Shipping is a significant expense for most businesses. It is critical to understand what factors go into the freight shipping costs.
Freight rates depend on factors such as class designation and density calculation. A shipment’s dimensions and weight are used to find density.
Expedited services can add to the rate, as can a delivery location that requires backhaul.
1Determine Your Needs
Determining what you’re shipping is the first step in how to calculate freight shipping costs. It includes knowing if your goods are fragile, valuable, dangerous, or hazardous. It also involves identifying if your interests require special handling. This type of handling could include extra labor, equipment, and tools or the need for special care when securing the shipment.
The size and volume of your goods must also be known. It is determined by calculating your shipment’s length, width, and depth. This information determines your load’s NMFC and freight class, which are significant factors dictating your price.
Other significant considerations include the stability of your goods (whether or not they stack nicely on pallets) and whether your shipment requires any accessorials such as liftgates, trailers, or temperature control. Additionally, it’s essential to consider your shipment’s origin and destination points and if your products can ship during off-peak seasons, as this can significantly impact prices. It is where working with a freight broker can pay off.
2Determine the Distance
The distance your products travel to reach their destination is crucial in determining freight costs. For example, shipping to a remote location costs more than shipping to a central city. Additionally, international freight rates are generally more expensive due to customs fees and other charges.
If your product is oversized, carries a hazardous substance, or requires special handling, you’ll also pay more for the service. These items can be costly because they must be carefully packed and insured for the trip.
You might be charged for the actual or volumetric weight depending on how your cargo is shipped. Usually, whichever figure is higher will be the chargeable weight. To calculate volumetric weight, measure your product’s length, width, and height and multiply them together.
Next, divide this measurement by a specific factor for each type of shipment (road, ocean, or air). The result is the cubic volume of your package in CMS. It is how much space your shipment will take up on the truck.
3Determine the Weight
The weight and size of the item, the mode of transportation (truck, ship, or air), the pickup and delivery locations, and the actual goods being delivered are all factors that affect shipping prices. In addition to these aspects, other shipping costs are associated, such as fuel surcharges, handling fees, and storage costs.
To determine your freight class, measure your shipment’s length, width, and height in inches, considering any pallets, skids, and packaging. These measurements should be taken to the most comprehensive and longest freight points. It is to avoid overhangs, which can lead to pricing adjustments down the road. Multiply these three measurements and divide by 1,728 to calculate your freight’s cubic inches. You can then divide your freight’s total weight by the shipment’s cubic feet to find its density, which is crucial in determining class.
Once you know your freight’s density, you can apply a general class rate to your shipment to estimate shipping costs. The more dense your cargo, the less it will cost to ship.
4Determine the Class
Freight classes are a significant factor when it comes to pricing your freight. They’re based on the density of your goods, which you can calculate by using an online freight class calculator or simply measuring your shipment’s dimensions and weighing them to find their density. The lower the freight class, the cheaper the load will be.
The freight class is a measure of the probability that a commodity will be stolen or damaged during shipping, and it also considers how easy it will be to stow the item in containers, trucks, and other vehicles. For example, flammable and perishables are deemed high-risk and have higher freight classes.
A freight carrier will use the NMFC codes to determine your shipment’s freight class, on which they’ll base their price. Remember that online class calculators are only estimates and should only be used for reference purposes. If you need clarification on your freight class, work with a 3PL to help you correctly estimate the cost of shipping your goods. Then you can make informed decisions about your freight needs.
5Determine the Mode
The type of transportation mode you choose will depend on the goods you are shipping and how quickly you need them delivered. Some interests may require special facilities like refrigeration or security measures that add to their cost, while others can be shipped with any container. Long distances must be transported via air or sea, whereas shorter journeys can be made by road or rail.
Ocean freight is a common choice for moving bulk commodities such as agri-products, metals, coal, and iron ore. It is also used for odd-shaped cargo like engines and propellers that would not fit into a plane or train. It is often cheaper than air freight for moving these goods, but it can also be more expensive due to high terminal costs.
Road freight is a common choice for companies that need to ship smaller quantities of goods or final-mile deliveries to customers’ doors. It is typically more affordable than other modes of transport for shorter journeys, and it can be combined with any different mode.