Road freight: pricing, minimum rates and calculation

Anyone working with road freight needs to keep track of Brazil's economy, industry rules and changes in the logistics market. Highways remain central to the distribution of goods in the country, and any cost variation quickly appears in negotiations between shippers, carriers and customers.

Fuel remains one of the operation's most sensitive items, but it is not the only point requiring attention. Today, in addition to diesel, anyone calculating freight in Brazil also needs to consider the minimum freight rate set by ANTT (Brazil's National Land Transport Agency), tolls, cargo type, distance, vehicle capacity and other costs that make up the price. Do you know how these factors influence heavy vehicle logistics?

For road freight, spending on fuel, maintenance, tires, working hours, taxes and fees can be substantial. That is why, when some of these costs rise or a rule changes, the carrier needs to seek alternatives to improve efficiency without charging less than is needed to keep the operation running.

But to save and price better, it is important to know how road freight works, what items make up its price and how to calculate it, right? Take a look:

What is road freight?

Road freight is the transport of goods by road, within the same city, region, state or country. It is handled by logistics companies and carriers that deal with each type of cargo and work to deliver it safely to the agreed destination.

A price is charged for each delivery, and behind it, several details make up the final transport price. In domestic operations in Brazil, payment must also comply with the minimum rates defined for road freight transport, which exist to establish minimum conditions for carrying freight within the country. Including:

Cargo value

It is important to know the cargo value and include it in the freight calculation, since some fees and insurance are calculated according to the price of the goods to be transported.

Category

Transported goods are classified into categories that can include live, fragile, hazardous, heavy and frozen cargo, among others. Each of these categories influences how transport is carried out.

They are therefore also considered when calculating road freight. The logic behind minimum rates itself takes account of the type, nature and specifics of the cargo transported, because different cargo requires different care, vehicles, routes and costs.

Weight and size

The weight and size of cargo are essential to the freight price, since the goods will occupy space and determine the truck's maximum capacity.

In practice, looking only at actual weight is not enough. The space occupied also matters: that is why many operations compare the goods' physical weight with volumetric weight, considering measurements such as length, width and height. In general, when the cargo's volume takes up more space than its weight suggests, it can influence the charge.

Route

The longer the route, the more fuel will be consumed. In addition, the truck experiences wear, and the driver will also have long working hours.

However, even shorter trips require good planning to reduce the freight price.

Route planning should therefore consider the shortest distance as well as roads with fewer obstacles — including traffic, tolls, traffic lights, circulation restrictions and stopping points. Distance traveled is one of the factors considered in transport cost formation.

Want to improve your fleet management? Talk to a Prolog specialist

Tolls

Tolls are road fees charged for roadworks and maintenance, keeping the road in good condition. All drivers using the highway must pay, including the person carrying the freight.

The farther away a delivery is, the more toll plazas the truck may pass, and these amounts should be included in the freight price. In Brazil's road freight transport, there is also the mandatory Vale-Pedágio toll voucher rule: the shipper must advance this amount to the carrier rather than leave the cost to be absorbed during the trip.

Minimum charge

A large share of carriers set a minimum weight for a delivery, being fair to those paying for the service and avoiding losses for those transporting it.

In addition to this commercial practice, it is important to distinguish the company's internal minimum charge from the minimum freight rate defined by ANTT in Brazil. Minimum rates are binding, and domestic road freight transport in Brazil must be paid at or above them. In other words, commercial negotiations must not ignore the operation's regulatory minimum cost.

Excess freight charges

An excess freight charge is a fee charged when the weight of goods exceeds the agreed amount.

This reinforces the importance of checking cargo weight, dimensions and characteristics before collection. When actual cargo does not match the information provided in the quotation, transport may require another vehicle, occupy more space, consume more resources or change the planned cost composition.

Transport fees

Road freight in Brazil also involves numerous fees and taxes, such as the Tax on the Circulation of Goods and Services, Risk Management fees and Traffic Restriction fees, among others. Naturally, these are included in the final freight transport price.

A lot is added to the final freight price, isn't it?

That is why it is so important to research trustworthy companies that operate legally, respect the operation's minimum costs and seek savings without compromising safety, deadlines and quality: everyone benefits.

How does road freight work?

Road freight can take place by hiring a carrier to deliver another company's goods — outsourcing a service.

Some businesses accept small shipments; others work specifically for large companies. Others do both, transporting a wide variety of products, from furniture to food.

Logistics can therefore be responsible for:

• Collection;
• Storage;
• Picking;
• Transport;
• Delivery to the destination.

The carrier also has inventory warehouses, a truck fleet — whose types can vary according to the product transported — and a large team of professionals qualified to handle the goods in the best way.

It is a role with great responsibility because, beyond dealing with a series of bureaucratic requirements, it is one of the main contributors to the country's economic activity, making deliveries to a wide range of locations throughout Brazil.

How do the economy and fuel influence road freight?

As mentioned above, road transport relies heavily on fuel. When fuel prices rise, delivery prices tend to rise as well, because diesel directly contributes to the truck's operating cost.

Consequently, the prices of the transported product may rise, financially affecting producers and consumers.

Diesel also appears in the industry's reference rules in Brazil: ANTT's minimum freight rate policy follows the S10 Diesel Oil Indicator. That is why a carrier needs to seek ways to balance freight pricing. These include knowing the vehicle's fuel consumption per kilometer, planning shorter routes, establishing partnerships with fuel stations, keeping truck maintenance up to date and practicing defensive driving.

What else influences freight prices?

When calculating a freight service, the main consideration should be the items included in the service provided, such as those listed under “what is road freight”.

We can see that the greatest influences on a final price are the fees charged, fuel price, tolls, distance traveled, cargo type and vehicle configuration. These items are not always within the carrier's control and therefore need careful consideration when pricing.

It is worth emphasizing that each logistics company has its own fees and may add or exclude items different from those covered here. Even so, total transport operating costs and applicable minimum rates must not be ignored in negotiations.

How can you check minimum rates and review contracts?

To check the minimum freight rate in Brazil, first gather the operating data that affect classification: cargo type, nature and specifics; vehicle configuration and type; number of axles; load capacity; and distance traveled. Then consult ANTT's current regulation and table, and compare the applicable amount with the negotiated payment.

• Record the data used in the calculation and the version of the reference consulted;
• Check whether the contracted amount is at or above the minimum rate applicable to the domestic operation;
• Confirm that the shipper advances the mandatory Vale-Pedágio toll voucher amount;
• Review pricing and adjustment clauses before renewing or changing a contract;
• Repeat the check when the applicable reference or any operating data change.

This routine makes contract reviews more straightforward: managers can compare the quotation's assumptions with the trip's actual conditions and record why the price was maintained or adjusted. Since the minimum rates defined in ANTT's regulation are binding in Brazil, negotiations must not result in payment below the applicable minimum.

When organizing contracting documents, it is also worth consulting the information about CIOT (the Brazilian freight transport operation code) (in Portuguese), and the fine for failing to issue a CIOT (in Portuguese). To keep track of the topic's history, also see adjustments to the road freight rate table (in Portuguese).

How is freight calculated?

1. Determine the cargo value, weight and size.
2. Gather basic delivery information: distance in kilometers, delivery destination and whether scheduling is possible.
3. Identify the fees applicable to the delivery, including tolls, insurance, risk fees, traffic restrictions and other applicable charges.
4. Apply the formula: height x width x length x 300, to find the volumetric weight used in the operation.
5. Calculate freight by weight, considering mileage and cargo weight. Generally, the weight used is the greater of actual weight and volumetric weight. For this stage, logistics companies have a rate table indicating product weight x delivery distance.
6. Calculate the dispatch fee and value-based freight (cargo insurance). The dispatch fee is a fixed transport charge set by the company. Value-based freight is calculated as cargo value x the value-based freight percentage, also set by the company.
7. Calculate the GRIS risk management fee, a risk fee whose percentage is set by NTC (Brazil's National Association of Freight Transport and Logistics) at 0.3% of the goods' value.
8. Calculate the base freight charge with the formula weight-based freight + dispatch fee + value-based freight + GRIS.
9. Check the applicable minimum rate, considering factors such as distance, cargo type, vehicle configuration, number of axles and the load capacity of the vehicle combination used.
10. Add fees applied to the total amount, adding percentages for extra fees such as high-risk delivery, more than one delivery attempt, etc.
11. Add everything to obtain the final freight price, using the formula base freight charge + fees applied to the total amount, respecting minimum costs and the amounts agreed for that operation.

With all fees and tables at hand, this calculation can be quick and simple. And, of course, it is essential to keep track of price changes in the logistics market, such as fuel, truck maintenance, tolls and minimum rate rules, to avoid losses.

Today we can also count on help from various tools that perform this calculation automatically. It is worth researching them and modernizing your business.

To learn more about improving your company's management, download the infographic on 7 technologies for fleet management (in Portuguese).