Generally speaking, the more you know, the better you’re able to manage both expectations and outcomes. This is particularly true concerning LTL freight quotes – there is a direct correlation between greater knowledge and lower rates for your freight.
What Factors are Involved in LTL Freight Quotes?
It depends on the mode of shipping. For less than truckload (LTL), i.e., loads too large to ship parcel yet not filling an entire truck, the heavier the shipment, the higher the weight discount (the less paid per hundred pounds). LTL shipments over five pallets tend to get spot quotes by the carrier that are based on volume. And truckload (TL) rates are typically calculated using per mile or per hundredweight with an additional fuel charge.
In addition to the important weight factor, the following variables are considered for LTL:
- Density: determined by total shipment weight divided by total cubic feet; higher density = lower class/lower rate
- Density, Part Two: density of shipment on a pallet is determined by the total shipment weight divided by the height of the pallet and carton + dimensions of the pallet; any additional elements such as overhanging packaging must be included in the measurement
- Freight classification: a combination of density, ease of stowing, handling, liability issues, and value; freight of higher density tends to offer damage resistance and ease of handling and gets lower rates, while lower density freight is lighter, tends to require more room, and is more subject to damage and is more expensive to ship; all freight is assigned a classification number between 50 and 500 as per National Motor Traffic Association guidelines
- The mileage from point A to B: unsurprisingly, the longer the drive to the shipment’s destination, the more it will cost; additional costs can accrue if a destination is beyond typical geographical boundaries for a particular carrier, making it necessary to interline, i.e., use an additional carrier for the final leg of a haul
- A carrier’s particular base rates: varying between carriers and lanes, these rates are determined by CWT/per 100 lbs. plus freight classification
Minimums and Negotiated Discounts
While some factors involved in LTL freight quotes are static, there are also opportunities for discounts on both sides, including:
- Absolute Minimum Charge (AMC): this is the bottom line for carriers; a dollar-amount increase on a minimum charge – amounting to a higher percentage rate than with typical contract rate increases – can offer carriers a balance to heavier shipment costs
- One freight class assigned to a group of items in varying classes: known as freight all kinds (FAK), this is an average of sorts agreed upon by a carrier and their client, assigning all items the same class rating and offering savings to the client
- Different lanes/different rate tariffs: overall LTL freight rates can be improved with an understanding of freight, and varying lane activity; these rates are not set in stone, and carriers will generally work with current or prospective clients to ensure rates that work for all parties involved
- Accessorial charges: in addition to the standard fuel surcharge, at times carriers need to charge extra for services like delivery to locations with limited access such as schools, providing liftgate, and delivering inside buildings; these charges are sometimes assigned a flat rate, or simply eliminated
How a Third-Party Logistics (3PL) Partner Can Improve Your Freight Rates and Bottom Line
Assuming the above criteria are met, Amrate – a cloud-based Transportation Management System (TMS) – can guarantee the lowest rate for a shipment because after freight details are entered just once, it pulls rates from over 400 carriers, including every major carrier in the U.S., for that shipment.
With market volatility in fuel pricing causing rates to constantly change, you’re guaranteed the lowest rate at whatever time the order is entered. In addition, the greater the volume, the greater the discount tends to be.
Click below to request a free trial of Amrate and see for yourself how you’ll save 30% or more in 2021 and beyond.