If you ship goods to customers, you know costs can add up quickly. But how do you determine the best way to save?
Freight rates depend on many factors. Here are five that impact the price of your shipment. Freight class, freight distance, accessorial charges, and fuel are essential considerations.
Freight Class
A shipment’s density is one of the most critical factors determining freight shipping costs. This factor considers the weight and size of a shipment, as well as its storage and handling capabilities. To calculate density, measure the length, width, and height of a pallet or skid and multiply these measurements by the product’s weight in pounds to find its volume in cubic feet.
Storability considers how easily a shipment fits into the trailer it will travel in. For example, if your shipment is bulky or has an awkward shape, it may be harder for equipment to stow and will be classified as a higher freight class. Other factors that impact stability include if your shipment contains hazardous materials, items subject to government regulation or individual carrier policies, or particular transport specifications.
Your shipment’s route and distance will also impact rates, as carriers must efficiently fill every inch of space on their trucks. This translates to a higher rate for long-distance hauls compared to shorter ones.
Distance
The longer your freight needs to travel, the more it will cost. But there are other factors in play.
The type of carrier you choose also impacts costs. For example, some national carriers have hubs and routes (known as lanes) that influence shipping costs. Additionally, regional carriers are often less expensive if your products travel a short distance within their coverage area.
Another essential factor to calculate freight shipping costs is fuel. A high price for diesel fuel can increase freight rates significantly. This can be particularly true for air and ocean transport, which require large cargo planes or container ships to transport loads.
For a specific, accurate shipping quote, it’s essential to have precise pickup and delivery locations and a detailed shipment description. And remember accessorial charges, such as for dimensional weight or handling requirements. To minimize these fees, consider combining multiple small shipments into larger, fuller shipments for better rates. Doing this saves money and reduces weather events’ impact, which can drive up your rate quotes.
Carrier
Aside from the weight and density of your freight, the type of carrier you choose to ship it with can significantly influence costs. For instance, national carriers offer excellent service for long hauls but can be expensive if you’re shipping to a remote area. Regional carriers serve specific areas and are often less costly for shorter distances.
Freight shipping rates can also fluctuate based on season and supply and demand. For example, a sudden increase in production for a particular industry may lead to more shipments than usual and overwhelm the normal trucking capacity. Transportation companies typically charge higher rates when this happens to ensure they can fill all their trucks and trailers.
Airplanes, container ships, and trucks all require diesel or other fuel types to operate, so when prices rise, do rates.
Fuel
The fuel that trucks, trains, and ships need to operate can significantly impact freight shipping costs. Since almost all carriers rely on some form of crude oil to power their fleets, they typically pass higher fuel prices on to their customers. These increased costs can quickly eat into the slim margins of haulage firms.
Moreover, the distance your freight needs to travel can also impact your costs. This is because the closer your load is to its destination, the less expensive it will be to ship. Generally, shorter hauls are charged per day, while longer trips are typically billed at a rate per mile.
In addition to the overall fuel price, other factors can influence your rates, such as the number of ports, hubs, and railroads a state has. The rates can also fluctuate based on the season or whether you are shipping regulated merchandise. Lastly, the age of your truck or train can also affect your freight shipping rates. Newer vehicles are more fuel efficient and aerodynamic than older models. The same is true for cargo ships, which can benefit from exhaust gas scrubbers that reduce fuel consumption by up to 59%.
Time
In addition to freight rates, shipping costs depend on the time a shipment takes from one location to another. For example, air freight can be more expensive than ground transportation because it requires faster transit times and higher security levels to protect the cargo from theft or damage.
Fluctuating fuel prices can impact freight shipping costs as well. High fuel prices can lead to more expensive air freight, ocean freight, shipping container costs, and trucking expenses. Retailers can help lower these costs by consolidating shipments and shipping fuller, more efficient product loads.
Shipping your products internationally can be very costly. This is because carriers are subject to a range of geopolitical issues that can affect their ability to transport goods efficiently, such as the threat of piracy, weather conditions, and natural disasters. Additionally, international shipping often requires special handling requirements that can increase your freight rates. For example, if your goods require lift gates or inside delivery, or if they must travel over mountain passes or through busy cities, you may be charged for these accessorial charges.
