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Yard journal · Logistics

Backhauls, and why your ZIP code sets your price

Two customers, identical order, identical grade, three hundred miles apart — and a delivered price that differs by forty per cent. The reason is a truck that was going there anyway.
Published
July 16, 2024
Written by
Nadia Okonkwo-Reyes
Reading time
8 minutes

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US ZIP (66115 or 66115-1204) or Canadian (M5V 3L9)

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Key takeaways

  • Thirty-eight per cent of our miles run on trucks already making the journey, at a fraction of the headhaul rate.
  • Lane structure beats distance: Des Moines is closer than Springfield and costs more per box.
  • A two-day delivery window frequently moves a load onto a return leg and is the cheapest concession a buyer can make.
  • Backhaul availability collapses during harvest and before Christmas, which can add forty per cent to a lane.

A customer in Springfield and a customer in Des Moines order the same four hundred boxes at the same grade in the same week. The Springfield delivered price is fourteen per cent lower. Neither of them negotiated anything. The difference is that we have a regular return lane out of Springfield and we do not out of Des Moines.

What a backhaul is

A carrier delivering into Kansas City with nothing booked for the return leg has two options: run empty, or take whatever pays something. A load of banded boxes going the direction the truck is already heading is close to pure margin for them, which is why it can be priced at a fraction of the headhaul rate.

Thirty-eight per cent of our miles run this way. It is the single largest reason a used box can be delivered four hundred miles and still undercut a new box made two hundred miles away.

Why this makes pricing look inconsistent

Customers occasionally suspect that delivered pricing is arbitrary. It is not arbitrary, but it is genuinely lane-specific in a way that catalogue pricing cannot express.

Delivered cost per box, 400 five-wall 3A boxes, flattened
DestinationDistanceLane typeFreight per boxDelivered per box
Topeka, KS65 miOwn truck, metro$0.42$8.17
Springfield, MO215 miRegular backhaul$0.88$8.63
Des Moines, IA195 miHeadhaul, no return$1.55$9.30
Tulsa, OK250 miRegular backhaul$0.95$8.70
Denver, CO600 miBrokered truckload$2.10$9.85
Atlanta, GA800 miLTL$3.40$11.15

Note that Des Moines is closer than Springfield and costs more. Distance is a rough proxy for freight cost; lane structure is the real driver.

How to make your own lane cheaper

  1. Ask what capacity exists on your lane before assuming a quote is fixed. Sometimes waiting four days puts you on a return leg.
  2. Be flexible on delivery date. A two-day window is often worth several hundred dollars against a fixed appointment.
  3. Combine collection with delivery. If we are taking empties out of your building, the inbound leg is already paid for.
  4. Order in trailer-efficient quantities. Four hundred and eighty flattened boxes and six hundred and ninety flattened boxes cost nearly the same to move.
  5. Consolidate with a neighbour. We have run shared loads for two businesses in the same industrial park more than once, and both paid roughly half.

The seasonality nobody warns you about

Backhaul availability collapses during agricultural harvest and again in the weeks before Christmas, because every trailer in the region has a paying load in both directions. A lane that is cheap in May can be forty per cent dearer in October with no change to the boxes.

If your requirement is predictable, book it outside those windows. If it is not, tell us the flexibility you do have and we will work around the peaks.

Questions

Follow-ups on this post.

Can we do anything to lower our own lane cost?
Five things: take flattened stock, be flexible on the date, order in trailer-efficient quantities, combine collection with delivery, and ask whether a neighbour could share a load. We have run shared loads for two businesses in the same industrial park more than once.
Why do you quote freight separately?
So you can see exactly what geography is costing you. It occasionally loses us an order to somebody closer, which is the correct outcome.

Nadia Okonkwo-Reyes · July 16, 2024 · Logistics

Written at the ReGaylord reload yard, 3259 Fiberglass Rd, Kansas City, Kansas. If any of it is wrong, or you have better data, tell us — several of these posts exist in their current form because a customer argued with an earlier one.

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