My Cart 0

Freight Rate

If you are the owner of a trucking company, determining which rate to charge customers is a vital part of operating a successful business. Rating freight requires careful analysis of your company’s operating costs, including mileage of your trucks, fuel and vehicle maintenance costs, as well as fees charged by brokerage companies. Freight rates are determined by taking these factors into consideration and applying the rate to the corresponding freight class. Setting a desired profit is also useful when rating freight. Setting the freight rates for your trucks is one of the most important decisions you will make when you operate a trucking company. Your rates will determine your success: If your rates are too high, you will not have customers, and if your rates are too low you will lose money. Normally, you will make higher rates on your outbound trucks because you will be hauling freight for your own local customers. You will often be receiving freight from brokers on your inbound freight and will give up a percentage of the revenue to the broker that found the freight. Guidelines on How to Rate Freight (1) Calculate the annual costs that it takes to operate your trucking company. Add up all expenses, such as fuel, maintenance of your fleet (trucks), wages paid to employees, rent of your facility space and fees paid to brokerage companies. Divide the total amount by the number of miles driven in a year. The answer is your per-mile operating cost. (2) Forecast your sales for the next year and set a goal for profit. Refer to updated fuel cost lists by region and other valuable tools to estimate your sales for the future. Use the desired per-mile profit to base the rates for freight. (3) Determine rates for freight. If you company offers full truckload service, set the rate at an amount that guarantees profit by covering your per-mile costs. For less than truckload rates, set rates based on the class set forth by the National Motor Freight Classification (NMFC). (4) Use established rates when receiving orders from customers. Obtain the weight, dimensions, value and density of all freight before quoting a customer with a freight rate. Negotiate the price with the customer as necessary. Guidelines on How to Figure Truck Freight Rates (1) Add all of your yearly operating expenses and divide that amount by the number of miles you travel in one year. Do not forget to add your office and payroll expenses to your truck operating expenses. The answer will tell you your operating cost per mile with no profit and is the minimum amount you should average on your rates. (2) Add the amount of profit you want to make. This amount will vary depending on your needs and the availability of freight. Only you can decide if you are out-pricing yourself if you add a profit to your rate on every load. Making a profit is not difficult when freight is abundant and trucks are in demand, but when there are more trucks than freight, you may have to forgo making a profit on every load. (3) Look at a price variance map for your equipment (see Resources). The map will provide information on what areas of the country are abundant in freight and what areas are abundant in trucks. If you are hauling freight into a state like Florida, which is a consumer state, not a producer state, you need to set your rate on a load going into the state higher than normal because the load you take out of the state will not even meet your expenses. (4) Negotiate with your customer. If the customer is one that you have used before and intend on using again, you will want to work with him to set a rate that works for both of you. Often your customer will know of return freight when you deliver his load; if he is able to help, you want to consider this when you set his rate.