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Freight rates refers to the price
of shipping a specific cargo from one location to another.
And your freight shipping company
can’t always give you your all-in cost if you don’t give them all the pertinent
data for the load. That’s why you must understand the fees and
costs included in the freight rate.
Freight Shipping and LTL Shipping costs are hard to predict
and can significantly impact the bottom line. So, how do you calculate the
freight rates most accurately? Or, are there any factors that affect these costs freight shipping and LTL shipping?
Well, read on to find out.
Factors Affecting Freight Rates
Weight Of The Shipment
Be it freight shipping, LTL Shipping or standard
shipping, the weight of the shipment is one of the most important factors
affecting the freight rates.
In the case of freight shipping and LTL shipping
generally, the rates are cheaper when it comes to shipping price per 100 lbs.
This creates a bit of discount incentive for heavier and larger LTL shipping and freight
shipments in general.
With the shipment weight increases,
it moves to the next shipment group. Once in the next shipment group, the
weight is considered in the lowest weight category in that specific
Therefore, the weight corresponds
to the corresponding ltl shipping costs for that particular group.
The Density Of The Shipment for LTL Shipping
By calculating the density of
shipments it allows carriers to maximize the load capacity of their
trucks. It also offers them another metric
to offer freight rates for specific LTL shipping and other freight shipping needs.
Density is calculated by multiplying the overall width x height x length
and dividing it by the total weight of the shipment.
Freight Classification for LTL Shipping
Freight class is yet another factor
affecting the LTL shipping freight rates. There are currently 18 freight classes for LTL shipping ranging for
class 50 to class 500. The higher the
freight class the more the over-all ltl shipping freight rate will be per shipment.
Freight classes are defined based
on the shipment’s density, its weight, the complexity of handling and delivery
requirements. Considering these factors, the shipping rates will be lower for freight
with a lower freight class that has less handling and delivery requirements.
Along with freight class, LTL Shipping freight
must be assigned an appropriate NMFC (National Motor Freight Classification)
code based on the type of the freight.
So, it is important that your
freight broker makes sure your shipment has the right NMFC codes and
classification. If you need assistance calculating your freight class and/or
NMFC code please do not hesitate to call us.
Distance Between Origin And Destination
In general the longer the distance
between the Origin and Destination the higher the cost of shipping will be. But
shipping rates may vary from place to place depending on capacity and complexity
of pick-up and delivery locations.
Moreover, additional cost related
to the distance may be added if the carrier doesn’t serve the destination area,
and the shipment has to be transferred to another carrier.
Look for a freight agent who keeps
such switch-over or inter-lining to the minimum if possible.
After selecting the freight class, the next thing you’ll want to know is how quickly you want your shipment to reach to the destination. Expedited Freight Shipping can be used for faster delivery, but the rates will be higher. Where as Consolidating LTL shipping Carriers can be used if you are trying to keep freight rates low and you have some flexibility of when the shipments deliver.
The cost of freight is, of course, in
large part tied to the fuel cost. With the decrease in fuel prices, freight
rates also go down. Shipping carriers may choose to take the cost of the fuel
or reduce the amount so that the shipping rates are cheaper while achieving
Tariff And Negotiated Rates
Shipping costs depend on the type of ltl shipping or truckload freight charges you get from the carrier. Therefore, if you opt for tariff fares or negotiated shipping rates, your ltl shipping and other freight costs will vary. So, it is better to contact third-party logistics company (3PL).
They could get you price
negotiation that you might not be able to get in the first place.
Easy Logistics Management Takes the Guesswork Out Of Calculating Freight Rates
Freight rates can vary widely depending
on the carriers and/or 3PL’s you choose. By leveraging our powerful ltl shipping freight
management software, you can greatly simplify your logistical process. Our easy
to use and FREE software helps you compare 34,000 Freight Carriers and their
rates in USA, Canada, and Mexico for Volume, LTL, Partial, Full Truckload, and
Air Freight Shipments. You also get
greatly reduced over-all freight rates leveraging our approximate $2 Billion in
annual spend with our network of ltl shipping carriers.
Additionally, we have just introduced exciting new freight shipping automation apps for top ecommerce, and ERP business software like Shopify, Woo Commerce, Magento, Netsuite, etc. Or just outsource your complete logistical needs to our Managed Transportation Department and well manage everything for your team!
Contact us today if you would like
help further economizing, automating, or just plain outsourcing more of your ltl shipping and freight
rating and logistical process in general!
Tips and Tricks to get better LTL Freight Rates!
- Leverage an LTL Freight Brokerage
If your firm does not spend enough to achieve a deeper freight shipping discount, consider leveraging a freight brokerage. Larger freight brokerage companies combine their client’s volume to get some of the deepest LTL freight rate discounts. They can then provide small to medium-sized companies deeper freight shipping discounts than they could achieve based on their individual volume. Freight brokerages also can provide easy-to-use Freight Management Software that will save you time and headaches managing your LTL freight shipping process.
- Try and ship more items on each freight load
The more you ship on each load, the less it costs you per item or per pound for freight shipping. So generally speaking if you can ship more items to your distributors, retailers, or even consumer per shipment, the less it will cost per item shipped. In many cases, freight carriers have minimum charges so it may not cost you any more to ship 2-5 items on one load if the cargo is light.
- Shared Truckload Services
Shared Truckload Services is a new service that a few technology-forward logistics companies are starting to offer. In a nutshell, they are taking traditional full truckload freight carriers and using an algorithm to quote, booking, and manage LTL-style shipments. Leveraging lower cost no-traditional FTL carriers to run their comingled loads. There can be many benefits of using shared truckload services for LTL freight shipping, including lower freight rates, less handling, and transit-related damages, and one accountable driver and truck for the entire length of freight shipments.
- Negotiate a Customer Specific Tariff
If your products are complex and ship at various freight classes or are density rated you might want to negotiate a customer-specific tariff or FAK. As with all things everything is negotiable including freight rates! So call up a handful of your preferred carrier or leverage your freight broker to help you negotiate a better company-specific tariff.
- Try and negotiate your accessorial charges off or down
If your shipping needs involve a high degree of accessorial freight shipping services you might approach your carriers to discount or remove these charges. Especially if you are shipping directly to consumers more and more your residential delivery, liftgate, and appointment fees will all add up. If you can negotiate to get some of all of these charges removed it may yield you a much better overall freight rate for your needs.
- Reconfigure your Packaging if your products are density rated
If the products you ship freight are large or strange dimensionally you could be get charged all kinds of additional freight charges. If your product can be reconfigured to be more compact for shipping this can help you avoid overlength fees. Usually starting at 8ft, cubic capacity charges, and a whole host of over-dimensional freight charges that really add up. These over-dimensional charges sometimes do not even get taken into account on your initial freight quotes if not expressly mentioned to your carriers when booking loads.
- Use a 3PL warehouse and fulfillment center closer to your end customers
The shorter the distance you are shipping your freight the lower generally the freight rates right? So why not try and store some of your fastest-moving SKUs closer to your end clients or retailers. Leveraging a 3PL warehouse and fulfillment center may even save you money over having your own warehouse to ship from. Especially if your company is located in an expensive metro area or has a high degree of seasonality. There can be many other benefits besides better freight rates using a regional fulfillment center including, faster transit times, less handling and transfers, and overall less expensive freight shipping costs.
- Leverage lower-cost basis regional carriers to handle closer client freight shipments
Whether you use a freight shipping brokerage with a large carrier network or try and negotiate a tariff with a local/regional carrier, this may help you lower your freight rates. Regional or local freight carrier companies generally have a lower cost of doing business and can afford to pass those savings along to their customers. It’s also probably not a bad idea to have a few freight shipping options just in case your primary carriers can’t pick up.
Connect with us to achieve better freight rates now!
Here are some other great resources we have found and referenced in writing this article about LTL shipping and freight shipping in general. Should you want to understand how freight rates are calculated further! Enjoy!