Transportation plays a vital role in the economy as it provides movement for almost all goods and services. It enables businesses to transport raw materials and finished goods to their respective destinations. However, freight transportation comes with complex pricing contracts that businesses need to understand to operate smoothly. One of these contracts is the \"Loaded Mile.\"
What is a Loaded Mile?
A Loaded Mile is a term used in the freight industry that refers to the distance traveled while hauling cargo. In simple terms, a Loaded Mile means a truck carrying goods from one location to another with the truck's total weight and cargo combined considered as one unit of measurement. A contract between a shipper and a carrier usually outlines the load's total miles covered, and the freight's weight is charged as a single unit.
How is it Calculated?
To calculate the Loaded Miles, the freight industry uses a point-to-point measurement system. Loaded Miles are calculated by determining the distance between the shipping and delivery points, which is then multiplied by the agreed-upon rate-cents per mile with the weight of the freight included. The carrier's hauling rate for the cargo should be based on the distance beween the origin of the cargo and the destination. Once these measurements are taken into account, the carrier and shipper will agree on the negotiated rate.
Why is it Important?
The Loaded Mile contract is vital in the freight industry because it allows the carrier to provide service at a fair rate while also making a proper profit on the services offered. Additionally, knowing the rate of a Loaded Mile helps shippers estimate the cost of transporting their goods before finalizing transportation agreements. The Loaded Mile is a straightforward pricing system, making it an industry standard in shipping contracts.
Conclusion
In conclusion, the Loaded Mile is a critical aspect of the freight industry as it is an efficient way of measuring and pricing transportation. The process underpins the calculative approach to pricing freight transportation cost and highlights the need for clear communications between carriers and shippers. With both parties understanding the concept of the Loaded Mile, engaging in, negotiating and agreeing on a contract that accommodates their requirements will be a simple process.
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