How to Calculate Freight Rates

Of course Mileage is going to dictate total cost, but not all lanes cost the same. Much of this depends on freight volumes in and out of an area.  Florida for example consumes more than it produces.  There is more freight opportunities going into FL then are coming out of Florida.  So typically it costs more to ship a truck into FL then out. Now multiply this all over North America and you have endless lanes to consider.  Most often trucking companies have a guide to assist them called a "state to state rate matrix".  Typically an excel type file that shows all states (to and from) with a RPM (rate-per-mile) value or "base rate".

The trailer type can have lot to do with the rate:

• Van
• Flatbed
• Stepdeck
• Double Drop
• Specialized

A cost plus approach would start with a base rate let's use 1.50/mile for a flatbed for example and add on for a more specialized trailer.  So, to go to a stepdeck you might add .15/mile to the base rate.  Of course as the the trailer becomes more specialized the more your RPM will increase.

Length, width, height, and weight.  The height can dictate the trailer type required (see equipment above).  Although the bigger something is it can cost more, it usually is more about the weight.  Weight uses more fuel to haul, so this has a more direct cost associated with it.  It's important to point out that oversize and overweight hauling add additional costs that we detail later.

Similar to the cost changes in the lane your shipping in, so does the time of year.  In fact, it can change on a monthly, weekly, and even daily in some cases.  Where the 4th quarter can be busy and therefore rates go up, the first quarter slows down and rates can often drop.  Often manufactures try to ship inventory at the end of the month (accounting benefits), so demand for trucks increase and so rates can increase.

There once was a time when trucking companies didn't have a fuel surcharge.  But when the price of diesel kept increasing, dramatically, carriers scrambled to start adding fuel surcharge to their rates. Because fuel costs have never gone back down to where they once were, FSC is added to about every shipment.  Most carriers and many shippers get updated costs of fuel every week.  This cost is added to the base RPM.

When a load grows in size and becomes oversize, trucks have the added costs of state permits and depending on the size escorts costs as well.  All the states are different, which makes determining these costs difficult and time consuming.

There can be many types of accessorial charges, but some you might see regularly are:

• Tarps
• Insurance
• Driver Unload
• Tolls
• Lift Gate

We won't go into each one of these, but the list here is by no means complete.  Depending on what additional services are required on shipment the cost can go up.