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 Packaging Optimization Mean?

In simple terms, “packaging optimization” is a process that utilizes smart packaging. This refined method of packaging is designed to safely contain, protect and communicate the specific contents of your packaging as your products travel through the various handling processes within the supply chain.

The product’s journey starts with the manufacturer, then may go on to a warehouse or in-store fulfillment centre, and ultimately wind up being delivered at its final destination. This  last mile of delivery could be a consumer’s home, an office building, retailer or other end point.

At each step along the way, there are factors which determine in what condition your products will ultimately arrive. Optimizing your packaging for the rigours of your product’s journey can make all the difference in the world.

Start by Choosing Optimal Packaging Materials

The first step in choosing optimized packaging for your product is in fully understanding its vulnerabilities .This involves going the testing stage (if applicable), then determining the best packaging materials.

Once your product has gone through testing using established protocols for its shipping class, the next task is developing the the proper packaging to help protect the product as it navigates through all supply chain environments.

This packaging system is broken down into three levels:

1. Primary Packaging – The packaging directly in contact with the product itself and is often designed with the “unboxing” experience in mind. Other considerations are product protection and perhaps store display.
2. Secondary Packaging – Packaging that’s just outside of the primary packaging and typically used to create a stock-keeping unit or SKU. Also part of the unboxing experience, this protective layer also helps guard against moisture and humidity.
3. Tertiary Packaging – Referred to as transit or bulk packaging which often forms a group quantity of SKUs. This level of packaging is the final layer used to protect the products in transport, safely and securely, from point A to point B. For example, this could be from a manufacturer’s loading dock to the final point of sale.

How Much Packaging is Just Enough for the Environment and Supply Chain?

In order to save on costs, many products wind up being under-packaged. This results in avoidable damage that sends the product into reverse logistics. This also produces product waste along with associated fees and other costs.

Conversely, there are some products which are over-packaged using far more material than is necessary. This excess is not only wasteful in its own right, but has an impact on our environment. Not just in terms of landfill or limited recycling, but in transportation costs due to size and weight issues. These overages in turn lead to excess fuel and energy consumption, along with higher transportation fees throughout the supply chain.

The sweet spot in optimal packaging should be designed to fit the requirements of your supply chain with these key points in mind:

• The right type and thickness of packaging films or rigid plastics
• Effective thickness and properties of foam or protective packaging
• An appropriate strength and flute of corrugated board used
• An efficient use and amount of winds of stretch wrap
• An efficient use of packaging tape or adhesive in the right location

Optimize Package Design

Whether you’re designing a package from the ground up or updating an existing design, there is value in following best practises within your industry, along with taking cues from consumer feedback.

Some considerations may include using fewer materials or lowering packaging weight. For example, modern packaging materials may include a dissolvable bag-in-container for non-solid or semi-solid products such as cereals. Or a bio-degradable rigid container might offer the right benefits for transport and storage space for other products.

Now with the right packaging and materials selected, it’s on to actually designing and engineering the packaging. Keep in mind this can impact different sections of not only the supply chan, but you own general packaging operations:

• Manufacturing & Operations – Your package design should ideally work within your current manufacturing processes and automation equipment. Additionally, these optimized packaging requirements should enable your systems to run at their optimal speeds.
• Material Vendors – Is your current material vendor able to produce the package to your specifications, and are they in line with your packaging objectives? Upgrading design factors can affect material vendor capabilities, as well as your own manufacturing systems. Therefor, make sure your provider’s equipment capabilities, material competencies and visions for the future are up to the task.
• Supply Chain Costs – Unique or non-standard shapes can impact your transportation expenses. Your packaging is truly optimized when all systems and touch points are maximized – or minimized as in the case of wasted air space. Shipping air, unless it’s absolutely necessary and relevant to the product, is wasteful.

Optimize Product Counts for Better Cost & Efficiency

End-users and customers often dictate the order quantities and case counts – that is, with the exception of the number of hot dogs in a package with respect to the number of hot dog buns  – a mysterious mismatch. Regardless, this demand is true for not only consumer packaged goods (CPG) manufacturers, but B2B manufacturers as well.

Fitting more product on a pallet without compromising product safety can improve your overall cube or product shipping density. This is an important part of transportation optimization especially when you use less-than-truckload (LTL) freight extensively. Similarly, fitting more product on a retail shelf or within storage can also help reduce inventory and storage requirements.

What is the Right Amount of Packaging Protection?

The right level of packaging protection will ultimately mitigate or at least minimize damage during transit or stacking. Effective packaging protection designed for specific products can have a wide array of requirements. For example:

• Protective barriers for pharmaceuticals and food products to help extend and maintain shelf life. This industry-specific packaging protects against environmental damages and penetration from oxygen, moisture or other contaminants.
• Fragile products require additional shock protection. This helps keep products from suffering damage due to mishandling and impacts.

Standardize Your Product Package Designs

Consider standardizing package sizes and dimensions across multiple products. This lets you increase efficiencies by streamlining manufacturing, reducing system changeover times, and improving line utilization. The added benefit is less risk of wastage as excess packaging can be redirected to other products with minimal loss in time, effort and materials.

Build Sustainability in Your Supply Chain

Baking in energy-efficient production will not only help reduce stress on the environment, it can also help your bottom line. Choosing to use energy-efficient machines and forward-thinking packaging materials with lower manufacturing temperature requirements, can produce very real and tangible savings.

Incorporating sustainable practices, recyclable materials and reusable packaging helps keep your packaging agile, adaptive. and generates goodwill towards the public’s growing awareness that environmental problems indeed need to be addressed now more than ever.