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How to Find the Cheapest Way to Ship Your LTL Freight

by John Rediehs on December 18, 2015 No comments


When you’re looking into different logistics companies to handle your LTL shipping, it can be a confusing and complicated process. Finding the best rates from a company that you can rely on can be overwhelming, but one way to make things easier on yourself is to learn more about the different factors that can impact shipping rates. By learning about what impacts shipping costs, you can find the cheapest way to ship LTL freight without compromising quality of shipments.

Learning About Factors that Affect Cost

There are several different things that affect how much LTL freight rates will be. Learning more about these factors will help you figure out ways you can save and which companies to do business with.

Weight of the Shipment

cheapest way to ship LTL cargo

Perhaps the most obvious factor that affects shipping cost, the weight of your shipment will determine how much you have to pay to ship it. LTL freight rates are designed so that the more a shipment weighs, the less you pay per hundred pounds (this price is often referred to as the “price per hundred”). In other words, as the weight increases, your rate per hundred pounds goes down, so that the cost isn’t astronomical if you have a very heavy shipment. These rates are usually separated into weight groups or classes, and the shipment will be priced accordingly.

Density/Size of the Load

Similarly, the density or size of the shipment will affect how much it costs to ship. In order to calculate the shipment’s density (which is helpful and necessary to be able to properly describe the goods being shipped), you first need to weigh the shipment and then calculate the cubic dimensions of it. To find the density, divide the total weight of the shipment by the total cubic feet. Once you know the density, you’ll be able to figure out its classification, which is the third factor that affects rates.

Distance the Shipment Has to Travel

The next factor that figures into the freight rate is the distance traveled. Typically, the farther the haul has to go, the more expensive the price per hundred. Many LTL companies serve a certain area or region, and if a shipment is outside that logistics firm’s shipping region, the freight will have to be transferred to another LTL carrier. This process is called interlining, and can cause the rates to go up considerably, due to higher minimums and the actual process of transferring loads.

reddog-instant-freight-quote

Classification of Freight

When you’re researching to find the cheapest way to ship your freight, you’ll need to know the classification of it. Every piece of freight shipped has a classification within the LTL shipping industry, and these classifications are a big part of what makes up the rates. Classes are listed in in the National Motor Freight Classification, which is put forth by the National Motor Traffic Association. There are 18 classes, and the class is determined by a few factors:

  • Product density
  • Value
  • Stow-ability
  • Handling
  • Liability

Shipments that are categorized in lower classes are typically very dense shipments that are difficult to damage and easy to handle. Higher classes refer to shipments that are less dense or lighter weight, freight that takes up more space or is more easily damaged. Lower classes have lower rates to ship, whereas higher classes have higher rates.

Distance the Shipment Has to Travel

The next factor that figures into the freight rate is the distance traveled. Typically, the farther the haul has to go, the more expensive the price per hundred. Many LTL companies serve a certain area or region, and if a shipment is outside that logistics firm’s shipping region, the freight will have to be transferred to another LTL carrier. This process is called interlining, and can cause the rates to go up considerably, due to higher minimums and the actual process of transferring loads.

Base Rates and Minimum Charges

The cheapest way to ship your freight will always start with whatever the minimum charge is with each company. Generally, LTL logistics providers will have what’s called an absolute minimum charge, or AMC. This minimum charge is the absolute lowest amount that a carrier will agree to ship on. LTL providers also have what are called base rates—rates quoted per 100 pounds that are based on the freight’s class. This rate is different from the minimum charge in that many carriers will modify their base rate depending on demand and capacity to fulfill the shipment.

Freight All Kinds, or FAK, Agreements

FAK agreements are arrangements made between you, the client, and the LTL carrier that allow shipments of different classes to be shipped and billed as the same freight class. This is a great way of negotiating to find the cheapest way to ship, as it can save a significant amount of money. If your LTL shipment includes products in lower and higher classes, you can negotiate to get the entire shipment billed as one class as a means of splitting the difference and being charged an “average” rate of the classes. This can reduce your cost by reducing the number of higher-class products in your total shipment.

Negotiated Tariffs and Negotiated Discounts

Negotiating different tariff, or tax, rates, on various lanes of shipping can help save you money and ensure that you’ll find the cheapest way to ship your product. This way, you can work on reducing the tariffs on some of the lanes as a trade-off for paying higher tariffs on other lanes. Another factor that affects what you’ll pay is whether you try to negotiate discounts with the third party logistics provider you’re working with. In fact, simply working with a third party logistics (3PL) provider can save money, since they will have more capacity to ship your freight than smaller shippers. You can also negotiate based on your relationship with the 3PL provider, as well as your reputation as a shipper and the volume of business you do. In other words, you can negotiate a deal with a logistics provider based on how good of a customer you will be for them.

Surcharges and Accessory Charges

Finally, surcharges and charges for additional services are the last factor that affects what rates will be. Additional services may include things like:

  • Lift gate service
  • Residential pickup or delivery
  • Delivery to limited access locations (for example, jails, churches, schools, or storage units)
  • Inside delivery

Additionally, a fuel surcharge is commonly attached to the shipment’s rate. Like many of the other factors that affect cost, these surcharges can be negotiated—either to be lowered altogether or to have them added as a flat fee rather than a percentage.

Finding the Cheapest Way to Ship LTL Freights

cheapest LTL shipping method

Of course, you could spend time calling a variety of LTL shippers as well as third party logistics providers and rehashing all of your needs and information to each one to get freight rate quotes before finding the cheapest one. But not many people have time for that—especially if you’re looking for a third party to handle the shipping for you.

If you’re looking for a third party to take over the shipping, you’re likely already strapped for time, and in that case, spending a lot of time calling different providers isn’t the ideal solution. Instead, look at a few different 3PL companies, and look for ones that offer a free rate-quoting tool as a way to start your research.

reddog-instant-freight-quote

Why Work with a 3PL Provider?

Third-party logistics providers are known for being less expensive than it would cost for a company to host and execute all of their own logistics services. Why? It’s simple, really – in order for a company to have the capacity to manage their own shipments, they’d have to have a warehouse to store the pallets and vehicles for shipping, hire and pay warehouse workers, maintain the equipment, pay rent on the warehouse, keep track of everything within the warehouse, etc. The costs associated with sourcing, maintaining, and executing your own shipping process far outweigh the costs tied to hiring a third-party logistics firm. Outsourcing your freight load shipments is by far the cheapest way to ship your products. Third party logistics providers’ entire business is shipping, so they can perform these tasks more efficiently, more quickly, and less expensively, so it’s in your best interest to look into hiring one for your shipping.

Additionally, if your business grows rapidly, you won’t have to scramble to find new methods to ship—3PLs are very scalable and adaptable to your needs, and instead of you having to buy more equipment and space to store it, you simply call your 3PL provider and work out new rates based on additional shipping lanes and demand.

Finding the cheapest way to ship your freight doesn’t have to be a headache—discuss your needs with a third party provider today, such as Red Dog Logistics. We’re happy to help you learn more about the options available for your freight, and you can also use our online freight rate tool for instant information about what you might expect to pay for your LTL loads. We’ll help you make sure you get the best value for your shipments.

To learn more, contact Red Dog Logistics today, and find the cheapest way to ship LTL freights across the country.

John RediehsHow to Find the Cheapest Way to Ship Your LTL Freight

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