How to work out a freight rate
What one trip actually costs, and how a rate per km and per ton comes out of it.
Why a rate quoted from memory loses money
Most rates are quoted in ten seconds on a phone call, from what the same route fetched last time. That works until something has moved — diesel, toll, the batta, or the fact that this load is lighter than the last one.
The costs that get forgotten are the ones that do not appear on the day of the trip. Tyres do not get paid for on the trip; they get paid for once in eight months. The EMI goes out on the fifth of the month whether the truck ran or not. Neither shows up in a quick mental sum, and both are real.
The eight things one trip costs
Every trip cost sits in one of these eight heads. If your quote does not have all eight behind it, something is being paid for out of the margin.
- Diesel — distance divided by mileage, times the rate on the day
- Toll — both ways, including the return if it comes back empty
- Loading — per ton or a lump sum, and whether you or the party pays it
- Unloading — the same question again at the other end
- Driver — trip batta, night halt, and anything handed over on the road
- Tyres and maintenance — a per km figure, because that is how it is actually spent
- EMI or vehicle rent — a monthly figure divided by the trips you get in a month
- Insurance, permit, tax and office — again monthly, divided across the trips
A worked example — Delhi to Mumbai, 10 wheeler, 16 ton
One trip, 1,400 km, and every one of the eight heads filled in. The numbers here are an example; the arithmetic is the part to copy.
| Head | How it is worked out | Amount |
|---|---|---|
| Diesel | 1,400 km ÷ 4 km per litre × ₹90 | ₹31,500 |
| Toll | Both ways on the route | ₹4,500 |
| Driver | Trip batta and night halt | ₹6,000 |
| Loading | 16 ton × ₹150 per ton | ₹2,400 |
| Unloading | Paid by the consignee at delivery | ₹0 |
| Tyres and maintenance | 1,400 km × ₹4 per km | ₹5,600 |
| EMI / vehicle rent | ₹60,000 a month ÷ 4 trips | ₹15,000 |
| Insurance, permit, office | ₹20,000 a month ÷ 4 trips | ₹5,000 |
| Total cost of the trip | All eight heads added | ₹70,000 |
Example figures only — the diesel rate, mileage, toll, batta and your own monthly costs differ by route, truck and month. Put your own numbers into the same eight rows and the method does not change.
Turning the cost into a rate
The cost is ₹70,000. Keep 15 per cent on top and the freight is ₹80,500. The same figure, said three different ways:
| Said as | Working | Rate |
|---|---|---|
| Per trip | ₹70,000 cost plus 15 per cent | ₹80,500 |
| Per km | ₹80,500 ÷ 1,400 km | ₹57.50 per km |
| Per ton | ₹80,500 ÷ 16 ton | ₹5,031 per ton |
All three are the same money. Which one you quote changes who carries the risk — and that is the next section.
The per-ton trap
Quote ₹5,031 per ton and you have agreed to be paid for what is loaded, not for the trip. If the party sends 12 ton instead of 16, you get ₹60,375 against a cost of ₹70,000. The truck ran the same 1,400 km, burned the same diesel, and you lost ₹9,625 on a trip that was agreed at a profit.
There are two ways out, and both are normal in the trade. Either quote per trip for a full load, or quote per ton with a minimum guaranteed weight written on the booking. What does not work is a per-ton rate with no floor under it.
The empty return
A one-way rate only works if the return load is reliable. If it is not, the outward trip has to carry the cost of coming back — diesel, toll and the driver for 1,400 km with nothing on the deck. On the example above that is most of the margin gone.
So either build the return into the rate and quote higher, or treat a confirmed return load as the thing that makes the route worth running at all. Quoting a one-way rate and hoping for a return is the single most common way a route that looks profitable is not.
Loading and unloading — who actually pays
Loading and unloading charges — hamali, labour, crane where it is needed — are small per trip and large per month, and they are the charges most often left out of a quote. The rate is usually per ton or per package, and it differs at the two ends of the same route.
Settle it at the booking, in words, before the truck is loaded: who pays loading, who pays unloading, and whether detention applies if the truck waits. Then write it on the LR as paid or to pay. Arguments about hamali are almost never about the amount; they are about nobody having said it out loud.
If you are a broker, not a truck owner
For a broker the arithmetic is shorter but tighter. Party rate minus supplier rate is the commission, and there is no diesel or EMI in between. But the margin is thin, so being off by ₹500 on a quote matters more, not less.
What eats a broker is not the rate — it is the gap between the two sides of it. A party pays in 45 days and a supplier wants money in 7, so the trip is profitable and the month is still short of cash. The rate is one number; when it arrives is another, and both belong in the decision.
Where the numbers come from
All of this assumes you know what last month actually cost — and that is the part a notebook cannot answer. Diesel, toll, loading, batta and maintenance have to be entered against the trip they belong to, or the per km figure above is a guess with decimal places.
TransportMaster records each expense against the trip, keeps the party rate and the supplier rate side by side, and shows what the trip earned after everything. Once a few months are in, the per km and per ton figures are your own — not an example from a page.
Frequently asked questions
How do I calculate freight per km?
Add up the cost of the whole trip — diesel, toll, loading, unloading, driver, tyres and maintenance, EMI or rent, and a share of insurance, permit and office. Add your margin, then divide by the distance. In the example above, ₹80,500 over 1,400 km is ₹57.50 per km.
How do I calculate freight per ton?
Work out the trip cost and margin the same way, then divide by the weight carried. ₹80,500 over 16 ton is about ₹5,031 per ton. Quote it with a minimum guaranteed weight, or a light load will leave you short.
What is loading charge in transport?
It is what the labour is paid to put the goods on the truck, charged per ton or per package, and sometimes a lump sum. Unloading is the same charge at the other end. Agree who pays each of them at the booking and write it on the LR as paid or to pay.
What is the difference between paid and to pay?
"Paid" means the freight has been settled by the consignor at pickup. "To pay" means the consignee pays it at delivery, usually before the goods are released. The same words are used for loading and unloading charges, and mixing them up is what most freight disputes turn out to be.
How much margin should a transporter keep?
There is no single figure — it depends on the route, the competition and whether a return load is reliable. What matters more is that the margin sits on top of all eight cost heads, including tyres and EMI. A good-looking margin over an incomplete cost is not a margin.
Why does the same route cost different amounts in different months?
Diesel moves, toll rates get revised, and the batta rises in the season. The load changes too — a lighter load on the same distance costs the same to run but earns less if you quoted per ton. Re-work the figure every few months rather than carrying last year's rate forward.
How do I know whether a trip made money?
Only by having the expenses recorded against that trip. Freight received, minus the supplier or driver payment, minus every expense entered on that trip, is what it made. If the expenses sit in a notebook and the freight sits in a ledger, the answer cannot be worked out at all.
Truck types and load capacity · Trip management — expenses against each trip · Party and supplier ledger
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