Most logistics businesses price and report on a blended rate per kilo, pallet or shipment. But cost is driven by the stop, not the weight: the drop density of a route, the waiting time at a door, the failed deliveries, the returns. We attribute cost to the work each account and route actually causes with TDABC, so a thin, many-drop round stops hiding inside the average set by dense urban volume.
Cost and Profitability Consulting · 150+ models since 2010 · TDABC
A rate per kilo or per shipment assumes cost rises with what is being carried. On the road it does not. A driver spends the day stopping, parking, waiting at doors, finding the contact, handling returns and recording proof of delivery. A dense urban route does forty drops in the time a thin rural one does twelve, and the admin behind a fragmented account dwarfs the admin behind a consolidated one.
Blend all of that into one rate and the easy, high-density work sets the average. The hard routes and fragmented accounts look fine on paper while they quietly run below cost, and the commercial team keeps winning more of exactly the business that loses money.
TRUE MARGIN BY ROUTE
Illustrative. Once delivery cost lands on the stop rather than the kilo, dense and regional routes earn while thin rural and many-drop routes fall below zero.
Two accounts move the same annual tonnage at the same revenue. On a per-kilo rate they look like equally good business, and the fragmented one may be the bigger "logo".
Account A takes a few large, scheduled drops. Account B takes many small, urgent ones, with tight windows, frequent returns and far more admin per euro of revenue.
Time the stops, the waiting and the returns and Account A nets a healthy margin while Account B costs more to serve than it pays.
Reprice the urgency, consolidate drops, widen the delivery window or set a minimum order. Most loss-making accounts turn positive without losing the volume.
| Account A | Account B | |
|---|---|---|
| Annual tonnage | 1,200 t | 1,200 t |
| Annual revenue | €310,000 | €310,000 |
| Drops / year | 240 | 2,050 |
| Average drop size | 5.0 t | 0.6 t |
| Cost to serve (TDABC) | €214,000 | €352,000 |
| Net per account | +€96,000 | −€42,000 |
On the rate card both accounts carry their weight. By cost to serve, one is funding the other, and only the stop-level view tells you which to grow, which to reprice and which to redesign.
CUMULATIVE PROFIT, ACCOUNTS RANKED
Illustrative. Rank accounts by true profit and the curve rises well above your reported total before a long tail of loss-making accounts drags it back down.
Stop, park, wait, unload, hand over, record, return: the activities a route is really made of, account by account.
TDABC costs each activity per minute of vehicle, driver and depot capacity, so unused capacity is visible rather than smeared across every shipment.
Each account carries the cost of how it actually buys: drop size, density, windows, returns and admin, not just its tonnage.
Accounts and routes sort by true margin. The losers become candidates to reprice, consolidate, re-window or set minimums for.
Operators who price on true cost to serve stop chasing tonnage that does not pay and stop subsidising fragmented accounts out of the dense routes that carry the network. The same model feeds tender pricing, so new business is won on terms that hold rather than terms that quietly lose.
The model is built on your data and handed over, so the costing stays current as routes and accounts change.
The Profit Check takes five minutes and no data upload. It points to where your blended rate is most likely hiding loss-making routes and accounts, and what it is worth to price them properly.