What You Need to Know About Calculating Freight Rates
For shippers, calculating freight costs can be one of the hardest expenses to predict and can seriously impact the bottom line.
Using a transportation management system (TMS) can help optimize your shipping process and cut freight costs for LTL, truckload, parcel, intermodal, and other shipping modes. There are a variety of factors that impact how freight rates are calculated. It is helpful to understand these when making strategic shipping decisions on freight. Below are a few of the top factors impacting your freight costs.
Mode of Transportation – The mode you choose to ship your freight will have a large impact on the cost of goods. Shipping a product by air is generally more expensive than driving a truck from point A to point B in the United States. Air can, of course, increase the speed of delivery, making it an important factor to weigh when comparing customer expectations and cost. Full TL is another example of a cost-saving mode when compared with LTL loads. If consolidation of several LTL shipments into one FTL shipment is possible, money can be saved in unloading costs, fuel charges and labor. Consolidation into FTL is often not an option, however, and the best shipping mode remains LTL.
Weight – The shipping industry uses the hundredweight pricing model, which means that freight costs are calculated per hundredweight (CWT). Carriers consult a pricing chart that lists these costs and weight brackets. Under this model, the more your shipment weighs, the less you pay per hundred pounds. Many carriers will offer more competitive prices on volume shipments. Using Kuebix TMS, volume spot quotes can be leveraged directly through the technology.
Distance – The further your freight needs to travel, the higher the freight rate will be. This is due to wear-and-tear on assets, fuel utilization and driving time. It is important to always optimize each load so that the truck takes the most direct route to all stops and fewer trucks are utilized.
Kuebix is taking some of the guess-work out of calculating LTL freight rates through its free TMS.
If you’re looking for great freight rates on truckload shipments, the best place to look is a community with thousands of shippers, carriers, vendors and brokers collaborating to create the best loads. Kuebix Community Load Match is a truckload spot market where any shipper can easily connect to trucks with available capacity. If you have freight to ship and are looking for additional capacity, you can request and receive truckload spot quotes through Community Load Match for free!
Begin Calculating Your Rates Now with Kuebix Free Shipper.