How to Calculate Freight Shipping Rates

Attempting to calculate shipping rates and freight shipping costs can be a challenge to even the most experienced business owner. Fortunately, it doesn’t have to be! At On Track Freight Systems, we’ve outlined a few simple steps and tips you can use to effectively and accurately calculate freight shipping rates and freight costs. Read on to learn more. And don’t hesitate to reach out to us today for our free freight calculator.

How to Calculate Freight Shipping Rates?

While calculating your freight shipping costs can sound complex, it’s generally not. Here are a few simple steps you can use to calculate your freight rates and freight shipping cost

Start with Tariff for the Class and Weight of the Shipment

To understand how to calculate freight rates, we first need to start with the fact that all LTL shipments are created based on tariffs. Carriers should publish these tariffs, which are also known as base freight rates, at least once a year. Tariffs should be presented as a cost matrix that explains hundredweight (CWT) rates for every freight class and weight for each zip code combination. 

You Will Need Origin and Destination Zip Code for Freight Shipping Cost

When you’re rating an LTL shipment or looking to estimate the cost of freight; you will need the destination, origin zip code, as well as freight classification, and weight of each product. 

Shippers Should Know the Freight Class & Weight

Freight classification is published by the National Motor Freight Classification, which is the standard that offers a comparison of commodities moving intrastate, interstate, and foreign. 

The NMFC provides an item number for every commodity. This number is assigned for applying to classes coupled with governing regulations and rules. In total, there are 18 different classes — spanning from Class 50 up to Class 500. The class is based on different dimensions:

  • Liability
  • Handling
  • Stowability
  • Density 

In general, freight with a lower class will be less expensive to ship. Lower classes represent cargo that is low-risk and/or very dense. On the other hand, higher classes will indicate freight that will take up more space and be lighter. The higher the freight class, the more it will cost to ship. 

The Formula for Calculating Freight Shipping Rates

To calculate your freight shipping rates, you will need to know the following information:

  • Origin zip code
  • Zip code for delivery
  • Class 
  • Weight
  • Tariff rate for the class and weight

Once you have this information, the simple formula for calculating your LTL freight shipping rates is listed below: 

Freight Class x Tariff Rate for Class & Weight

The previous freight shipping rate formula is a very basic representation. If you’re determining a line-haul rate, many other factors could come into play. Common factors that may alter your freight shipping rate for line hauls include:

  • Deficit weight rating
  • Freight All Kinds
  • Lane specific strategies
  • And more.

To ensure you have the most reliable information, we encourage you to reach out to the team at On Track Freight Systems for a free freight quote. 

LTL Freight Tariff Variables You Should Consider

When you are looking to calculate your LTL freight cost, it’s imperative to know that rates for the same lane can vary from tariff to tariff. For instance, the shipping tariff produced by a regional carrier may offer superior rates on shorter hauls than longer hauls. On the other hand, a carrier who has a broad national footprint could offer better tariffs on longer hauls than they do shorter hauls.

Freight Discounts

Another thing to keep in mind if you’re calculating your freight shipping rate is that the carrier may offer you a discount. These discounts are often negotiable and can correlate with several factors, such as:

  • The volume of the freight
  • The relationship you have with the carrier
  • And more

At the same time, minimums may be negotiable. A carrier’s minimum represents the lowest amount charged per shipment. It’s important to consider applicable discounts when attempting to estimate freight shipping costs.

Common Challenges Associated with Calculating Freight Cost

In general, the complex reputation of calculating freight cost for LTL shipments exists for a few reasons. 

  • The vast number of factors. When calculating LTL freight shipping cost, the number of factors associated with the move can make it more challenging. For example, you must always consider pallet count, cargo weight, and freight classification.
  • Benchmarking can be a challenge. Benchmarking LTL shipping can be difficult because making direct comparisons with the operations of other shippers can be complex.
  • A lack of understanding of cost drivers. Many shippers fail to have an understanding of the factors driving LTL freight rates. Because freight networks continually change, shippers should stay informed of alternating patterns of supply and demand when looking to estimate freight rates.   

Accurate Data Is Key to Freight Quotes and Calculating Freight Shipping Costs

Whether you’re attempting to estimate freight costs yourself or are requesting a quote, it’s imperative to capture your actual class. Far too often, shippers are provided a FAK cargo designation on invoices, which obscures the actual classes. 

In this instance, there may be several types of goods being shipped. This can introduce several inaccuracies and complications that can dramatically change the price. The shipper has no real way of knowing the class of the cargo if everything in the shipment is classified under the FAK designation. In the end, accurate data is paramount. 

And when you correctly capture the data elements — particularly those instrumental to tariff calculations — you can streamline all LTL pricing activities and mitigate flawed assumptions. 

Contact On Track Freight Systems for Easy & Competitive Freight Shipping Rates

Getting the best LTL rates for your shipments is paramount. At On Track Freight Systems, we are a leading carrier in the New York, Long Island, and New Jersey area. We offer fast, highly affordable LTL overnight shipments throughout an expansive coverage area.

And if your shipments extend beyond our expansive footprint, we offer an array of cost-effective coast-to-coast logistics and shipping solutions to ensure your shipment is on track! 

In the end, calculating freight shipping rates can be confusing because of the sheer number of factors you must accurately consider. However, at On Track Freight Systems we make it easy by offering a free quote.