Calculating freight shipping costs is a daunting but essential process for many businesses. To obtain an accurate freight cost estimate for a shipment, you’ll need to consider the modes of shipping, freight classes, transport companies, and various additional charges.
While there is no single rate for freight shipping, you can estimate freight delivery costs manually or use an online freight rate calculator, as long as you have all the key details regarding the shipment.
International Shipment Modes of Transport
Freight carriers transport packages worldwide via the three primary methods: by sea (ocean freight), by land (truck freight), and by air (air freight). Each freight transportation method has its own conditions, advantages, disadvantages, and associated freight costs.
Ocean freight accounts for the majority of the freight market’s international shipping. Although the delivery times are the longest of the three methods (the average speed of an ocean liner is 16-18 mph), the cost of freight shipping by ocean is the lowest. Ocean freight services are typically dependable, efficient, and cost-effective.
Ocean freight shipping containers can carry a tremendous amount of cargo. There aren’t as many restrictions, laws, and regulations surrounding ocean freight as other international shipping modes, leading to fewer surcharges.
There are two main types of ocean freight, depending on the freight density:
- Full container load (FCL): Cargo loads big enough to fill an entire 40-foot container.
- Less than container load (LCL): A combination of partial freight shipments placed into one container. This option is best for shippers who don’t have enough cargo for a full container load.
Ocean freight is charged by volume and measured in cubic feet. Due to the lower freight density, LCL shipments require more work at every stage of the process and take longer to deliver. Because of this, LCL is more expensive than FCL.
If you’re looking for the lowest container shipping prices possible, it is more advantageous to ship full container loads.
Truck freight is the primary mode of transportation by land. The trucking industry is a staple of freight shipping and a critical element of the supply chain in North America, handling approximately 72.5% of all freight (over 11.8 billion tons) transported in the United States each year.
Truck freight is shipped via semi-truck trailer, with one truck driver per truckload. A typical truckload is either a 20-foot container, a 40-foot container, or a dedicated truck trailer load.
Unlike ocean freight and air freight, which can only be transported from an origin port to a destination port, truck freight can be delivered directly to customers, such as commercial establishments or construction sites.
Like ocean freight, the truck freight market categorizes shipments into two groups:
- Full truckload (FTL): shipment loads large enough to occupy an entire 20-foot container, 40-foot container, or truck trailer.
- Less than truckload (LTL): a shipment load that is too small to take up an entire truckload. Like cargo ships, partial freight truckloads are best suited for shippers who cannot send enough cargo to fill the full truck space.
Several factors influence truck freight shipping rates. The dimensions and weight of each shipment are crucial in estimating shipping rates. The distance from the origin to the destination also contributes to the cost.
The trickiest part of calculating a freight quote is establishing the freight classification. The key factors determining FTL and LTL freight classes are value, handling, stowability, density, and liability.
Compared to the other freight shipment methods, air freight is the most expensive. However, it is also the fastest and one of the safest, making it the best choice if you need your shipment to reach its delivery destination on time.
Air freight quotes are calculated using either the actual weight or the cubic meter dimensional weight, depending on which is more costly.
The typical air freight container is the Unit Load Device (ULD), a family of specially contoured containers designed to fit inside the fuselage of cargo planes and passenger jets. These containers can only transport a limited quantity of cargo, meaning that air freight has the most restrictions on freight dimensions.
Calculating the cost of air freight primarily depends on determining the shipment’s accurate dimensions and chargeable weight. The first step is to calculate the freight shipment’s dimensional weight by multiplying the volume in cubic meters by 167. (This is considered the air freight standard: 167 kilograms = a cubic meter)
If the dimensional weight is greater than the package’s actual weight, this becomes the chargeable weight. However, if the actual weight is higher, your chargeable weight is based on that instead.
The National Motor Freight Traffic Association (NMFTA) created the National Motor Freight Classification (NMFC) standard, categorizing freight shipments into a freight class system to develop a more unified pricing structure.
There are 18 different freight classes categorized between 50 and 500. LTL freight shipping companies have become more strict with accurately classifying shipments due to the differences between fine and bulky freight.
Classification is allocated based on the following criteria:
- Density and value
Each freight class corresponds to a specific weight range (in pounds) per cubic foot. The higher the weight range per cubic foot, the lower the freight class number.
Freight class chart
The NMFC freight class chart (plus examples of common freight in each class) is as follows:
- FC 50: More than 50 lbs. per cubic foot. (nuts, steel parts, bolts, screws, other high-density bulky freight)
- FC 55: 35-50 lbs. (paint, hardwood lumber, bricks, mortar, bulk copy paper)
- FC 60: 30-35 lbs. (ceramic tiles, bottled liquids, stone blocks)
- FC 65: 22.5-30 lbs. (boxed books, automotive parts, car accessories)
- FC 70: 15-22.5 lbs. (boxed loose paper or newspapers, pencils, furniture parts, automotive engines)
- FC 77.5: 13.5-15 lbs. (bathroom fixtures, snowplows, textiles, tires)
- FC 85: 12-13.5 lbs. (crated machines, small engines, disc media such as CDs or DVDs)
- FC 92.5: 10.5-12 lbs. (computer hardware, electronics, fridges, ATMs, gas-powered generators)
- FC 100: 9-10.5 lbs. (vacuums, wine cases, car and truck covers)
- FC 110: 8-9 lbs. framed paintings, wood cabinets, table saws, metalworking equipment)
- FC 125: 7-8 lbs. (small household appliances (toasters, coffee machines, etc.), vending machines, boxed posters)
- FC 150: 6-7 lbs. (motorcycles, ATVs, UTVs, jet-skis, assembled furniture)
- FC 175: 5-6 lbs. (stuffed furniture, metal cabinets, couches)
- FC 200: 4-5 lbs. (televisions, aircraft parts, aluminum furniture, packaged mattresses)
- FC 250: 3-4 lbs. (mattresses and box spring sets, plasma TVs, bamboo furniture)
- FC 300: 2-3 lbs. (light furniture (tables, chairs, wood cabinets), canoes, kayaks)
- FC 400: 1-2 lbs. (deer antlers)
- FC 500: Less than 1 lb. per cubic foot. (ping-pong balls, gold dust)
In addition to standard freight rates and item classifications, your freight carrier may impose other charges that can affect the total cost of shipping. Here are some of the most common, what causes them, and how to avoid or minimize them as much as possible.
Fuel surcharges are the most common accessorial charges. Freight forwarders typically add fuel surcharges to their shipping costs to balance fuel cost variability.
Calculation of fuel surcharges varies from carrier to carrier; each one employs its own formulas to compensate for the average diesel fuel price fluctuations.
As fuel prices constantly change, fuel surcharges cannot typically be avoided. However, you can try to negotiate a discount with your freight forwarder to account for the fuel cost variability and bring the total shipping costs down.
A common fuel surcharge calculation method is as follows:
- Original fuel price – updated fuel price = Fuel cost difference (FCD)
- FCD divided by miles per gallon (MPG) = Cost per mile (CPM)
- CPM multiplied by total traveled distance = Surcharge cost
Here’s a trucking industry example: If the average diesel fuel price is $2.00 at the origin and the updated average price is $2.20 at the destination, the fuel cost difference is $0.20.
Assuming the delivery truck’s average gas mileage is 6 MPG, multiplying the fuel cost difference by the MPG results in a cost per mile of $1.20. If the total traveled distance is 850 miles, then the surcharge cost for diesel fuel is $1,020.
No international shipment discussion is complete without determining freight insurance costs. The purpose of freight insurance (or cargo insurance) is to protect yourself against the possibility of damage or loss, giving you peace of mind.
Unlike in many other industries, freight insurance costs are not standardized. This is because of the many factors that can affect the final pricing. Although some standard insurance cost calculation methods exist, each shipment is unique, and the final cost will vary accordingly.
One of the simplest methods to calculate cargo insurance is to take the freight cost, add the commercial invoice value, and add 10% to the result to cover additional expenses.
For example, if the shipment’s total value is $550,000 and the cost to ship freight is $15,000, the shipment’s insured value is (550,000 + 15,000) x 1.1 = $621,500.
Hazardous materials and dangerous goods
Transporting hazardous materials introduces an additional risk of damage or injury, which results in increased shipping costs. If your cargo includes hazardous materials or dangerous goods classified under one of the nine hazard classes defined by the FMCSA, you may have to pay additional fees.
The nine hazardous materials classes are as follows:
- Class 1: Explosives
- Class 2: Dangerous gases
- Class 3: Flammable and combustible liquids
- Class 4: Flammable solids, spontaneously combustible products, dangerous when wet
- Class 5: Oxidizers and organic peroxides
- Class 6: Poisons, biohazards, and toxic hazards
- Class 7: Radioactive materials
- Class 8: Corrosives
- Class 9: Miscellaneous dangerous goods
Many types of commonly shipped cargo may be classified as hazardous materials. Examples of common freight with hazmat classifications include perfumes (which may be flammable), lithium batteries, disinfectants, specific types of paint, and hand sanitizer.
All hazardous materials require hazmat-rated packing materials, and all personnel transporting hazardous material in the supply chain must be hazmat trained, including truck drivers. In turn, the average price of hazmat shipping is typically higher than non-hazardous materials.
Sometimes, your carrier may arrive at the destination country but cannot complete a delivery. Here are the three most common reasons:
- The recipient turned the shipment away
- The delivery address changed while the shipment was in transit
- The recipient was absent or there was no one to accept the delivery
In all three instances, your forwarder charges you for redelivery. The best way to avoid paying these fees is to ensure your receiver’s delivery information is correct and up-to-date before creating your bill of lading.
Lift-gates are mechanical devices designed to assist with loading and unloading shipments to and from the delivery vehicle. Lift-gates are used if no loading dock is available.
Your shipping carrier may charge lift-gate fees if the shipper or the receiver does not have a loading dock, as most delivery vehicles do not have them installed by default. The best way to avoid lift-gate fees is to communicate with your shipper and your receiver to ensure docks or lift-gates are available on site.
Inside pickup and delivery fees
Carriers typically add extra charges to your container shipping price if your shipment must be delivered directly to a residence or business premises instead of being delivered to a shipping dock. You incur these fees because the trip duration is longer.
Although you cannot always avoid these fees, you can mitigate the costs by specifying the exact delivery location and instructions in your freight shipping options ahead of time.
For example, the shipment details on your bill of lading should specify whether the freight needs inside pickup or delivery, which address, and how to reach the desired delivery point.
Vehicle not used fee
A Vehicle Not Used fee may also be known as a Truck Ordered Not Used (TONU) fee. Carriers may charge you if your shipment isn’t ready for loading when their drivers arrive for a scheduled pickup. The TONU fee is a flat rate per day, ranging between $150 for a dry van to $300 for a running reefer.
TONU fees are easy to avoid; notify your carrier as soon as possible and cancel or reschedule the pickup before they dispatch their drivers.
Attention to Detail is Key
Although freight rates are continually fluctuating, getting an accurate quote is possible. The most critical factor is gathering all the relevant details before starting your calculations.
Partner With Asiana USA for Your Worldwide Shipping Needs
Asiana USA is a premier multinational freight service provider and logistics company that provides peace of mind for its international clients and unparalleled customer service. For a rate quote or more information, contact us today at (855) 500-1808.