Understanding truckload pricing is crucial for shippers, carriers, and logistics professionals looking to accurately estimate transportation costs in today’s dynamic freight market. With truckload spot rates at a near two-year high ($2.53 per mile), a 15% increase since October 1st, and the trucking industry experiencing significant volatility, knowing how to calculate and predict your freight costs has never been more important.
Understanding the Current Truckload Market Landscape
The trucking industry is experiencing unprecedented changes in 2024. The industry’s average cost of operating a truck in 2024 was $2.260 per mile, a 0.4 percent decline compared with the previous year. However, this slight decrease masks a more complex picture. When lower fuel costs are excluded, marginal costs rose 3.6 percent to $1.779 per mile – the highest costs ever recorded by ATRI for non-fuel operating costs.
The market dynamics have shifted dramatically. There are about 14,400 fewer trucking authorities active now compared with last year. That’s a 4% drop, which means fewer trucks fighting for the same loads. This reduction in capacity has contributed to the current rate environment, where freight volumes are actually down compared to last year. So why are rates going up? The answer lies in supply and demand fundamentals.
Key Components of Truckload Pricing
1. Base Rate Calculation
Trucking freight rates are calculated on a per mile basis. Therefore, the most important number when it comes to calculating truck rates is the number of miles between your starting point and the destination. The basic formula for truckload pricing is:
Total Rate = Base Rate per Mile × Total Distance
Current market rates vary by equipment type:
- Overall average van rates vary from $2.30 – 2.86 per mile
- Reefer rates are averaging $3.19 per mile, with the lowest rates being the Northeast at $2.47 per mile. Average flatbed rates average $3.14 per mile
2. Fuel Costs and Surcharges
Fuel represents one of the largest variable costs in trucking operations. The national average diesel price is $3.71 a gallon compared to $3.76 one month ago and is down $0.03 compared to one year ago. East Coast diesel prices are averaging $3.73 per gallon. The average price in the Midwest is $3.70 per gallon.
The U.S. Department of Energy sets the weekly national average diesel fuel price each Monday. That average price is used to determine the fuel surcharges and is standard for all freight carriers. Most carriers include fuel surcharges in their base rates to protect against fuel price volatility.
3. Distance and Lane Considerations
A lane is described as an origin to a destination and can fluctuate in cost based on freight volumes in and out of those two areas. Cities that have a high ratio of trucks to available freight may be cheaper to ship from than other locations with higher volumes than drivers.
The distance factor isn’t linear. Mileage plays a role in dictating total cost, but unfortunately, the calculation isn’t that straightforward. Longer distances will still incur higher charges because of the increased amount of fuel and driver time required. But not all lanes cost the same, even if they are the exact same mileage.
4. Equipment Type Requirements
Different types of freight require different equipment, which directly impacts pricing:
Dry Van: This is what most people picture when they think of freight trucks. They have a non-temperature-controlled sealed trailer attached to them and are a good benchmark for the average cost per mile for truckload freight.
Refrigerated (Reefer): These trucks contain equipment with a refrigeration unit that transports goods that need proper temperature control. After putting it to the test, reefer freight rates are higher than that of other trucks since they use more fuel — so factor that into your freight prices per mile.
Flatbed: Generally commands premium rates due to specialized loading/unloading requirements and weather exposure considerations.
Factors Affecting Truckload Pricing
Market Supply and Demand
Trucking rates are the prices that carriers charge to transport freight from one location to another. They depend on various factors, such as freight supply and demand, fuel costs, distance, type of cargo, and seasonality. Carriers typically list trucking rates as “per mile,” so it’s important for shippers to know the distance between their starting point and delivery destination to calculate an accurate estimate.
Overall truck availability vs. the demand for services will always have an impact on truckload freight rates. The current market reflects this dynamic, with reduced capacity driving rates higher despite lower freight volumes.
Seasonality and Market Cycles
The trucking industry follows predictable seasonal patterns. This is happening a week before the end-of-year surge, which always delivers the strongest rates of the year. Understanding these cycles is crucial for cost estimation and budget planning.
Service Level Requirements
There is a classic debate in trucking that warrants a mention on this list; service or price. Does your order require extra attention, communication, attention to breakage, specific expertise, or have strict deadlines? Moving items that demand high service levels or more reliability tend to cost slightly more than those that don’t.
Geographic Considerations
Regional differences significantly impact pricing. According to DAT, the highest average van rates are in the Midwest at $2.10 per mile. The lowest average van rates are in the East Coast at $1.74 per mile.
Step-by-Step Cost Estimation Process
Step 1: Determine Your Shipment Details
Before requesting quotes, compile comprehensive information:
- Origin and destination zip codes
- Shipment weight and dimensions
- Equipment type required (dry van, reefer, flatbed)
- Any special handling requirements
- Delivery timeline and flexibility
Step 2: Calculate Base Distance
Use professional routing software or GPS systems to determine the exact mileage. Remember that trucking miles may differ from standard automotive routing due to truck-specific restrictions and preferred routes.
Step 3: Apply Current Market Rates
Use current spot rates or contract rates as your baseline. Spot rates are typically lower than the contract rates, which are negotiated between shippers and carriers for longer-term agreements. While contract rates are also influenced by economic outlook, freight volumes, truck utilization, and inflation, they are typically more consistent. Shippers can take advantage of contract rates to avoid market volatility and ensure they have capacity available at a stable rate when they need it.
Step 4: Factor in Additional Costs
Consider these additional cost components:
- Fuel surcharges (if not included in base rate)
- Accessorial charges (detention, loading/unloading fees)
- Tolls and permits
- Insurance requirements
- Deadhead miles compensation
Step 5: Account for Market Conditions
Current market conditions significantly impact pricing. National average trucking rates are constantly fluctuating, so it’s important for carriers to keep a close eye on how the market evolves as well as understand the factors that can cause these shifts. Spot market rates are subject to change in real time, depending on freight supply and demand. An increase in rates may be driven by a number of persistent, industry-wide challenges in trucking, such as driver shortage, capacity constraints, and rising operational costs.
Understanding Cost Variables and Their Impact
Driver Wages and Labor Costs
In 2023, driver wages saw a significant increase of 7.6%. This substantial rise reflects the ongoing efforts of trucking companies to attract and retain skilled drivers in a competitive labor market. The increase also underscores the critical role that drivers play in the industry and the growing recognition of their value.
However, the 2024 trends show moderation. Driver wages – the primary contributor to cost increases in the three years following the COVID-19 pandemic – rose by just 2.4 percent, half a percentage point less than inflation.
Equipment and Maintenance Costs
Repair and maintenance costs rose by 3.1% to $0.202 CPM, tires stayed fairly flat with a $0.001 increase, and fuel costs went down 13%. The report also includes analyses of cost trends in 2024 and beyond, including, for the first time, carrier-reported changes in Q1 2024 costs.
Even with labor and parts costs decreasing, ATRI anticipates that repair and maintenance costs are likely to see another year of moderate increases due to the improved parts sourcing, less-competitive technician labor market, and the newer truck-tractors with a lower average age. To back up this assessment, ATRI said that “in the first two months of 2024, carriers reported an increase of 2% in repair and maintenance costs per mile on average compared with 2023 overall.”
Insurance and Risk Management
Claims costs went up significantly, both in number and dollar, some saying claims costs quadrupled in 2024. Insurance costs also went up significantly, with additional safety measures being used to mitigate premium increases but also litigation.
Technology’s Role in Pricing Transparency
Modern technology platforms provide real-time pricing visibility. Uber Freight’s algorithm adjusts in real time to fluctuations in the market, allowing shippers to access current rates they can lock in immediately—without risk of fluctuations down the line. Uber Freight’s pricing algorithm accounts for factors like the day of the week, time of day, weather, and even seasonality. We also make sure to consider how quickly loads are being booked.
Contract vs. Spot Market Pricing
Understanding the difference between contract and spot pricing is crucial for cost estimation:
Contract Rates: Q2 truckload contract rates trended closer to inflation. Truckload contract rates trended upwards to -2.7%, up from -5.3% Y/Y in Q1 2024. Typically contract rates will lag spot rate activity by two to three quarters, but the turn happened faster in this cycle, lagging by only one quarter. This was driven by record decreases in contract rates — there was just not any further down to go.
Spot Rates: More volatile but can offer opportunities when market conditions are favorable. Truckload spot rates are up 34 cents a mile since Oct. 1, 2024, a 15% increase. In the past week, we’ve seen spot rates jump from $2.38 to $2.53 a mile, a 15-cent increase.
Regional Rate Variations
Understanding regional pricing differences helps in accurate cost estimation:
Van Rates by Region:
- Midwest: Highest at approximately $2.10 per mile
- East Coast: Lowest at around $1.74 per mile
- National average: $2.01-$2.06 per mile
Reefer Rates by Region:
- West Coast: Highest rates
- Northeast: Lowest rates at $1.90-$2.47 per mile
Best Practices for Accurate Cost Estimation
1. Provide Detailed Information
Provide your transportation partners with as much information as possible and as early as possible. As you can see, a lot goes into determining a freight rate. If you provide details upfront, less back-and-forth communication will be required, orders can be handled quicker, and quotes will be more accurate and often cheaper.
2. Consider Multiple Scenarios
Build flexibility into your cost estimates by considering:
- Rush vs. standard delivery timelines
- Different pickup/delivery windows
- Alternative equipment types when applicable
3. Account for Market Volatility
If more loads are booked than normal, prices may decrease. If fewer loads are being booked than normal, prices may increase. Build contingencies into your budgets to account for market fluctuations.
4. Leverage Historical Data
Track your shipping patterns and costs over time to identify trends and negotiate better rates with carriers.
Future Market Outlook and Planning
The trucking industry continues to face challenges. The average marginal cost to operate a truck in 2024 was around 34% higher than in 2014, according to the American Transportation Research Institute. Simply put, it is difficult for freight rates to drop materially, as many carriers have been running with unsustainable unit economics.
The spot rate market improved and carriers believed it would lead to improvement in the contractual market. Carriers said that overall December felt tighter, but it was likely due to seasonality.
Conclusion
Accurately estimating truckload costs requires understanding multiple variables and their interactions. With current market conditions showing rejection rates are increasing, giving truckers more leverage to select higher-paying loads. Future trends to watch include potential increases in contract rates, a possible freight demand boom in 2025, and the impact of Clearinghouse II regulations on driver availability.
The key to successful cost estimation lies in staying informed about market trends, understanding the factors that drive pricing, and building relationships with reliable transportation providers who can offer competitive rates and consistent service.
By following the methodologies outlined in this guide and staying current with market conditions, shippers can develop more accurate cost estimates, budget more effectively, and make informed decisions about their transportation strategies in the dynamic truckload market.
References:
- FreightWaves – Truckload rates near a 2-year high
- American Transportation Research Institute – Operational Costs of Trucking
- Method – Freight rates: Trucking rates per mile 2024
- C.H. Robinson – 2025 Truckload forecast: Expect spot rates to rise
- Bureau of Transportation Statistics – Freight Analysis Framework
