What a rate is made of
Rate per mile is a trap
Rate per mile is seductive because it turns a messy thing into one clean number. Divide the cost by the miles and now you can compare anything to anything. That is exactly the problem.
Why it misleads
A truck has costs that do not care how far it goes. Someone has to drive to your dock, wait, load, secure the freight, and do paperwork. That work is identical on a 200-mile run and an 1,100-mile run. Spread across 200 miles it is expensive per mile. Spread across 1,100 it nearly disappears.
So short lanes always look terrible on rate per mile and long lanes always look great. If you benchmark a 180-mile run against your network average, you will conclude you are being gouged. You are not. You are measuring with the wrong instrument.
The same distortion shows up in four other places:
- Direction. Into a freight-rich market is cheap. Into a market where the truck will sit is expensive. Same miles, different economics.
- Equipment. Reefer carries fuel and maintenance costs dry van does not. Flatbed carries securement and tarping labor.
- Season. Produce season reprices whole regions for weeks. So do the days around major holidays.
- Which miles. Practical miles, shortest miles, and the routing your provider actually uses can differ by a real percentage. If two quotes use different mileage bases, the per-mile comparison is fiction.
What to use instead
Cost per lane, tracked over time
Your Portland-to-Reno run compared to your own Portland-to-Reno run last month is a real comparison. The same lane, the same equipment, the same commodity. Everything that makes rate per mile lie is held constant. Nearly everything useful about freight benchmarking comes from comparing a lane to itself.
Cost per unit delivered
Cost per pallet, per case, or per pound of product landed. This is the number that connects freight to the part of the business that pays for it, and it catches things rate per mile cannot — like the fact that a slightly higher rate on a truck that holds more can be the cheaper answer.
Total landed cost, including what went wrong
The cheapest rate that produced a missed appointment, a damaged pallet, and four hours of your team's time was not the cheapest rate. Most shippers never do this arithmetic because the costs land in different places. It is worth doing once a quarter, even roughly.
A fair use for rate per mile
It is genuinely useful for one thing: sanity-checking a single lane against itself over time, on the same equipment. If your usual lane has been running at one number for six months and today's quote is materially different, that is a real signal worth a question.
It is not useful for comparing lane to lane, provider to provider on different lanes, or your network against somebody's published average.
The conversation this makes possible
When a shipper opens with "your rate per mile is above market," a provider hears someone working from a benchmark that does not apply, and the conversation gets defensive.
When a shipper opens with "this lane has run consistently for us and today's number is well above that — what changed?" they get an actual answer. Capacity tightened, fuel moved, the receiver changed their appointment rules, or the truck now deadheads out. Every one of those is something you can plan around once you know it.
One number invites an argument. The other invites information. Take the information.
Questions welcome
Ask me anything in here — joseph@thesupportedshipper.com. No charge, no follow-up sequence.