How Are Bulk Freight Rates Calculated?

A common question we hear is, "How are bulk freight rates calculated?" The process is quite different from other types of freight. While general freight rates for van, reefer, and flatbed trucks are typically set as a flat rate, bulk freight rates are based on weight. Here’s a closer look at how these rates are determined.

1. Flat Rates vs. Weight-Based Rates

   • Flat Rates: For general freight, a flat rate might be offered. For instance, a van load of boxed widgets from Kansas City to Dallas might be priced at $2,000. This rate remains constant regardless of the specifics of the load.
   • Weight-Based Rates: Bulk freight rates are determined by the weight of the load, which varies by commodity.

2. Calculating Rates for Bulk Commodities

   • Grains: Rates for grains like corn are typically calculated per bushel. For example, if corn is priced at $0.55 per bushel and you can haul 950 bushels, the total rate for the load would be $522.50. To find the rate per mile, you’d divide this amount by the number of miles. If the load is transported 200 miles, the rate would be $2.61 per loaded mile.

   • Feedgrains and Fertilizers: These are often priced per ton. For instance, if dried distiller grains (DDGs) are priced at $30 per ton and you can haul 25 tons, the total would be $750. Note that this estimate can vary based on state laws and truck capacity.

3. Weight Considerations

   • US Tons vs. Metric Tons: In the US, freight is usually measured in short tons (2,000 lbs). Be aware that other units, such as metric tons (2,204 lbs) and long tons (2,240 lbs), are used in different contexts.

   • State Regulations: Different states have varying weight limits for trucks. Generally, the maximum weight is 80,000 lbs, but some states allow heavier loads with additional axles or during winter months when roads are frozen.

4. Why Bulk Rates Differ from Flat Rates

   • In the commodity trading world, grains, feed, and fertilizers are priced by weight. This method ensures that the cost of freight aligns with the actual quantity transported. If rates were flat, and the truck wasn't fully loaded, the cost per unit of the commodity would effectively double. Weight-based pricing ensures fairness and accuracy in these transactions.

• Fuel Surcharge: This is a topic for another article, but it’s worth noting that many companies don’t use fuel surcharges unless they can pass the cost on to the end user. Some long-term contracts might include a fuel surcharge to protect against fuel price volatility.

We hope this helps clarify how bulk freight rates are calculated. Understanding these factors will help you better manage your freight costs and improve your bottom line.

God Bless,

Jared Flinn