As we mentioned in the previous article, the process of price formation in logistics is very complex and involves the interaction of numerous factors. There are both general and specific factors that influence the cost and pricing of these services. The range of logistics services is vast, so each transport and delivery service follows its own pricing principles.
For example, if you need to transport a full truckload from point A to point B, the cost of such transportation can generally be calculated (distance, fuel cost, driver’s salary, depreciation, licenses, vignettes, insurance, administrative expenses, taxes, etc.). However, even in this case, several variable factors will come into play (demand based on seasonality, transport availability, or even macroeconomic and political factors).
For example, if you need to transport a full truckload from point A to point B, the cost of such transportation can generally be calculated (distance, fuel cost, driver’s salary, depreciation, licenses, vignettes, insurance, administrative expenses, taxes, etc.). However, even in this case, several variable factors will come into play (demand based on seasonality, transport availability, or even macroeconomic and political factors).
Why Are Courier or “Through-Warehouse” Services Sometimes Cheaper?
For courier services and companies handling groupage shipments, the cost of delivering a specific cargo is often well below its actual cost. One might even say that it’s impossible to determine the cost of such a delivery, as the income and expenses of these companies can only be calculated over a specific period (be it a day or a single trip, not per delivery).
However, this type of transport service, like courier delivery or terminal-based delivery, has certain drawbacks. Clients must adhere to strict conditions, starting with packaging requirements and delivery deadlines, while also accepting reduced security and control. Despite modern technologies that allow online tracking of cargo and parcels, transportation involves passing through multiple warehouses, repeated handling, and therefore significant risks of damage or loss. At best, if the cargo is found, the delivery deadline will be missed. However, these risks are “compensated” by a lower price.
Since the goal in groupage or courier transport is to deliver as much cargo as possible with minimal investment, very strict requirements are imposed on the size and weight of the cargo. If these standards are exceeded, the price can increase significantly.
However, this type of transport service, like courier delivery or terminal-based delivery, has certain drawbacks. Clients must adhere to strict conditions, starting with packaging requirements and delivery deadlines, while also accepting reduced security and control. Despite modern technologies that allow online tracking of cargo and parcels, transportation involves passing through multiple warehouses, repeated handling, and therefore significant risks of damage or loss. At best, if the cargo is found, the delivery deadline will be missed. However, these risks are “compensated” by a lower price.
Since the goal in groupage or courier transport is to deliver as much cargo as possible with minimal investment, very strict requirements are imposed on the size and weight of the cargo. If these standards are exceeded, the price can increase significantly.
When Does Courier Service Become Too Expensive?
Courier services are unsuitable for businesses needing to transport large and heavy loads, for instance, those exceeding the size of a Euro pallet. In such cases, standard transportation methods must be used, such as a full truckload (FTL), or a less-than-truckload (LTL) option, where the truck follows a specific route and collects smaller loads. In this scenario, the price is calculated based on loading meters (LDM). An LDM is an area in a semi-trailer that measures 2.4 meters wide (the standard width of a semi-trailer) and 1 meter long. The cargo height can reach 260 cm or more — up to 310 cm in a so-called mega-trailer or jumbo truck.
Why Do Delivery Prices Vary for Locations with the Same Distance?
Of course, this question isn’t entirely accurate given what we’ve just discussed. However, there is still an explanation for it!
Objectively, the calculation of the price per meter can be the most volatile among all options. In this case, all the previously mentioned objective factors come into play, as well as additional subjective circumstances. The price for this meter, even under identical conditions (cargo size and weight, distance between loading and unloading points), can fluctuate by hundreds of euros. Geographic location, even within the same country, plays a major role. For example, in Latvia, transport flows are predominantly directed to or from Riga, so fewer vehicles operate in regions where loading or unloading would be convenient without incurring additional costs.
Objectively, the calculation of the price per meter can be the most volatile among all options. In this case, all the previously mentioned objective factors come into play, as well as additional subjective circumstances. The price for this meter, even under identical conditions (cargo size and weight, distance between loading and unloading points), can fluctuate by hundreds of euros. Geographic location, even within the same country, plays a major role. For example, in Latvia, transport flows are predominantly directed to or from Riga, so fewer vehicles operate in regions where loading or unloading would be convenient without incurring additional costs.
Why 100 Kilometers Isn’t Such a Small Distance After All?
For instance, for a truck to specifically drive 100 kilometers to pick up cargo from a location off the optimal route, significant resources are required: driving time (2 hours for the driver; under working regulations, this could amount to almost ¼ of the daily maximum), fuel (approximately 30–35 liters), and the driver’s overall working time (not just driving but also handling the loading operations, which vary at each site). Altogether, this could take half a workday, incurring the corresponding costs, while the client might think, “It’s just 100 km.”
What’s the Best Solution?
It’s possible that a company might have transport already nearby or find a way to organize the shipment differently. However, this also requires resources. Thus, the cost of such a shipment can vary greatly, which doesn’t mean one company is offering an “unreasonable” price. Referring back to the previous discussion on loyalty, we can conclude that a transporter will always try to offer the best solution to a loyal client, even in such cases. For instance, partners might be involved, as a good company needs a reliable partner network. No logistics company in the world can efficiently handle all shipments with its own fleet, no matter how extensive it is. A good transporter will always offer the best price to a loyal client, even when there are additional complications.
What Can Be Concluded, and What Does LATCARRIER Offer?
Considering all the above, it’s clear that the price of each cargo delivery can vary widely, depending on both the client’s needs and the specialization of the transport company. How do you choose the right cargo transport company to ensure that each required service is performed with the necessary speed, security, and cost?
LATCARRIER evaluates each client’s request and all critical information to determine the best way to execute it and offers available options. We understand that no transport company can deliver all the world’s cargo with its own fleet. Therefore, to ensure an optimal balance between price and service for our clients, LATCARRIER only collaborates with trusted partners. Our main goal is always to offer the client a solution that meets their needs and expectations. For this reason, our team prioritizes working in a way that ensures the client feels secure and is satisfied with both the price and the quality of the service provided.
LATCARRIER evaluates each client’s request and all critical information to determine the best way to execute it and offers available options. We understand that no transport company can deliver all the world’s cargo with its own fleet. Therefore, to ensure an optimal balance between price and service for our clients, LATCARRIER only collaborates with trusted partners. Our main goal is always to offer the client a solution that meets their needs and expectations. For this reason, our team prioritizes working in a way that ensures the client feels secure and is satisfied with both the price and the quality of the service provided.
