A freight network is under- or over-priced when the carrier’s rate does not align with its actual length-of-haul profile, market expectations, and operating-ratio requirements. Length of haul alone does not determine profitability.
The traditional rule that long haul makes money and short haul loses money no longer holds consistently. Rising costs, changing freight patterns, and network inefficiency mean that both short- and long-haul freight can be profitable or unprofitable depending on how price and cost interact.
FreightMath examined the question from two directions: how carriers compare with peers and how each carrier compares with the broader market. Both analyses showed that a carrier can succeed at any length of haul but cannot overcome freight that is systematically mispriced.
How We First Identified the Issue: The Rate-Haul Ratio
The first method ranks carriers in two ways:
- Average length of haul, from shortest to longest.
- Rate per mile, from highest to lowest.
The Rate-Haul Ratio is then calculated as:
Rate-Haul Ratio = Rate Rank ÷ Length-of-Haul Rank
The ratio shows whether pricing fits the freight profile. A high value indicates that a carrier runs shorter or more demanding freight without receiving the corresponding rate premium. A low value indicates stronger pricing relative to distance.
When operating ratio was added, carriers below 100 OR had an average ratio of 0.84. Those between 100 and 110 averaged 0.88. Carriers above 110 averaged more than 2.0.
Weak alignment does not always create a high operating ratio, but a very high operating ratio was usually associated with poor price-to-distance alignment. In many cases, the carrier was not primarily failing operationally; it was underperforming commercially.
The Structural Misalignment Zone
Some carriers run short or moderate hauls while earning rates associated with long-haul freight. Others operate true long-haul networks but assume that distance will offset a weak rate.
The resulting misalignment appears in three ways:
- Rates sit close to variable cost per mile, leaving little room for overhead or operating variability.
- Each additional mile reduces margin because the revenue and cost curves no longer intersect at a profitable point.
- Operating ratio remains near 110 despite dispatch changes or volume growth.
That is a pricing-architecture problem. It must be corrected commercially rather than through planning or equipment-utilization adjustments.
A Market-Facing View: The Expected RPM Curve
The Rate-Haul Ratio compares carriers with one another. The Expected RPM Curve compares each carrier with the market.
FreightMath fitted a logarithmic curve to tens of thousands of dry-van loads to estimate what freight normally pays at different lengths of haul. The curve reflects a familiar market pattern: short hauls earn more per mile, while long hauls receive a lower RPM.
For any haul length, the analysis calculates:
Variance = Actual RPM − Expected RPM
A negative value indicates underpricing; a positive value indicates a premium.
One anonymized carrier averaged 525 miles at $2.05 per mile. The market curve indicated an expected $2.33 at that length, showing an underpricing gap of about $0.18 per mile.
Bringing the Two Measures Together
The combined framework has three parts:
- The Rate-Haul Ratio shows whether pricing is aligned relative to peer carriers.
- The Expected RPM Curve shows whether pricing is aligned with the market.
- Operating ratio tests whether the resulting price-and-distance structure is financially sustainable.
Together, the measures distinguish an operational problem from a commercial one and quantify how far pricing may need to move.
It’s Not the Miles; It’s the Math
Profitability does not come from length of haul by itself. It comes from receiving the appropriate revenue for the miles, time, and cost involved.
Carriers that understand their price-to-distance alignment can identify underpriced freight, improve customer strategy, and address the structural drag that can keep operating ratio above 110.