also a customs broker, we can help you create streamlined, cost-efficient, end-to-end solutions. Reach out if we can help.