All shipping companies—from small package to over the road carriers—use four factors when determining their rates. This includes weight, freight class, volume, and distance. By understanding how to calculate shipping costs, you can save money by avoiding certain expenses. Small changes in your packaging can reduce the size and weight of your products and pay off big in the end. A small adjustment may only save you a couple of dollars, but depending on how much you ship throughout the year, it could translate into thousands of dollars saved.
How much your shipment weighs is important to the carrier. Semi-trailers have a maximum amount of weight they are legally allowed to carry. There is also a physical threshold for weight; if a trailer is overloaded, the floor could give way, or the landing feet could fold under the weight. Carriers need to know the weight so they don’t overload trailers on LTL or full loads. Carrying more weight also means burning more fuel to move it, which they factor into the cost.
Every commodity shipped in the U.S. falls into a specific freight class. Freight classes exist so that customers can get an unbiased price when shipping freight. The stowability, liability, density, and ease of handling determine what class something goes in. White copier paper is going to be in the lower class because it is easy to move, inexpensive, and easy to replace if damaged. Likewise, high-value medical devices will fall under higher classes. The higher the classification, the more it will cost to ship.
The size of your shipment will be a large factor in cost. Bigger items take up more space on a trailer, so carriers need to know how big your shipment is. If you take up half the trailer, there is less space for more pickups. Additionally, if the volume of your shipment is greater than the weight, the volume will become the billable factor.
When requesting standard or expedited freight services, how far your package must travel is considered when calculating shipping costs. The further you need something to travel, the more it is going to cost. Traveling thousands of miles means more expense for the carrier—they have to pay the driver, fuel the truck, and cover other related expenses. A quick drive to a neighboring county is no big deal, but driving cross-country will definitely cost more.
Whether you're a company looking to improve one facet of your supply chain, your entire supply chain, or simply looking for a transportation and logistics consultation, we can help.