FACTORS THAT DETERMINE FREIGHT SHIPPING RATES
When it comes to freight shipping, some of the most common questions involve freight rates. While price can vary for a number of reasons, there are a few common elements to consider.
- Shipping method: The mode of transportation used to ship the freight is a weighing factor. For example, expedited shipping will usually result in additional charges.
- Origin and destination: The further the distance between the shipping origin and the final destination, the higher the rate will be. Proximity to a major metro can also impact freight shipping rates.
- Size and weight: The dimensions and weight of the shipment are key to determining freight rates. The length and width should be rounded up to the next inch while accurate weight measurements are key to rates and for carriers to meet local, federal, provincial and state regulations.
- Special services: Any shipments that require special handling (perishables, fragile, hazardous materials) will likely lead to higher costs.
- Density: A shipment's density is one factor that determines LTL freight rates. Shippers need to know how to calculate a shipment's density so they can properly describe their goods on the bill of lading. The total weight of the shipment is divided by the total cubic feet to determine the density. If the shipment is palletized, use the dimensions of the pallet, the combined height of the carton and the pallet, and the total weight of the shipment. When determining the dimensions of your shipment, be sure to measure the longest sides including any packaging, overhangs or protrusions. Once density is calculated, you can then figure out the class.
- Classification of freight: Every piece of freight has a classification within the LTL world and classification is a big driving force to make up LTL freight rates. Classes are published in the National Motor Freight Classification (NMFC) book by National Motor Traffic Association. NMFTA has established 18 different classes ranging from 50 to 500. The class is determined by product density, value, stow-ability, handling and liability. Lower classes represent very dense freight that is difficult to damage and is easy to handle. Lower classes have lower rates. Conversely, higher classes represent lighter/less dense freight that typically takes up more space. The higher the class, the higher the rate will be. For additional information on freight classification make sure you check out our next blog post in this series on what determines LTL freight class.
- Accessorial/surcharges: Accessorial charges stem from extra services performed by the carrier that goes beyond the typical dock to dock/business to business pick up and deliveries. Common examples of these charges are lift gate service, residential pickup or delivery, limited access locations (i.e. jails, prisons, churches, schools, storage units) and inside delivery. Accessorial charges can be negotiated to a flat rate or even waived altogether. A fuel surcharge is the most common accessorial as it’s typically factored in on every shipment.