Determining freight rates is one of the most essential processes for shipping companies. The most common method of shipping used for freight are trucks, ships, and aircraft, and each shipping mode has its own type of rate.
Regardless of the mode of shipping, you will need to produce a bill of lading. This document acts as a receipt of services, a contract for the carrier and shipper, and a document of title.
There are two main shipment types in trucking: full truckload and less than truckload (LTL). Although they are similar forms of freight services, their rates are set very differently.
Truckload freight rates don’t consider the density or type of shipped items. Instead, the main factor in determining the rate is the distance. Because truckload rates are charged by the trailer load, the fullness of the trailer does not affect the price.
Some other considerations that affect the rate include the transit time, fuel costs, lead time, and seasonality. Expedited freight generally requires additional fees.
Establishing LTL freight rates is more complex. Since LTL involves freight shipments from several shippers, many factors determine the shipping costs. Some of the key pricing criteria include quantity, size, density, distance, base rate, and weight.
The most important aspect of setting LTL freight rates is the NMFTA’s (National Motor Freight Traffic Association) freight classification. Under this system, each piece of cargo receives a unique classification number from 50 to 500, which determines its rate.
Spot or Contract Rates
Truckload and LTL rates can be spot or contract. Spot rates are one-off prices at a certain time, while contract rates are usually long-term rate agreements.
Although air freight is the least cost-effective mode of freight shipping, it’s faster than other shipment types. A typical ocean freight shipping time from China to the United States takes between 20 – 30 days, while air cargo will arrive at its destination in just a few hours.
The rate of air freight charged is determined mainly by weight and volume. Other factors that can also affect the price include fuel surcharges, security surcharges, airport transfer fees, handling charges, and pick up and delivery fees.
Ocean and Sea Freight
Ocean and sea freight is by far the most common form of shipping. It accounts for 90% of all shipping. Although it is a relatively slow mode of transport, it is cost-effective and can carry a large volume and weight.
Similarly to truck freight, you can ship your ocean or sea freight in full container loads (FCL) or less than container load (LCL).
Ocean and sea freight rates are generally determined by the volume of items, irrespective of weight. However, for exceptionally heavy goods, you may need to factor in weight. Other determining price factors include customs surcharges, container freight station charges (consolidation charges for LCL only), handling charges, customs brokerage, insurance, routing charges, and accessorial charges.
Getting to Know Freight Rates
The world of logistics and shipping takes time to become familiar with. Aside from freight rates, many additional charges are quite common, such as carrier collects, third-party, prepay and add, and various free-on-board (FOB) charges.
For any more information on freight rates or shipping details, contact the shipping experts at Asiana USA today at (855) 500-1808. We are more than happy to provide a quote or further knowledge of international shipping services.