For facility operators
Per-pallet or hourly: working the math on a lumper quote with your own trailer data
A per-pallet rate and an hourly rate can describe the same crew doing the same work at very different total cost, depending on your load mix. Here is how to test both against your own inbound before you sign.
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The short version
Collect load condition, pallets out, cases, and crew time per trailer for a quarter, then derive your load mix and your observed pallets per crew hour by condition. Per pallet transfers productivity risk to the agency; hourly keeps it with you, and the rate always contains somebody's estimate of that risk. Convert every quote to a single number against last quarter as it actually happened, with minimums and adders applied, then reprice it against your forecast and against a stressed mix. Watch the minimum call, the wait time rule, the pallet count definition, and the adder trigger, because those four move the total more than a few percent on the headline rate.
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Two quotes arrive for the same dock. One prices unloading per pallet. One prices a crew per hour. Neither is dishonest, and neither can be evaluated on its own, because the question is not which rate is lower. The question is which structure produces a lower total against the freight you actually receive, and how much of the risk each one hands to you.
You can answer it with a spreadsheet and one quarter of your own receiving data. What follows is the method, with illustrative arithmetic to show its shape. The numbers below are invented for the example; use yours.
The data you need first
Four columns per inbound trailer, for at least a full quarter and ideally a year.
- Load condition: palletized, floor-loaded, slip-sheeted, or mixed.
- Pallet count out, meaning pallets staged into the building, not pallets in on arrival. On a floor-load these are pallets your crew built.
- Case or piece count, where your system has it. This is the only unit that scales with floor-load work.
- Labor time on the trailer: work started to work finished, and how many workers were on it.
From those, derive two things. First, your load mix, as a percentage split by condition. Second, your observed crew productivity by condition: pallets per crew hour palletized, and pallets or cases per crew hour floor-loaded. Those two numbers are the whole basis of the comparison, and no agency can supply them for you.
If you do not have labor times, approximate for one month by having a supervisor note work start and work finish on the shift sheet. It is tedious and worth more than any quote you will read this year.
What each structure is actually pricing
Underneath the arithmetic, the structures allocate risk differently.
Per pallet prices the output. You pay for pallets moved, so if a trailer takes longer than expected, the agency absorbs it. That is real protection, and it means the agency has to build its estimate of difficulty into the rate. Per-pallet pricing rewards you when loads are clean and punishes the agency when they are not, which is why agencies write adders for floor loads and restacking.
Per trailer, usually tiered by pallet count, is per pallet with the counting simplified. Same risk allocation, coarser resolution: comfortable to budget, slightly wrong at the edges of every tier.
Hourly per worker, with a minimum call, prices the input. You pay for time, so if a trailer runs long, you absorb it. In exchange the rate carries no difficulty premium, and it handles work with no natural output unit: Rework, Returns & Salvage Processing, Sorting & Segregation on a badly mixed load, a trailer that has to be inspected before it can be touched.
Pay-Per-Load / Per-Piece as an Engagement Model prices the unit of work rather than the trailer, which is the honest structure when cases are what the crew touches.
Per pallet transfers productivity risk to the agency, hourly keeps it with you, and every rate you are quoted contains somebody's estimate of that risk.
An illustrative comparison
Round numbers, chosen only to show the method.
Say a quarter of receipts shows 1,000 trailers: 700 palletized averaging 24 pallets, and 300 floor-loaded that your crews build into 24 pallets each. Observed productivity is 12 pallets per crew hour on palletized trailers and 4 pallets per crew hour on floor-load rebuilds.
Crew hours per trailer, then: 24 divided by 12 is 2 crew hours palletized, and 24 divided by 4 is 6 floor-loaded. Across the quarter that is 1,400 plus 1,800, or 3,200 crew hours, for 24,000 pallets.
Now price it two ways with illustrative rates. At 30 dollars per worker hour, 3,200 crew hours is 96,000 dollars. At a flat per-pallet rate of 4 dollars, 24,000 pallets is also 96,000 dollars. The structures tie at this mix, which is the useful part: the flat per-pallet rate equivalent to that hourly quote is 4 dollars, and you can now judge the actual quote against a figure instead of a feeling.
Then test the sensitivity, because your mix will move. Hold everything else and raise the floor-loaded share to 40 percent of trailers. Crew hours become 600 times 2 plus 400 times 6, or 3,600 hours. The hourly bill rises to 108,000 dollars. The flat per-pallet bill does not move at all: still 24,000 pallets, still 96,000 dollars. That 12,000 dollar difference is the productivity risk, and under a flat per-pallet rate the agency is carrying it.
An agency that understands its business will not carry that risk for free. It will quote a higher flat per-pallet rate, or a lower base with a floor-load adder, which is the same thing stated honestly. Price the adder version too: a base of 3 dollars with a floor-load rate of 6 dollars gives 50,400 plus 43,200, or 93,600 dollars at your current mix, and it moves with your mix rather than lagging it.
Where the crossover sits, and the terms that move it
Run the same calculation at several mixes and you will find the point where the structures cross. Below it, per pallet is cheaper; above it, hourly. Knowing where that line sits is worth more than any single quote, because it tells you which direction your risk runs when your freight changes.
Four contract terms move the answer more than a rate difference of several percent.
The minimum call and shift minimum. An hourly quote with a four hour minimum per worker is not an hourly quote on a two hour day. Recompute with the minimum applied per call-out.
Wait time and idle time. Under hourly, a crew waiting for a trailer is billable, so your appointment discipline becomes a line on the labor invoice. Under per pallet, waiting is the agency's cost, which is why per-pallet agencies care about your schedule.
The pallet count definition. Pallets in, pallets out, or pallets staged. On a floor-load these differ enormously, and a per-pallet rate against pallets in will not last.
Adder triggers. Who decides a trailer is out of spec, on what evidence, and when you hear about it. An adder with a vague trigger is an hourly contract wearing a per-pallet label.
Check overtime, holiday, and freezer differentials against your own calendar too. A freezer differential applied to a dock that runs cold year round is not a differential; it is the rate.
How to test a quote before you sign it
Build one sheet with your quarter of data in it, then put each quote through three passes.
First, price the quote against last quarter exactly as it happened, trailer by trailer, with every adder and minimum applied. This is the only apples-to-apples comparison, and it frequently reorders the quotes.
Second, price it against next quarter as you forecast it, especially if your floor-load share or volume is changing. A structure that wins on last quarter and loses on next quarter is not the one to sign.
Third, stress it. Raise the floor-load share by a third, drop total volume by a quarter, add a week where volume doubles. Each quote now shows where it breaks and who eats the breakage, and one stable across all three is worth a little more than the cheapest.
Then ask the agency to walk your sheet with you. An agency that runs crews well will find your arithmetic errors and say where its own rate is exposed, which is the most informative conversation available before a contract. If you are still building a shortlist, compare agencies by service and Engagement Model first.
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