FreightMath helps an irregular-route OTR carrier price freight by calculating variable cost and gross margin at the load level, adding time, ranking customers and lanes, and identifying specific rate opportunities.
Freight markets continually shift with driver and equipment supply and the economy. Rather than reacting to media narratives or broad shipper pressure, carriers should focus on their own metrics, market position, customer needs, and profitability levers.
Step 1 – Calculate Standard Cost per Mile
The standard cost per mile contains variable costs only. It excludes fixed equipment and administrative expense.
The variable categories are:
- Driver compensation: wages, per diem, benefits, and workers' compensation
- Owner-operator or lease-purchase compensation: mileage or percentage compensation and fuel-surcharge amounts
- Fuel: diesel, DEF, and other additives
- Truck maintenance: tractor parts, labor, and tires
- Trailer maintenance: trailer parts, labor, and tires
- Insurance: premiums, deductibles, self-insured retention, auto liability, physical damage, cargo, excess liability, and minor accident damage
- Other variable costs: road expenses, motels, washes, tolls, and similar items
After mapping the relevant general-ledger accounts, divide the costs by dispatch miles from the same period. Calculate both year-to-date and most-recent-month values.
A mixed company-driver and owner-operator fleet should weight driver and contractor compensation by each group's miles. Company-driver miles should also be used to weight fuel and tractor maintenance. Other costs are divided by total company and owner-operator miles.
The result approximates the variable cost of every load. Historical comparisons also reveal inflation and help explain the new rate threshold to customers.
Step 2 – Calculate Gross Margin per Mile and per Day
Gross Margin per Mile
The required inputs are:
- Empty dispatched miles from the previous delivery to the pickup
- Loaded dispatched miles from pickup to delivery, calculated with a consistent method such as PC*Miler Practical Miles
- Total miles, equal to loaded plus empty miles
- Standard cost per mile
- Load revenue, including linehaul, fuel surcharge, and accessorial revenue
The load gross margin is load revenue minus the standard cost applied to total miles. Gross margin per mile divides that margin by total miles.
Gross Margin per Day
FreightMath then adds time. The interval begins with the empty call on the prior load and ends with the empty call on the current load.
Inputs include empty or dwell time, loaded time including loading, detention, transit, and unloading, the load's standard cost, and total load revenue.
Gross Margin per Day = ((Load Revenue - Load Standard Cost) / (Empty Time + Loaded Time)) × 24
Step 3 – Rank Customers and Lanes
Once every load has a gross margin per day, rank customers from high to low, including broker bill-to accounts.
Rank lanes using a geography with enough density. A carrier with only a few Marietta, Georgia, loads may group them with the broader Atlanta market as GA-ATL.
The ranking exposes which customers and market pairs use the carrier's time and capacity most productively.
Step 4 – Take Action
KSMTA suggests starting with a target of $0.10 per total mile in recoverable opportunity.
Rank customers within each lane by gross margin per day and add:
- The customer's effective rate per mile on the lane
- The average effective rate for the full lane
- An external benchmark such as a 30-day DAT contract rate
- The lane-average differential
- The external-benchmark differential
External benchmarks require enough market density and may need to be grouped using three-digit ZIP clusters or Key Market Areas.
Add two final fields to create the Price Impact Action Table:
- Price Opportunity: the larger of the lane-average and external-benchmark differentials
- Opportunity Value: historical miles multiplied by the price opportunity
The opportunity value is partly psychological: it shows the margin left on the table if the carrier could fully close the gap.
Because trucking is not perfectly efficient, the carrier should apply an actualization factor and establish a realistic six- to 12-month target. Customer knowledge, relationship timing, and operating conditions determine how much of the theoretical opportunity can be captured.
Knowing the incentives behind shipper requests and industry commentary removes a barrier to action. The calculations do not make the choices easy, but they show where the carrier can act with the greatest price impact.