Estimation of the Minimum Transportation Fee


The minimum transportation fee is the price that producer charge in order to just cover their transportation costs. If the charged fee is larger than this minimum, the producer earns money by transporting the product. In contrast, if the charged fee is smaller than the minimum, the producer loses money in transporting the product. In this case, the producer may cover part of the transportation cost by increasing the product sale price, provided that market conditions allow for such an increase.



FishTran Highlights:



  • International and English systems of measurement;
  • Estimation of the minimum transportation fee per mile (kilometer) and per pound (kilogram);
  • Transportation by own or rented truck, or by paid mail delivery service.



    • Information Required for Estimations:



  • Shipment by own truck: roundtrip distance and shipment weight; fuel price; truck efficiency; driver's wage; average driving speed; cost and frequency of regular car maintenance; insurance; auto loan financing; and average annual driving distance.


  • Shipment by rented truck - roundtrip distance and shipment weight; fuel price; truck efficiency; driver's wage; average driving speed; daily and per mile (per kilometer) rental rates; and the number of truck rental days.


  • Shipment by paid mail delivery service - shipment fee and weight.



    • Fee Estimation Procedure: Shipment by Own Truck



    Per-mile (kilometer) transportation cost is estimated as the sum of direct trip expenditures and car ownership costs converted to a per-mile (kilometer) basis.
    Direct costs include fuel, labor, and maintenance. Direct costs also account for depreciation in truck value for every mile driven.
    Ownership costs include insurance, auto loan financing, property tax, and other annual expenses that do not directly relate to fish delivery. To estimate per mile ownership costs, annual costs are divided by the average annual driving distance.

    Per-pound (kilogram) transportation cost is estimated as a product of per mile (kilometer) cost and roundtrip distance, divided by the shipment weight:

    Per Pound Tr Cost



    Fee Estimation Procedure: Shipment by Rented Truck



    Per-mile (kilometer) transportation cost is estimated as the sum of fuel, labor, and rental costs.
    Per-mile rental costs are either specified by the user directly, or estimated based on daily rental rate, number of days the truck is rented, and roundtrip driving distance.

    Per-pound (kilogram) transportation cost is estimated as a product of per mile (kilometer) cost and roundtrip distance, divided by the shipment weight (see the formula above).



    Fee Estimation Procedure: Shipment by Paid Mail Delivery Service



    Per-pound (kilogram) delivery cost is estimated as a ratio of delivery service fee and shipment weight. The delivery service fees can be estimated on-line using fee calculators on the web-sites of paid delivery service companies. The links to the web-sites of DHL, FedEx, USPS, and UPS are provided.



    More Information about Transportation Cost



    Barnes G. and P. Langworthy. 2003. The Per-Mile Cost of Operating Automobiles and Trucks. Minnesota Department of Transportation. (download from our site or from Minnesota Local Road Research Board's web site at http://www.lrrb.gen.mn.us/PDF/200319.pdf )

    A/N Group, Inc. (frequently up-dated) Auto and Vehicle Tables. http://www.smbiz.com/sbrl003.html

    Victoria Transport Policy Institute (Canada). 2005. Transportation Costs And Benefits: Resources for Measuring Transportation Costs and Benefits. http://www.vtpi.org/tdm/tdm66.htm

    Victoria Transport Policy Institute (Canada). 2005. Transportation Cost and Benefit Analysis: Techniques, Estimates and Implications. http://www.vtpi.org/tca/