Calculating freight shipping costs is essential for your bottom line regardless of which transportation service you choose. Shipping rates can vary considerably between companies and methods, so compare quotes to find the lowest rates and the best shipping option for your needs.
To accurately estimate freight shipping costs, you’ll need to know specific shipment details regarding the goods, such as dimensions and weight. Other variables also affect the cost of freight shipping, from the availability of truck drivers to fuel prices.
Two of the most common methods of shipping are air and ocean freight. Learn how to break down the costs for freight delivery for air and ocean shipping so you can accurately use a freight cost calculator to estimate shipping expenses.
What Determines Shipping Costs?
Several factors determine the cost of freight delivery, but the method of transportation has the greatest impact.
Freight classification
Freight class is a way to differentiate products for transport. The National Motor Freight Traffic Association (NMFTA) developed 18 classifications. Each class is determined by several criteria, including ease of handling, value, weight, height, length, density, and liability.
This standardized classification method allows shipping companies to streamline operations, creating a more efficient logistics system and transit process.
Gross and dimensional weight
The freight industry uses two metrics for calculating shipping cost: Gross weight and dimensional weight.
Gross weight is the total weight of the goods plus packaging. A shipping company can determine the dimensional or volumetric weight by multiplying the package’s length, width, and height. This provides the carrier with an estimate for calculating the freight capacity of the aircraft or shipping container.
Dimensional weight also plays an essential role in determining less-than-truckload (LTL) shipments. Some air freight companies charge by actual weight or dimensional weight, depending on which is higher.
Distance
Travel distance impacts shipping costs. The longer the distance traveled, the higher the freight price. For an international shipment, the country of origin, destination country, and final delivery location may carry additional costs, such as taxes, import duties, and charges associated with cargo examinations.
How fast you need to ship goods
Transit time is another influential factor in determining shipping costs. Typically, the more time-sensitive shipping is, the higher the cost.
Sea freight is generally cheaper than air freight. However, it takes much longer. Ocean shipments from China to the U.S. take around 30 days. Air shipments take only a few hours or up to 7 days, depending on the delivery location.
Special handling
Certain items, such as heavy machinery, fragile goods, or hazardous materials, may require special handling throughout the shipping journey. This increases shipping costs.
Additional Charges That Contribute to Freight Cost Estimations
In addition to the primary criteria that affect freight pricing, you also need to account for other fees:
Security surcharges
The terminal provider for air freight may charge a security surcharge, which covers the costs associated with airport security.
Terminal handling
Terminal handling fees apply to ocean or sea freight. This charge covers everything from stevedore labor to the use of specialized equipment and access.
Insurance
Whether you ship your goods by air or ocean freight, insurance is necessary to protect your merchandise against damage, loss, or theft. An insurance policy should cover every part of the shipment’s journey, from departure to arrival.
Fuel surcharges
A fuel surcharge is a fee that freight forwarders and shipping companies pay carriers to cover fuel costs, which fluctuate constantly. The United States Energy Information Agency (EIA) publishes weekly price data for diesel fuel. Shipping companies use the information relevant to their region to calculate the fuel surcharge according to their fleet’s gas mileage.
Customs brokerage
Depending on the value of your goods, it may be worth hiring a customs broker or a freight forwarder that offers this service. A customs broker is a licensed professional who can advise you or the shipping company regarding the importation and customs clearance process.
Accessorial charges
Accessorial charges are additional costs that freight carriers may add to your bill after completing the shipment. It typically encompasses services that extend beyond standard pick-up and delivery agreements. These extra services can make it challenging to determine the overall shipping costs.
Accessorial charges can include tolls, COD fees, border crossing fees, reweighing and reclassification costs, fuel surcharges, and deadhead costs.
Calculating Air Freight
Air freight reduces transit times compared with ocean freight, but it costs more.
Air freight costs are determined by chargeable weight. The cargo’s gross weight or volumetric weight equals the chargeable amount, depending on which number is higher. The gross weight equals the shipment’s actual weight, measured at the carrier’s facility.
To find the shipment’s volumetric weight, multiply the length, width, and height to determine its volume in cubic inches. Then, multiply the volume by 166 to find the dimensional weight in pounds or by 366 to find the dimensional weight in kilograms.
To calculate an air shipment’s cost, multiply the carrier company’s freight rate by the shipments chargeable weight. Air freight rates typically cost between $1.50 and $4.50 per kilo.
Calculating Ocean Freight
Ocean freight is determined by gross or dimensional weight, so it’s a good idea to calculate both to find the chargeable weight of your shipment. There are two primary types of ocean freight to choose from, depending on the goods you intend to ship. These are:
Less Than Container Load (LCL)
LCL, or Less than Container Load, is ideal for exporters whose cargo volume isn’t sufficient for a full container load. In this method, shipping companies consolidate multiple shipments into a single container, reducing individual freight costs.
If your shipment has a minimum gross weight of 400 kilograms or volumetric weight of 2m³ or more, LCL is the most cost-effective option. However, as the loading and unloading process is more complicated, LCL may also delay shipping times.
Full Container Load (FCL)
FLC, or Full Container Load, is ideal for exporters who need to ship larger items or goods in large quantities. In FCL shipping, an exporter pays a flat rate for the exclusive use of a single shipping container. This also simplifies the tracking process, as your goods are not sharing space with other consignments.
Calculate Costs Before Choosing a Shipping Method
If you are unsure whether to ship your goods by air or sea freight or if LCL or FCL is the best option for you, contact us to request a multi-quote so you can compare the cost for each freight mode.
Engaging a freight forwarder can provide fast, easy, and affordable access to the global shipping services you need. Contact Asiana USA for a freight quote today.
