Seven things to understand about Less Than Truckload carrier rates:
Base Rates: One of the challenges with purchasing less than truckload freight services is comparing the similarities and differences in costs between different carriers. Every carrier determines their own base rates which will differ a great deal between carriers and shipping lanes. A base rate is quoted per one hundred pounds often referred to as centum weight, CWT. When determining the CWT it is important to understand what it is based on. CWT takes into consideration the freight classification, the weight of the shipment, the distance travelled, as well as the origination and destination zip codes.
Classification of Freight: The National Motor Freight Classification, NMFC publishes the different classifications or classes comparing commodities that are moving in interstate, intrastate and foreign commerce. According to the NMFC there are eighteen different classes that range from fifty to five hundred and are based on the products density, ability to be stowed, handling and liability. If the freight is a lower class it represents a low risk, dense shipment. Higher class freight indicates freight that takes up a lot of space and is charged a higher rate.
Freight all Kinds: FAK is an agreement that enables multiple items with different classes to be shipped and billed at the same rate. This agreement is made specifically between the carrier and customer. This allows negotiations with the carrier to ship multiple commodities that range in class to ship at a specific rate. Commodities range in class from one hundred to two hundred that are being shipped are charged at one hundred fifty because of the FAK agreement between the carrier and customer.
Distance: CWT calculations for less than truckload freight also take into consideration the distance the freight needs to travel. This is a bit trickier as of course the longer the distance the more it will cost to ship. Some LTL carriers will only service specific regions and if a shipment is sent outside the normal service area the trucking company will transfer the load to another LTL carrier. This can add to the cost of the shipment.
Weight: With less than truckload shipping you actually pay less per pound the more a shipment weighs. So a shipment that weighs two hundred and fifty pounds may actually end up costing $1.49 a pound where as a shipment weighing one hundred pounds may cost $2.00 a pound.
Minimums: With less than truckload carriers there is an absolute minimum charge otherwise known as an AMC. This is considered the minimum amount that will be charged or the shipment will not go.
Accessorial Charges: The accessorial charges are the fees that are charged for services that go beyond shipping the freight from one point to another. Examples of these charges are inside pick-up, lift gate services, residential delivery, packing and many other extra services.