What is the reasonable freight to be paid on a route using road transport?

The calculation of transport operating costs allows not only to quantify the costs related to the use of a fleet in the operation, but also to assess whether the tariffs practiced by carriers on certain routes are adequate or not, in the case of an operation with outsourcing of transport services. transport.

Far beyond just considering the distance traveled on the route, freight pricing usually takes into account several aspects, such as the type and condition of the vehicle, type of cargo transported and its degree of danger, productivity of the operation, loading and unloading times, existence or not of return freight, average speed of vehicles considering traffic and quality of roads used, ease of access, vehicle circulation restrictions, presence of risk regions in the route traveled, seasonality of demand, among others.

Figures 1 : Aspects that tend to influence freight pricing. Source: ILOS.

As the impacts of some of these factors are difficult to measure and reflect in the calculation of operational cost (or Should Cost), this usually involves some simplifications. For example, the existence or not of a return for a certain freight depends on the network of customers that the carrier serves. Therefore, it is common to adopt an average return remuneration mileage based on the specificity of the asset and regions of origin/destination for the approximate cost of return freight to be remunerated in the Should Cost methodology.

It is important to point out that adopting some simplifications in the construction of a calculation model is fundamental to make its applicability feasible. However, it is necessary to assess the impact that a simplification can bring to the results to be obtained, and then decide whether it should be incorporated into the model or not.

The workflow for costing road freight transport involves the following steps:

1. 1. Definition of cost items to be considered

At this stage, a list of the main items that impact the cost of the transport operation must be constructed. The list presented below is not exhaustive and can be supplemented and adjusted depending on the relevance attributed to each item by the responsible team in the company.

Figures 2: Cost items normally considered in the costing of road freight transport. Source: ILOS.

1. 2. Classification of costs between fixed and variable

   With the list of cost items finalized, you must classify them, one by one, into fixed costs, which are independent of the distance traveled, and variable costs, which depend on the distance traveled. In the list of costs presented above, the dark gray color is associated with fixed cost items and the orange color with variable cost items.

   3. Calculation of individual costs

   For each cost item, now classified as fixed or variable, a calculation methodology must be established, with the definition of equations and parameters involved. For standardization purposes, all costs must be calculated for the same time base.

   4. Route costing

   After defining the calculation methodology for each of the fixed and variable cost components and surveying the necessary parameters, the total fixed cost, in R$/h, and the total variable cost, in R$/km, must be calculated.

   The total cost of a trip on a route will be obtained by multiplying the total fixed cost by the total time consumed per trip, including transit time, loading time and unloading time, plus the multiplication of the total variable cost by the total distance traveled in the snippet.

   Note that loading and unloading productivity composes the Should Cost calculation in the fixed cost component. The shorter the route distance, the more representative the fixed costs tend to be in relation to the total cost and, therefore, the productivity of the loading and unloading processes tends to have a greater impact on the resulting Should Cost.

   It is also important to include in the Should Cost calculation a percentage of the empty return to be remunerated to the carrier or self-employed person, which aims to reflect the average distance to be covered by the haulier or self-employed person until he gets a new load, either for reasons of load imbalance between the regions of Brazil, or due to the specificity of the asset used.

   Do you want to know if your company's transport costs are in line with the calculated operating cost? ILOS, in addition to carrying out consulting services for reviewing the transport contracting strategy, regularly offers the Strategic Transport Management Course, which has a module dedicated to the detailed calculation of Should Cost, with practical exercises on the subject. Click here to know more!

   Sources:

   [1] https://ilos.com.br/web/cursos/cursos-de-atualizacao/gestao-estrategica-dos-transportes/