What factors do you need to consider to better control your freight costs? Are there hidden charges you should be aware of? Is the domestic freight market predictable enough to make qualified decisions? Let’s see if there’s a practical road to understanding trucking rates.

If your products are shipped by truck, you’re paying for it. Whether you have your own fleet or have to rely on a third party, having a reasonable knowledge of the factors influencing your trucking costs just makes sense.

As we uncover the information you need, it’s important to realize there are two distinct facets in discussion: trucking rates and truck freight rates. Trucking rates apply to you directly (your costs as a business owner), whereas truck freight rates are the costs incurred by carriers – owner operators and trucking companies.

How to Calculate Trucking Rates

For most physical business, freight and trucking costs are a significant and often revolving part of your operating overhead. Therefore it makes sense to understand the basics so you can break down these costs into smaller increments that help you determine the best trucking rate per mile.

Trucking freight rates are calculated using a per-mile (or kilometre) basis. Therefore, the most important metric when calculating truck rates is the number of miles between your point of pickup and final destination.

Having an average rate per mile for trucking and reasonably accurate information of current freight rates is essential for predicting your shipping costs, providing quotes and negotiating shipping rates with your customers.

What is a Truck Freight Rate?

A truck freight rate is the price a specific broker or shipper will pay a carrier to haul a load. Because the average trucking company only only one to two trucks, the aggregated number of small businesses becomes staggering. This also means there can be a huge variation in pricing from company to company.

Is this a problem or an advantage? When you realize just how competitive the domestic freight market is, you certainly have an opportunity for a win. The trick is in being informed and doing your homework through due diligence.

Factors That Determine Truck Freight Rates

There are number of standardized factors used to calculate truck freight rates. Some of them are predictable or fixed, others are variable. As a group, they’re all taken into consideration when determining truck freight rates.

1. Distance

Whether local or long haul, the distance between start and finish points is an important part of determining trucking rates per mile.

2. Weight

The next most significant factor is the weight of the shipment. For instance, moving crates full of dumbbells is going to cost more than boxes full of ping pong balls.

3. Density

Shipment density is another factor that determines the volume of space a shipment will take up in the truck. This in turn impacts your trucking per mile rates. For all intents and purposes, calculating the shipment density is fairly straight forward: divide the shipment weight by its cubic feet. In other words, shipment weight divided by cubic feet = shipment density.

4. Base Rate

All trucking carriers have established base rates for shipments. Although most rates are usually cited per $100 dollars, they will vary based on the carrier and transporting lane. Your base rate also includes both fixed and variable costs and variable costs. Fixed costs are items such as insurance and equipment leases. Variable costs are those that fluctuate such as fuels expenses and driver pay.

5. Classification

Freight classification plays a significant role in freight rates. For instance, hauling hazardous materials is far different and requires extra precautions compared to shipping stuffed animals.

The National Motor Freight Traffic Association (NMFTA) has defined 18 classes of shipments that affect freight rates per mile. Freight classification is determined by factors such as:

• Product density
• Value of goods
• Handling needs
• Stow-ability
• Liability

Types of Trucking and Haul Rates

The type of truck used for transport will affect the overall cost of trucking. For instance, you’ll need a far more powerful vehicle to haul an oversize bulldozer compared to a vintage automobile. In a similar fashion, you’d want to ship frozen foods in a reefer rather than a flatbed.

Heavy Haul Trucks

Heavy haul trucking companies will use common per mile cost factors such as:

• Fuel expenses
• Repair and maintenance expenses
• insurance for trucks
• Highway tolls and fares

If you’re moving heavy products, a good rule of thumb is to keep an eye on both local and national trucking rates.

Flatbed Trucks

As for flatbed truck rates per mile, the national rates average $3.14 (USD) per mile. However, depending on your location a shipping points, specific areas may have higher or lower rates.

Fair prices for flatbed truck services consider things like:

• Trailer type
• Load-to-truck ratio: the number of loads vs your available trucks
• Cargo weight
• Destination
• Other services such as oversize loads, warehousing, loading and unloading

Refrigerated Trucks

Refrigerated trucks or reefers are equipped with a refrigeration unit for goods that need low temperature control. Since they consume more fuel, reefer freight rates are higher than that of other trucks of the same relative sizes. This difference ultimately factors into your freight prices per mile.

Dry Vans

Perhaps the most common type of truck you’ll see on the highways, dry vans have a non-temperature-controlled sealed trailer and represent a fair benchmark for determining the average cost per mile of truckload freight.

What’s the Going Rate for Trucking Per Mile?

In order to understand the scope of the trucking industry and determine a competitive rate per mile, you need to know how much trucking companies actually charge per mile. Their cost per mile is influenced by such factors as:

• Fuel
• Repairs and maintenance
• Insurance
• Roadway Tolls

For many operations, financing is also rolled into the cost per mile. Typical financing charges for trucks and trailers can range from 0%-30% of revenue.

As of July 2021, trucking rates per mile remain steady. Here are the current rates for the most popular freight truck types:

Trucking rates (in USD) for the most popular freight truck types within the last few years have hovered around:

• $2.30 to 2.86 per mile for dry vans
• $3.19 per mile for reefers, with lower rates of $2.47 found in the Northeast
• $3.14 per mile for the average flatbed
• $2.95 to $3.76 per mile for heavy haul according to heavyhaulandoversized.com

As we’ve experienced recently, inflation and interest rates have been impacting the economy. Resulting in rising fuel prices over the past year thus creating a huge variable when calculating transportation rates.

Company vs Owner-Operator Trucking Rates

In contrast to company drivers working exclusively for a trucking firm, owner-operators own or lease their own trucks. As a form of networking, owner-operators usually work together with a trucking company in order to find trucking jobs and leverage back-office support.

This autonomy comes at a cost though, as owner-operators have to deal with additional stress and the burdens of financing, maintenance, health insurance and related operational expenses largely on their own.

In terms of trucking rates, owner-operators generally earn an average of 75% percent of the loads they take. The balance of the percentage goes to the trucking company.

For a deep dive into the intricacies associated with the operational costs of trucking, please refer to this comprehensive industry pdf: https://truckingresearch.org/wp-content/uploads/2022/08/ATRI-Operational-Cost-of-Trucking-2022.pdf

Trucking Rate Terminology You Need to Know

Building a knowledge base on trucking rates also means understanding the terminology. Other than  pricing, there are a few trucking industry terms you should be familiar with:

Consignor: The entity that sends the freight to its counterpart the consignee.

Consignee: The entity that receives the freight from the consignor.

Carrier: A business that offers shipping services.

Bill of Lading (BOL): Also called a freight bill, the bill-of-lading is a record of all details of the shipment and the agreement between a carrier and the shipper.

Loss and Damage: Loss and damage rates only cover shipments in transit or in storage facility operated by the carrier.

Full Truckload (FTL): Also termed TL, an LTL shipment requires the use of a whole truck.

Less Than Truckload (LTL): Shipments that don’t utilize the full capacity of a truck.

Drayage: Drayage is a form of short-haul trucking that connects the different modes of shipping such as ocean freight or air freight.

Pallets (or Skids): Plastic or wooden stacking platforms that usually measure around 40″ by 48″.

SKU: A Stock Keeping Unit, a method of recording individual items of a different kind, size, or freight.

CWT: A standard shipping weight unit equivalent to 100 pounds.

Finding the Best Trucking Rates is Not as Hard as You Might Think

From trucker shortages, supply chain issues to the prospect of extra charges, the trucking landscape is full of – at times unpredictable pitfalls. But with a solid understanding of the trucking field and its players, you increase your ability to react with agility.

Contact Brimich and Packaging today and talk to an experienced professional who can quote trucking rates tailored to meet your company’s specific needs.

What Does OS&D Mean?

In the context of LTL claims, OS&D is an abbreviation that stands for over, short and damage. To expand the meaning further, here’s a description of each term used:

• Over or Overage: The shipment quantity is over and above that listed on the shipping documents
• Short or Shortage: The shipment quantity is less than that indicated on the BOL (bill of lading)
• Damage or Damaged: The shipment was received damaged. Damage can be either externally visible or concealed within the packaging containers.

Solving Problems Associated with LTL OS&D Claims

Nobody wants to deal with the headaches of filing a claim of any kind – but it does happen. The fallout from an interruption in your supply chain will include delays, unexpected costs, lost productivity and perhaps worst of all, a loss in customer confidence.

Moreover, OS&D can become a point of contention between you the shipper and your 3PL partner as you try to hammer out the details. Both sides have to feel they’ve done the right thing towards resolving a claim.

To help you get past the problem of dealing with an OS&D claim as quickly and efficiently as possible, we thought we’d share some insight into how limit claims and improve your chances of recovering a payment.

Details of OS&D Claims

Since there are a number of aspects and circumstances that constitute a claim, here’s some further explanation on the particular elements:

Time Period for Filing a Claim

For visibly damaged goods, a shipper usually has nine months to submit a claim. Taking numerous pictures is critical in making sure there’s enough evidence to back-up the freight claim.

Similarly, don’t delay the claims process by waiting any great length of time. The success of being compensated goes down the longer you wait.

As shipping technology advances so does the ability to monitor freight claims. Using technologies such as Software-As-A-Service (SaaS) can greatly help to expedite the claims management process.

Shipper’s Responsibility for the Freight Bill

As a process, the freight bill still needs to be paid regardless of whether there is a claim in place or not. As a shipper you are still required to pay the invoice as part of the delivery service.

In other words, claiming reimbursement for a damaged shipment is a completely different process and transaction.

Bill of Lading

The importance of the Bill of Lading or BOL, can’t be underestimated. It’s the key document the carrier uses to verify all aspects of the shipment itself, especially when associated with an OS&D freight claim.

As a main point of reference in evidence, it’s the one document both parties inspect first to determine how the product was received at the warehouse or distribution centre.

Along the shipment’s journey, signing the BOL acknowledges the product arrived and verifies its condition. Before signing off on the BOL, he receiver validates the shipment quantity and inspects it to make sure there’s no visible damage to the freight.

Once the BOL is signed, the bill of lading is free and clear. This now “Free BOL” allows little to no opportunity for filing a damage or short-ship claim because title of the product is transferred at that moment.

Shortage Claim

As the name implies, a shortage claim occurs when freight arrives incomplete. The shipment is clearly missing a number of units and does not match the details described on the bill of lading.

If a consignee or receiver made a note of a shortage on the BOL, it’s relatively easy to file a shortage claim.

Concealed Damage Claim

Due to the extra layer of inspection required, concealed damage claims are more difficult to pursue and claim for reimbursement.

In comparison to obvious visible damage where you have an extended period to file a claim, most carriers will only allow concealed damage claims to be filed within five days.

Concealed Shortage Claim

Similar to a concealed damage claim, concealed shortage claims are not immediately recognized and therefore not noted on the BOL at the time of signing.

Concealed shortage claims are difficult to prove, so you’ll often find that carriers push back very hard on these claims.

As with other concealed claims, time is of the essence. You only have five business days to let your shipper know about the shortage. If you delay beyond five days, your carrier will deny your claim.

Refused Freight Claim

If a consignee is not happy with the condition of their received freight, they have the right to refuse part or all of the shipment. Examples of refused freight include: damaged freight, late shipment or wrong product.

In the case that your consignee refuses shipment, it’s returned to your carrier’s delivery terminal. Your LTL or 3PL partner will contact with the following options on what to do with the freight:

• Send it to another address
• Send the shipment back to the address of origin
• Dispose of the product of as per your company’s policy

Depending on the agreement with your provider, you may or may not have to pay the invoice.

Once again there is a critical window of time window. You must file the claim within five days otherwise the carrier can deny the claim.

Loss Claim

A loss claim makes great case for maintaining insurance as it means your entire shipment was lost by the LTL motor carrier. The majority of loss claims occur due to the shipment paperwork being separated from the physical freight itself.

In this situation, your carrier will typically have a week to try and to locate your freight. Service providers understand this does not reflect well on them. Therefor in the event the freight is not found, you will not incur shipping charges and the claim will be reimbursed quickly.

Freight Claim Reimbursement – Key Points to Keep In Mind

Successful OS&D claims begin and end at the receiving dock. Taking immediate action will help ensure the claim is quickly processed and approved.

The following lists cover the essential documents and actions required to facilitate a quick resolution:

OS&D Claim Requirements

• POD must notate any discrepancy to the BOL
• Copy of the freight bill
• Original BOL must be included
• Merchandise invoice documenting the value of goods
• Repair or replacement bill for the product
• Pictures of the damaged freight
• Damaged freight must be saved until the claim is approved

How to Improve the Product Receipt Process

• Inspect the freight immediately
• Do not sign the BOL without inspecting the freight
• Document any damages or shortages
• Notate any damage on the BOL
• Take pictures of the freight
• Store the shipment in a safe area to prevent further disturbance until the claim is approved