Untitled

The cost of freight, what’s the big deal?

Duke City Redi-Mix (DCRM) can basically be split into a few categories regarding our freight costs. Here at DCRM we haul sand & gravel products that we deliver to customers and for stocking purposes, we haul admixes and other aggregates to make concrete, and we deliver redi-mix concrete. At first glance these different forms of hauling material may seem like kindred spirits, and to an extent they certainly are, at least in the sense that in each case something is being delivered, but that’s where the similarities start to differ and express themselves in the form of dollar signs. Yes, dollar signs! Something we can all agree is at least marginally important to us if not the only reason we get up in the morning! Personally, I get up for waffles! YUM!! Anyway, in a completely professional sense, let’s discriminate between the various types of delivery/freight options we encounter on a daily basis at DCRM. The following account will aim to discern the differences and similarities between them and how they affect company and consumer costs.

Let us consider the variety of freight options that exist for our company’s purposes. First, we not only manage our own fleet of trucks, but we also hire other companies and independent haulers depending on our needs. Secondly, we have both incoming and outgoing freight. Tertiarily (I’ve always wanted to use this word in a sentence 😊), we use a variety of different single and combination-trucks to accomplish our goals. As you can imagine, all of these delivery/freight variables also influence the bottom line, determining company and consumer costs.

Yes, even a company as awesome as DCRM uses other trucking companies & independent haulers to meet our shipping needs. Truth is, when it comes to our shipping needs, we are certainly capable of being self-reliant, but let’s be honest, sometimes the most efficient way to be effective is to bring together under one management other quality companies and independents needed to turn out our product. We are fortunate at DCRM to have quality help in supplying our facilities with the products we need in order to make and deliver the products you need! Notice how I said YOU NEED our products!!

Incoming & outgoing freight – Just like it sounds, we haul materials in and ship products out. We haul a variety of different materials to our different facilities not only for the production of our redi-mix concrete but also for our sand & gravel sales and distribution. To make redi-mix concrete we must freight in materials like sand, different gravel products, cement, flyash, color pigment, and a variety of different concrete admixtures. With these materials we produce and ship redi-mix concrete to our customers. Our sand & gravel division freights in a large variety of different decorative landscape gravel products as well as gravel products more suited for commercial & industrial use. From our distribution hubs we deliver materials throughout the region and occasionally out of state.

In order to accomplish our goals, we use a variety of different specialized trucks suited for stocking materials and delivering products to customers. In general, these different trucks can be classified as single-unit and combination trucks. The single-unit trucks we use to haul freight are represented by our tandem-axle dump trucks and our concrete mixer trucks. The combination trucks we use to haul freight are our end-dump tractor-trailers, bulker tractor-trailers & flatbed tractor-trailers. Each of these delivery vehicles comes with its own challenges and variables to consider. For example, some trucks are larger than others and take longer to complete a delivery. However, larger trucks can also be more cost effective due to larger quantities of material they can deliver per load compared to a smaller truck. Concrete mixer trucks, bulker tractor-trailers & flatbed tractor-trailers all require significantly longer delivery times due to the nature of off-loading these vehicles, and as we know, time is money. Larger trucks can also have higher maintenance costs due to their size and mixer trucks due to their number of moving parts.

Higher maintenance costs and extended delivery times mean higher overall company costs & consumer costs per delivery. For example, our concrete mixer trucks are our highest maintenance cost vehicles and take an average of about 2 hours per delivery, and our tandem dump trucks are our lowest maintenance cost vehicle and take an average of 1 hour per delivery. As you can probably see, there’s a significant difference in company freight cost that gets passed on to the consumer per delivery depending on which method of delivery is required. Here’s a “short list” of some other things to consider regarding company freight costs; truck payment, ongoing maintenance (tires, oil, part replacement), badging-labeling-paint, truck washing, fuel, drivers wages, insurance (also workman’s comp insurance), registration, shop-mechanic expenses, oversight, etc. Throw a little profit on top of that & you have your consumer cost.

So, what are our company freight costs for our different trucking units? Well, that’s proprietary, so I’m not going to tell you! What I can tell you is the consumer costs per type of delivery truck, which are also a reflection of our overall company cost per vehicle (including company profits). We deliver products to customers with three different types of trucks or truck & trailer combinations and we are competitive across the board with standard regional trucking rates. First, our concrete mixer truck consumer cost can be as high as $120 per hour truck time. Our tandem axle dump truck, in which we use to do the majority of our residential sand & gravel deliveries, consumer costs are based on a $75 per hour round trip calculation. Our tractor-trailer (18-Wheeler) deliveries are based on a $90 – $100 per hour round trip calculation for local deliveries. Our over the road consumer costs for tractor trailer are calculated at $3.50 to $4.00 per loaded ton mile (based on a full load of at least 23 tons). Our tractor-trailers costs can vary depending on what they are hauling.

This is just a snapshot of our freight costs and options at DCRM. There are obviously several more contributing factors and minor details to be accounted for in calculating overall costs. For a more holistic description on the subject of freight costs, options and profitability, I can be contacted at DCRM main office (My consultation fee is $50 an hour 😊). Seriously though, In a culture that has come to expect free delivery and government hand-outs, and has forgotten that very few things in life are truly fee, I’ve had to explain the very fine details of our freight costs more times than I can remember and I don’t mind breaking it down once again for the curious inquirer.

Josh Barela

The DCRM Sand & Gravel Guy