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How Freight Forwarders Calculate Their Transport Costs: An Insider's Guide

As a digital freight platform, Saloodo! positions itself between the loading companies and the forwarding agents or freight carriers carrying out the transports. As a result, we see a multitude of requests for different transports from all over Europe and the respective price offers of the service providers. It is often the case that inexperienced clients are surprised by the bids submitted – sometimes because they are too high or on the contrary, too low.

In this article, we aim to shed light on the principles by which transport service providers calculate their transport costs and where clients often have misconceptions. However, it's important to note upfront that we cannot list all factors, as pricing actually incorporates many different aspects. One thing upfront: We cannot list all points here, as pricing actually involves many different aspects.

Co-loading - "Carpool" for freight

Many clients are familiar with the concept of "co-loading." Transporting goods as co-loading means that a vehicle already used for a transport order is not yet fully loaded. In such a case, the vehicle can take a detour to pick up more goods - to "co-load" another shipment. Usually, the first transport order covers the costs of the transport for the freight carrier. Therefore, co-loading is typically much cheaper than if it had to be transported with its own vehicle.

Conditions for Co-loading

However, as a shipper, one cannot always assume a low price, as not all co-loadings are easy to implement. The first requirement is that a vehicle is already en route or will be soon. This vehicle must then have enough space available for the co-loading - both in terms of free loading space and load weight. Last but not least, the original route must be long enough to allow the co-loading to be picked up and unloaded in the meantime - without causing significant delays to the original shipment. Therefore, quick co-loading is not always possible, which can lead to higher costs.

Short Distance = Low Price?

Especially for transport requests over a very short distance, a very low transport price is expected. This is fundamentally correct since many transport costs are calculated per kilometer. Intuitively, fewer kilometers = lower price. However, there is a certain minimum effort that arises regardless of the distance traveled. This includes:

  • The time spent traveling to the loading site,
  • The time spent unloading at the unloading site,
  • The time spent unloading at the unloading site,
  • The fact that the vehicle cannot be used for other, longer distances during this time.

As a result, a transport by a forwarding agency always has a certain minimum price, even for short distances. This is comparable to a taxi ride, where you have to pay not only the price per kilometer but also always a base amount, no matter the actual length of the journey.

Better Use of Spaces - Unpalletized Goods

There is regularly cargo to be transported that is not yet on pallets or may not fit on pallets at all. These could be long pipes, wooden beams, or steel girders. For such items, the idea might be that the truck driver could simply place them between the other pallets on the loading area. This would allow even more efficient use of space that would otherwise remain empty - a great idea to save on transport costs. However, this does not work in road freight transport. The cargo must always be properly secured to protect the lives of the drivers and other road users.

Therefore, goods cannot simply be wedged between pallets but must be secured with tension belts and other securing materials. Including all the securing measures, for example, a pipe takes up much more space, and there is no "saving of space."

How Freight Forwarders Calculate Prices for Their Transport Offers

There are many different factors influencing freight forwarding prices, which are also weighted differently. Here you see a selection of factors that play an important role in the pricing of transport costs:

  • Regarding the transport route: length of the transport in kilometers, whether it is an international or national transport, and whether there are elevations to overcome, etc.?
  • Regarding the timing of the transport order: Is there currently a surplus of freight? But also holidays, bridge days, weather conditions (icy roads, poor visibility), etc.?
  • Around the cargo: Some goods can only be transported by specific vehicles. For example, bulk goods like sand or flour that do not fit on regular trucks.
  • How long does the transport take? Groupage transports, like PTL, are cheap but also take longer. If it needs to be quick, courier service transport or a full load is often necessary.
  • Regarding the loading/unloading site: Does additional equipment need to be taken along for loading and unloading? Some loading sites have no forklift and no ramp, yet many trucks are precisely designed for this. In such cases, the truck must carry a so-called piggyback forklift – this is, of course, more expensive than if the forklift could be dispensed with.

Transport costs through Saloodo! less complex

The points illustrate that pricing for transport services is a complex topic and not always immediately understandable at first glance. However, it is worthwhile to delve into this matter to comprehend the background when selecting a service provider. If you place a transport request with Saloodo!, it becomes even easier: you can see at a glance all the freight forwarders that have made offers for your request, allowing you to easily appoint the right transport service provider for your needs.

You Want to Learn More about this Topic?

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20. July 2017 / Reading time: ~ 1 Min.