Understanding Full Truckload Shipping Rates

Understanding what goes into a full truckload rate is the first step toward optimizing your transportation spend. Though the rate structure for a truckload shipment may be presented as a simple “cost per mile” or “door-to door” rate, the actual calculation is much more complicated.
understanding full truckload shipping rates

Full truckload shipments occur when a customer pays for the exclusive use of an entire truck. Truckload shipments generally carry a maximum of approximately 45,000 pounds, 26 standard pallets or 3,800 cubic feet of product. This option is ideal when a shipper has strict timelines, intends to use the full space or weight capacity of a truck or prefers to not share a truck with another company’s products. Because truckload shipments typically go directly from their origin to destination without routing through a hub system, they are handled less, arrive faster and with less potential for damage.

BIG PICTURE FACTORS

Truckload rates are affected by more than just the specifics of your shipment. Industry-wide dynamics including overall capacity, fuel prices, regulations, weather and other national trends can significantly impact truckload rates.

Overall Capacity

Truckload capacity is affected by many factors including the state of the global economy, the current driver shortage and ebbs and flows in import and export volume at the ports. Seasonal fluctuations for commodities like fresh produce in summer and Christmas trees in winter also have a significant impact on the truckload market. When demand is high, additional competition for truckload capacity will increase rates. 

Fuel Prices

Because fuel prices fluctuate with the market, fuel is one of the most difficult costs to account for. Truckload rates normally include a “linehaul rate,” which is a baseline rate charged for transportation services, plus a fuel surcharge. This surcharge can vary from week to week based on the market, and many carriers adjust their prices up or down regularly.

fuel pump

Regulations

Transportation is a highly regulated industry. Changes in regulations regarding safety, emissions, driver hours of service and other factors can have a significant impact on truckload rates. For example, when the Federal Motor Carrier Safety Association (FMCSA) announced regulations requiring electronic logs rather than paper logs, carriers were forced to invest in new technology to meet the regulation demands. In some cases, these costs are passed on to the customer.

Weather

Storms, flooding, natural disasters and other inclement weather can cause extensive interruption to normal supply lines. The resulting re-routes, additional stops and delays can add accessorial charges to the shipping cost.

SHIPMENT-SPECIFIC FACTORS

The specific requirements of your shipment also impact truckload rates. The distance your freight travels, combined with the lane, lead time, delivery time and service requirements all factor into the final cost.

Mileage & Lane

As expected, the farther your freight travels, the higher the price. However, like a bulk discount, per-mile rates generally decrease the longer the haul. Keep in mind, not all miles are created equal. Routes of similar distances can carry very different rates depending on market conditions, opportunities for backhauls and location-specific factors. 

Lead Time & Delivery Time

When capacity is tight, the optimal use of driver hours is critical. Reducing loading and unloading time will make your freight more attractive to drivers and carriers. Some major retailers hand down significant fines for missed delivery appointments, whether early or late, even fining a percentage of sales, which can quickly add up to thousands, even millions, of dollars. As much as possible, give carriers additional lead time, increase delivery windows and avoid unfavorable delivery times. 

Specialty Services

The type of equipment required to haul your freight and any special services required during pick-up or delivery play a significant role in full truckload rates. Shipments requiring driver assist, load locks/straps, inside pickup and delivery, or lift-gate services, for example, will trigger an additional fee. Match your needs to your carrier’s strengths and limit the use of specialty services whenever possible.

Understanding what goes into a truckload rate can help you optimize your shipping spend. As with all transportation costs, keep in mind the “lowest landed cost,” which is the total cost of a product once it has been delivered to a customer. This includes the original price of the product as well as all transportation costs, customs, duties, taxes, insurance, handling and payment fees. By considering all the market and shipment-specific factors listed here, you’ll be more likely to identify the best pricing for your shipment and control overall spend.