How are Freight Rates Calculated? | Citizenshipper

CitizenShipper CitizenShipper · Updated March 8, 2023

Calculating freight rates is a thorny task for any shipping service or cargo broker. The final cost depends on a wide variety of factors, not limited to: distance, weight, volume, season, destination and mode of transport. The rate is quoted to the customer with every factor accounted for, so the customer can be spared this tortuous calculation. But for the curious, we’ve compiled a guide that should shed some light on the many considerations that the freight broker must take into account.

First things first.

How is freight cost calculated?

The factors that affect the cost of freight shipping are:

  • Commodity: Is the cargo a product, like a car, or a material, which might be used to manufacture cars? This information is needed to give cargo a corresponding National Motor Freight Classification (NMFC). The NMFC is needed before the cost can even be calculated, as it informs the quote.
  • Distance: How far is the cargo going? The further it needs to travel, the longer it will take and the more fuel will be needed by the carrier. There are no workarounds to this, but the price of distance is at least easy to calculate.
  • Weight: More fuel will be needed to transport heavier items. They can also accelerate wear and tear on the carrier vehicle and can be harder to load and unload. These costs are all factored in, including the weight of the packaging.
  • Size: The bigger the cargo, the fewer items can be transported in the carrier alongside it, making the journey less efficient for the carrier. To counteract this, costs are raised. Size as well as weight also determine whether the cargo will need to be transported by pallet, skid or crate.
  • Type of location: Will the cargo arrive at a location where it is difficult to load and unload? If so, the carrier may need special equipment, which also incurs higher costs for the customer.
  • Class: Officially no cargo can be transported in the U.S. without a given Freight Class. Density, stowability, special handling and liability (i.e. how delicate is the shipment) are the determining factors.
  • Density: Freight density can be the trickiest factor to calculate. Naturally two boxes of the same size, one containing dumbbells and the other helium balloons, will have different weights. If the weight of the shipment is disproportionate to its size, ‘dimensional weight’ is a vital factor. Input the size (including packaging), weight and a few other details of your shipment into this helpful online freight density calculator to find out how much your freight will cost per cbm or per unit.

How do you ship freight?

For customers, the work that goes into getting freight shipped is mainly preparation. The conveyance of cargo is usually handled end-to-end by the shipper (and sometimes cargo broker), and the likeliest reason for anything to go wrong in transit, is if the cargo was prepared incorrectly. An unclear label can send a shipment to Washington, not Washington D.C.; an inaccurately weighed and measured shipment can incur charges and delays en route. For customers of freight shippers, the answer to the question ‘how do I ship freight?’ is ‘choose the right shipper and package the shipment with care and attention to detail.’

Here are some pointers.

Consider whether your freight should be palletized, i.e. shipped by pallet as opposed to in separate ‘units’. The weight of an average pallet is between 20 and 40 pounds, which will be factored into shipping costs. However, since all items aboard a pallet are considered a single unit, using pallets instead of shipping loose items can save the customer money. Pallets are the standard way of transporting large cargo by air, rail, sea and road.

Choose a pallet that is sturdy and large enough so that there is no overhang. When you come to place your cargo onto the pallet, stack them with an eye on space-efficiency. Don’t pyramid the items, if you can help it, because pallets are often stacked and this can lead to damage of the topmost item.

Five revolutions of stretch wrap are recommended to secure the load to the pallet. This will prevent individual items from coming loose and getting separated.

An equally crucial step is labelling. When you label your shipment, make sure to include:

  • Telephone number/s
  • Complete address information
    • include postal code of the shipper
  • Name of consignee

For ease of preparation, there are five things to check off to keep you palletized cargo secure:

  1. Use a top and bottom load protector (corrugated cardboard will do) to disperse weight when pallets are stacked on top of each other.
  2. Use corner and edge boards, made of the same material, to increase vertical stacking strength as well as to protect the corners and edges of the cargo.
  3. Use stretch wrapping to stabilize the load.
  4. Bind the cargo with straps to further ensure the items will not be separated in transit.
  5. Type your label and print it to avoid confusion over handwriting. Make sure to affix it somewhere it cannot be missed.

The advice is much the same for non-palletized cargo. Use sturdy containers that aren’t liable to be easily crushed. Double-boxing helps. Secure the surfaces and edges with the same kind of protectors and label each item separately. Cushioning is all-important, so use lightweight cushioning like styrofoam at the edges of each item to ensure safety while keeping the weight low.

Make sure all this is complete before the transporter arrives. You may be charged for the extra time a transporter waits to pick up your cargo and ship it.

Shipping services

The shipping service you choose will also affect freight cost. For shipping across the USA, an online marketplace is your best bet. The competition of the market will keep shipping costs low as drivers vie for your shipment. A shipping service with a positive reputation is also a good guarantee of safety and reliability in transit.

One such service is CitizenShipper. Post your shipment free of cost today and wait for the quotes to roll in. Choose the driver you want: some customers value experience over price, others favour drivers with the best testimonials.

Once you’ve made your choice, negotiate the freight cost. Then prepare your cargo and relax: The transporter will take it from here. 

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