How Bulk Trucking Companies Can Accurately Calculate Expenses and Set Fair Rates

Determining the right rate for hauling freight is a fundamental question in the trucking industry, and it’s one that every trucking company must address. Unlike many other industries, trucking involves a variety of variables—from the distance between pick-up and drop-off points to loading and unloading times, reload opportunities, hours of operation, and more. These factors can cause rates to vary widely, making it a complex task to calculate a fair and profitable rate. This post aims to help you better understand how to accurately determine a good rate.

In a previous post, we discussed how bulk freight rates are typically calculated using weights such as bushels, hundredweight (cwt), and tonnage. If you haven’t already, I encourage you to check it out on our forum. But the core issue remains: Are you getting a return on your investment—your truck and trailer—at the end of the day? And how does that return compare to industry standards, whether it’s average, high, or low?

Short Haul vs. Long Haul

Let’s start by discussing how rates can differ between short and long hauls. In the grain industry, short hauls are common. Grain is abundant, and grain elevators, terminals, feed mills, and processing plants are strategically located to minimize freight costs. Additionally, railroads often handle longer hauls of bulk commodities, making truck transport less competitive for distances over 200 miles. This isn’t true for all commodities, but it helps explain why some grains don’t move more than 150 miles by truck. However, specialty grains, such as organic varieties and certain feed ingredients (especially for pet foods), may travel longer distances by truck due to their specialized nature and lower volumes.

When grain is abundant and hauls are short, there’s the question of whether the rate should be calculated as a one-way or round trip. Typically, if grain is moving within a 60-80 mile radius one way, there isn’t another load to haul back, so the rate needs to cover both directions. Time is another critical factor. If a truck spends most of the day loading and unloading rather than running miles, the rate needs to account for that additional time.

For example, I recall scheduling trucks to move wheat from Topeka to Kansas City, roughly 60 miles. At the time, the going rate was $1.50 per running mile (this was 20 years ago). So, we paid the trucks $3 per loaded mile, knowing there was no return load available. This resulted in a rate of $0.20 per bushel of wheat (60 miles x $3/mile = $180 ÷ 900 bushels = $0.20 per bushel). This seemed reasonable until we encountered some issues. The terminal in Topeka closed at 3 p.m., and loading times could take up to an hour, meaning some trucks only managed two loads a day, grossing just $360—not ideal. Even with three loads, the revenue was still low. We had to either negotiate longer hours at the terminal, increase the rate, or combine the load with a higher-paying one. Ultimately, we chose to buy more wheat from Abilene at $0.44 per bushel and combined it with the Topeka load.

Reloads and Back Hauls

Reload opportunities, often referred to as “back hauls” (a term some may object to), are another factor in rate calculations. While no load should be considered a back haul in the traditional sense, there are situations where a discounted freight cost is necessary to make the haul viable. For example, purchasing grain from Columbus, Kansas, in the southeast corner of the state, posed a challenge because the Port of Catoosa typically offered a higher bid, thanks to its waterway access and lower barge freight costs. To buy wheat out of Columbus, we had to price the freight cost much lower. However, knowing that trucks frequently landed in the area due to dense poultry operations—and were often paid a great rate—made it feasible to haul the grain north to Kansas City, where our facility unloaded trucks until 11 p.m. This made it attractive for trucks to deliver late and still get unloaded.

Understanding Costs

Now that we’ve discussed how rates are figured, let’s touch on the importance of understanding your costs. While we won’t go into the nitty-gritty details in this post, I encourage you to use this simple calculator, generously shared by one of our members, to help better understand your expenses. You can access it here.

In hindsight, calculating freight rates is a complex task. It’s not just about getting a certain dollar amount per mile, but understanding the commodity, distance, loading and unloading times, opportunities for reloads, and more. Most importantly, it’s about maximizing revenue while minimizing costs. Although it’s not simple, gaining a clear understanding of these factors can help reduce misconceptions about what a fair rate should be, as it varies greatly depending on the situation.

Happy Hauling and God Bless,

Jared Flinn