Is Your Freight Network Under or Over Priced?

Summary: Length of haul alone no longer determines trucking profitability. Using two complementary metrics, the Rate-Haul Ratio and the Expected RPM Curve, carriers can identify mispriced freight, assess how their rates compare to peers and the market, and realign pricing to improve operating performance.

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For years, the trucking industry has relied on a simple idea: longer hauls make money, short haul burns it. But as explained in the blog Rethinking Long-Haul Profitability: New Challenges in OTR Trucking, that rule no longer holds. Rising costs, shifting freight patterns, and network inefficiencies mean miles alone do not determine profitability. Long haul can be profitable or deeply unprofitable. The difference comes down to how price and cost interact.

This leads to the real question carriers need to answer today: how do you know whether you are being paid appropriately for the freight you actually haul?

Using FreightMath^™, we studied this question through two complementary lenses. First, we examined how carriers compare to one another inside our client base. Then we evaluated how each carrier compares to what the broader freight market typically pays. Both perspectives pointed to the same conclusion: You can succeed at any length of haul, but you cannot outrun mispriced freight. Pricing alignment matters more than LOH alone.

How We First Identified the Issue: The Rate-Haul Ratio

We began by ranking each carrier by length of haul (shortest to longest) and rate per mile (highest to lowest). Dividing the two created a straightforward diagnostic:

Rate-Haul Ratio = Rate Rank divided by LOH Rank.

This metric highlights how well a carrier’s pricing aligns with its freight profile. A high ratio signals that a carrier is running shorter or more demanding hauls but not earning the revenue those hauls require. A low ratio indicates pricing strength relative to distance.

When we overlaid Operating Ratio, the insight became clearer. Carriers with OR below 100 had an average ratio of 0.84. Carriers between 100 and 110 averaged 0.88. But carriers above 110 climbed above 2.0. In other words, weak alignment does not always cause a high OR, but high OR almost always traces back to weak alignment. Carriers with a healthy Rate-Haul Ratio are far better positioned to withstand swings in freight mix, customer behavior, and network imbalances.

The simplicity of the metric made it a powerful first signal: Many carriers are not underperforming operationally. They are underperforming commercially, and the pricing-to-distance relationship exposes it.

Why Some Carriers Struggle: The Structural Misalignment Zone

A deeper look revealed a consistent group of carriers whose distance and rate profiles simply do not match. Many run short or moderate hauls but earn rates more typical of long-haul freight. Others operate genuine long-haul networks but accept rates that fall below long-haul expectations, assuming that higher length of haul will offset weak revenue. In today’s cost structure, it does not.

This kind of structural misalignment shows up in three ways:

1. Rates fall dangerously close to variable cost per mile, leaving no room for overhead or inefficiency.
2. Every additional mile decays margin instead of improving it, because the revenue curve and cost curve no longer intersect at a profitable point.
3. OR rises into the 110 range and stays there, regardless of operational tweaks or volume gains.

This is not a network problem or an equipment utilization problem. It is a pricing architecture problem. And it must be corrected at the commercial level, not through dispatch or planning adjustments.

A Market-Facing View: The Expected RPM Curve

While the Rate-Haul Ratio helped us compare carriers to each other, we needed a second method to compare each carrier to the market. To do this, we modeled what typical freight pays at different haul lengths by fitting a log curve across tens of thousands of van loads.

This curve captures a basic industry truth: Short hauls earn a premium per mile, and long hauls earn a discount. It establishes an Expected RPM at any LOH.

Once we know the expected value, we compare a carrier’s actual RPM to it:

Variance = Actual RPM minus Expected RPM.

A negative variance indicates underpricing for that haul length; a positive variance indicates premium pricing. For example, one anonymized carrier in our data runs an average LOH of 525 miles at $2.05 RPM. The market would expect $2.33 at that length of haul. They are underpriced by roughly $0.18 per mile.

This second lens confirms what the Rate-Haul Ratio reveals. Some carriers are not just misaligned; they are materially undervalued in a way that OR cannot recover from.

Bringing It Together: A Clear Pricing Alignment Framework

When viewed together, the two methods create a powerful advisory framework:

1. Rate-Haul Ratio shows whether your pricing makes sense relative to your peers.
2. Expected RPM Curve shows whether your pricing is appropriate relative to the market.
3. Operating Ratio validates whether your price-to-distance structure is financially sustainable.

This combined view is also the foundation of a pricing calculator we will make available soon. It will give carriers a simple way to evaluate where they stand today and how far they need to move to reach healthier OR performance levels.

The Real Bottom Line: It’s Not the Miles – It’s the Math

The rules around long haul and short haul have changed. Profitability no longer depends on length of haul but on whether a carrier is being paid correctly for the miles they run. By understanding price-to-distance alignment, carriers can identify underpriced freight, strengthen customer strategy, and avoid the structural drag that keeps OR above 110.

To determine if your freight network is under of over priced using the Expected RPM methodology described above, check out our FreightMath Pricing Normalization Calculator.

Please contact a KSMTA advisor via the form below for more information.