Why do price offers differ so much between transport companies?

Why does a cheaper offer not automatically mean better transport?

A very low price can mean either real optimization (well-planned routes, efficient fleet) or cost cuts that become apparent later: longer times, increased risk of delays, lack of additional insurance, or poor support in case of problems. Therefore, price differences must be considered in the context of the services included and how the company calculates its actual cost per kilometer.

Have you ever wondered why the price for freight transportation differs so much from one company to another? In fact, of the 41,500 transport companies in Romania, only about 10% actually make a profit. This startling statistic shows that fair pricing is a major challenge for the industry.

In reality, transportation costs are influenced by many factors, 60-75% of which are directly related to drivers' wages, fuel consumption and equipment depreciation. However, not all transport companies calculate these costs properly. For example, the cost of compulsory MTPL insurance has risen dramatically from €0.00581/km in 2013 to €0.03127/km in 2023, but not all companies reflect these increases in their offers.

A closer look reveals that price differences between freight forwarding firms are often the result of different approaches to calculating actual costs. In this article, we look at the main reasons why there are such wide discrepancies in price quotes and how we can better understand the structure of the cost of transportation to make more informed choices.

What influences the cost of a transport service?

The costs of transport services are influenced by many factors that determine the significant differences in the prices charged by firms. Understanding these elements is essential to correctly evaluate the bids received.

1. Fuel and price variations

Fuel represents between 20% and 40% of the total costs of a freight transport company. This major component is extremely vulnerable to market fluctuations. In recent years, the price of diesel has seen dramatic increases - after the pandemic, the price at the pump went up by 50% and the war in Ukraine added almost 50% more.

The impact is considerable - a 10% increase in fuel prices can add thousands of euros to a fleet's annual costs. In these circumstances, reducing consumption becomes a priority - optimizing routes and proper vehicle maintenance can reduce consumption by 10-15%.

2. Drivers' salaries and per diems

Drivers' remuneration represents between 20% and 30% of total operational expenditure. This includes actual salaries, per diems, bonuses and other benefits. For international routes, the salary can exceed 13,000-14,000 lei per month, and for professional drivers it can reach 3,000-4,000 euro.

The shortage of professional drivers has led to these costs rising steadily and is a major factor in pricing, especially for international transport.

3. Road tolls and insurance

Road tolls and vignettes make up between 3% and 15% of the total operational costs. They vary by country, vehicle category and distance traveled. In Romania, from 2026 onwards, truck taxes are expected to increase by up to six times, with a minimum 10% impact on operational costs.

Insurance is also an important component - MTPL, carrier's liability insurance and additional insurance for special cargo can amount to 2-3% of total costs.

4. Vehicle maintenance and spare parts

Vehicle repairs and maintenance account for between 4.5% and 7.5% of the amount invoiced, influenced by the age of the fleet and the way the service is managed (in-house or outsourced).

A well-maintained vehicle consumes up to 15% less fuel, and neglecting technical issues such as tire pressure can lead to significant extra costs - under-inflated tires increase fuel consumption by up to 8%.

Differences between large and small firms

In the transportation industry, company size plays a key role in pricing. Differences in pricing between large and small firms reflect distinct operational realities that merit in-depth analysis.

Is it safer to choose a large company just because it has better rates?

Not necessarily. Large companies can achieve lower costs through negotiation and volume, but a smaller company can be more flexible and faster in communication, especially on specific routes. The real difference is seen in predictability: clear deadlines, procedures, insurance, and how they handle unforeseen situations.

1. Access to resources and price negotiation

Large companies have significant advantages in negotiating operational costs. Because of their high volume of purchases, they get preferential prices on fuel, spare parts and insurance. A prime example is Kuehne + Nagel, which, generating revenues of $46.86 billion in 2024, can negotiate significantly better terms with its suppliers.

In contrast, small firms are often forced to accept standard prices, without the bargaining power to negotiate significant reductions. This discrepancy is directly reflected in profitability - out of all transport firms in Romania, only the 21 largest ones recorded profits of over €2 million.

2. Operational efficiency and fleet utilization

A crucial factor in pricing is resource efficiency. Large firms are implementing elaborate strategies to optimize routes, thereby reducing the number of kilometres without freight. By accessing transport exchanges integrated with TMS systems, they can significantly limit empty runs, using the fleet much more efficiently.

For example, companies such as Cartrans are working with eight services outside Romania for unscheduled interventions, ensuring continuity of operations and minimizing downtime. This allows these companies to offer more competitive prices while maintaining healthy profit margins.

3. Investments in technology and management software

Technology is undoubtedly one of the most important competitive advantages. Large companies are constantly investing in advanced transport management systems (TMS), which allow them to optimize all logistics processes.

For small and medium-sized businesses, implementing these solutions has historically been prohibitively expensive and complex. They were virtually forced to manage logistics manually, tediously logging on to multiple carrier websites to compare offers.

However, the emergence of cloud-based TMS solutions specifically designed for SMEs is beginning to balance the scales, allowing even smaller companies to optimize their operations and thus offer more competitive prices.

Different bidding and pricing strategies

The road transport market in Romania presents an interesting paradox: prices differ dramatically between companies, reflecting diametrically opposed business strategies.

1. Firms working below cost to win customers

A worrying phenomenon is the large number of hauliers who accept fares below actual costs. Of the 41,500 or so transport firms in existence, only 10% actually make a profit. Some companies accept fares as low as €0.70/km, when the real costs are around €1/km. The motivation? They'd rather keep trucks moving than idle them in the parking lot.

2. Correct calculation of cost/km

A realistic cost calculation involves multiple components: depreciation (1,20 lei/km), tires (0,102 lei/km), fuel (1,26 lei/km for a consumption of 28l/100 km), oil, insurance, leasing interest, licenses, taxes, maintenance and salaries. Minimum fares should cover at least three times the tolls plus the cost of the necessary fuel.

3. The role of indirect costs in pricing

Indirect costs are costs that cannot be directly allocated to a specific transport service. They include administrative overheads, rents and depreciation and are common to several services or activities. For cost efficiency, a percentage of 10% for indirect costs and 5% for profit is considered.

4. The low price trap and long-term impact

Unrealistically low fares create a vicious circle. In 2023, the profit margin in transportation was just 2%. Journeys that cost €2,400 during the pandemic have gone up to €1,800, even though operational costs have increased significantly. This practice is gradually destroying the market and pushing responsible firms that calculate costs correctly into bankruptcy.

How can transport companies become more competitive?

In order to survive in a highly competitive sector, transport companies need to implement strategies to optimize costs and increase operational efficiency.

1. Route and consumption optimization

Intelligent route planning is one of the most effective ways to reduce operational costs. According to studies, digitization is beginning to redefine the way transport operations are thought about. By implementing dedicated software, areas where demand outstrips supply can be identified, providing a considerable competitive advantage.

Modern systems make it possible to analyze the routes traveled by each vehicle, comparing planned distances and times with actual times. These tools reduce travel time, minimize operational costs and maximize the use of resources.

2. Staff training and harm reduction

Approximately 80% of all transportation damage occurs due to poor planning. In order to minimize these problems, it is essential to designate a person to supervise and control the conduct of transport operations in accordance with the regulations in force.

In the event of damage, proper documentation is crucial - accurately noting problems on the roadmap and taking photographs can make all the difference in the assessment process.

3. Cost monitoring through dedicated software

Modern software solutions allow detailed tracking of all costs, with automatic currency conversion and profitability analysis by truck, driver and period. Companies using such systems can achieve annual savings of up to €12,000 by identifying and eliminating losses.

Fleet management software integrates functions such as vehicle tracking, maintenance scheduling, fuel management and route planning, significantly reducing operational costs.

4. Collaboration with efficient external services

Strategic partnerships with specialized service providers can help keep your fleet in optimal condition. Services such as those offered by UTA Edenred, with access to over 6,300 qualified service partners across Europe, ensure the continued reliability and mobility of vehicles.

Conclusion

Prices for freight transport services undoubtedly remain a complex subject for all players involved in this industry. As we have seen, the major differences between the various companies' offers are not accidental, but the result of well-defined factors. Fuel, drivers' wages, tolls and vehicle maintenance are the main pillars determining the cost structure.

Company size also plays a decisive role. Large firms have considerable advantages through bargaining power, operational efficiency and access to advanced technologies. Small companies, on the other hand, face significant challenges, although the emergence of affordable TMS solutions is beginning to close the gap.

The practice of offering below cost remains, however, a worrying problem for the whole market. This approach, while it may bring customers in the short term, inevitably leads to degradation of service and even bankruptcies. A correct calculation of cost per kilometre is the foundation of a sustainable transport business.

To survive and thrive in this competitive environment, companies need to focus on optimizing routes, training staff, carefully monitoring costs and developing strategic partnerships with external service providers. These measures not only reduce operational costs, but also improve the quality of service.

Beyond all this, a thorough understanding of the cost structure and transparency in dealing with customers is the key to long-term success. The informed customer will always value a fair offer based on real costs over a seemingly attractive price that hides compromises on quality or sustainability. Educating the market therefore remains a shared responsibility of all players in the transport industry, essential for creating a healthy and profitable business environment.

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