Freight shipping is an essential component for businesses especially for those with a global supply chain where both suppliers and customers are from overseas. And whether your customer is 10 or 10,000 miles away from you, the condition of the product they buy can determine whether they’ll buy from you again or not.
That’s why it’s important to be mindful of the shipping process and, hopefully, this article will guide you through what freight shipping is all about. It’s important to ship your goods safely at a reasonable cost because at the end of the day, it’s your customer’s satisfaction that allows your business to thrive.
What is Freight Shipping?
Freight shipping is the process of transporting commodities and goods by land, sea, or air where the freight is loaded onto trucks, trains, ships, and airplanes. It also measures the shipment by the weight or number of pallets/containers. And since it transports items in bulk, it is mainly used by businesses to supply inventory to their distributors and other companies they work with.
Types of Freight Services
Freight services companies use one or multiple modes of transportation to carry your shipment and each type of service has its own pros and cons. The right one for you will ultimately depend on your budget, your shipment’s size and weight, its urgency, and many other variables you have to keep in mind as some services may be the only one suited to meet your needs.
This type of service carries your freight through roads and railways, where the cargo is either grouped together or allocated to a dedicated container depending on its size, weight, and urgency. It can carry many different kinds of products if the route to the destination is on land only.
Some of the benefits of ground freight services include:
- Low cost. It is the most cost-effective option for moving large shipments (e.g. bulky furniture, industrial equipment, airplane parts) within short distances compared to air and ocean freight services.
- Environmentally-friendly. Trucks and trains have smaller carbon footprints than ships and airplanes.
- Widely available. There are many different carriers that meet many different shipping needs and trucks operate around the clock.
On the flipside, trucks have weight and volume limits and are at the mercy of traffic, road, and weather conditions. And if you’re looking to ship products worldwide, this service may have to be combined with others to achieve your ideal balance of delivery speed and cost.
Ocean freight services
This type of service loads your freight on a container ship and is one of two ways to transport products overseas. It can also carry many kinds of commodities such as grain, minerals, metals, and petroleum, as well as large, oddly-shaped products like industrial equipment.
In terms of international shipping, ocean freight services are hard to beat because they can transport much more freight for a lot less money. There are also other benefits in using this type of service, which include:
- Not limited by weight. Ships don’t experience the setbacks of heavier weight that airplanes do.
- Wide reach for your products. Ships can travel to many countries around the world and can transport many kinds of items.
- Environmentally-friendly. Ships consume less fuel than airplanes while being able to transport more freight.
Although ocean freight is very cost-efficient, ships take much longer to transport products overseas compared to airplanes. What can take only a few days through air freight can take several weeks through ocean freight.
So if you have suppliers in other parts of the world and you’re running a tight schedule, it’s important to plan ahead in order to maximize the benefits of ocean freight.
Air freight services
This type of service carries freight on either passenger or cargo airplanes and is more expensive than ocean freight for transporting goods overseas. Its biggest advantage is the speed of delivery for your shipment, where the airplane flies directly to the country of destination with little to no stopovers. This type of service is ideal for perishable goods like flowers, food, and pharmaceuticals.
The other benefits of air freight include:
- Better freight protection. Airport safety regulations are strictly adhered to and cargo planes aren’t exempted in its scope. The cargo is also less likely to be damaged or lost because it is handled by less people.
- Trackable. Planes can be tracked in real time because of their definite departure and arrival periods.
- Less packaging required. Air shipments require less packaging than ground and ocean freight services, allowing you to shave off costs from your packing materials.
- Lower insurance premiums. Since the transit time for air cargo is significantly shorter compared to ocean freight, your shipment is exposed to less risk.
- Wider-reaching than ocean freight. Planes can reach land-locked destinations faster and more efficiently compared to using both ocean and ground freight services.
- Replenish supply faster. It allows businesses to achieve ‘just-in-time’ (JIT) inventory replenishment, which enables them to meet customer demand as soon as possible.
Given its capabilities and benefits, there is no wonder that air freight is the most expensive freight shipping option. However, planes also have weight and volume limitations and large, oddly-shaped products tend to be more expensive to ship using this service.
Difference between parcel and freight shipping
Both parcel shipping and freight shipping can serve businesses to meet their shipping needs. However, they have specific differences that you have to consider before deciding which service is suited for your business.
Parcel shipping is for packages that are transported and delivered one at a time. This service is ideal for small to medium sized retailers who don’t ship a huge volume (i.e. greater than one pallet) of packages each day. It also benefits individual shipments to many different locations because parcel carriers can deliver them faster. Overall, this is a more cost-effective solution for those who don’t meet the minimum requirements for freight shipping.
A parcel usually weighs between 1 to 150 lbs and can be packaged either with your own packaging material or the one supplied by the carrier. Some carriers, like UPS and FedEx, also consider the size (a maximum of 108 in. X 165 in.) for them to ship it as a parcel.
Freight shipping, on the other hand, is for large palletized shipments that are headed towards a single destination. This service is ideal for businesses that ship out numerous pallets a day (e.g. suppliers that ship hundreds or thousands of parts to an assembly plant).
The freight (whether it’s smaller, individual boxes grouped together or a single, large item) is measured by how much space it takes up inside a container/trailer. The maximum weight capacity ranges from 35,000 to 45,000 pounds depending on local regulations.
Freight Shipping Methods
Like many things in life and business, there are many ways to get your shipment from point A to point B. The right freight shipping method for you depends on your shipment’s size, weight, value, urgency, etc. And it is important to choose properly in order to avoid delays and other problems in your supply chain.
Ground freight shipping methods
Freight that is carried by truck is generally measured by how much space it takes up inside a trailer, which is usually 8 to 8.5 ft wide, 12.5 to 13.5 ft tall, and 40 to 53 ft long. And there are different types of trailers (e.g. refrigerated, air-ride suspension) that can transport items that have special requirements for shipping.
Each method can also be customized with additional services (e.g. lift gates and inside pickup and delivery) that help make loading or unloading the freight easier.
Less-than-truckload (LTL) is typically used if the shipment weighs between 150 to 10,000 pounds and uses one to five pallets, which doesn’t fully occupy a trailer. The freight often changes trucks en route to their destination because it passes through different terminals. It is cost-efficient because freight from different shippers are collected together and you only pay for the space and weight you consumed on the trailer.
A variation of the LTL shipments is Volume LTL, which is applicable for a shipment that uses at least six pallets and weighs more than 5,000 lbs, or it takes up between 12 and 32 ft of space. When a shipment with a density of less than 6 lbs/cu.ft takes up 750 cu. ft. of space, its freight costs are now different from standard LTL rates.
Full truckload (FTL) is for a shipment that fully occupies a trailer, whether there are enough pallets to fill it or the product needs a single container to safely transport. The shipment would also typically range between 10,000 to 45,000 lbs and would be transported directly to the destination with little to no stopovers.
It is viable for shipments that use at least 10 pallets, are highly valuable, or urgently needed. Despite being more expensive upfront, it is more dependable for delivering freight safely especially for those that have special handling requirements.
Partial truckload (PTL) is in between the LTL and FTL where the shipment uses at least 6 pallets or is heavier than 5,000 pounds. It is different from volume LTL because it doesn’t consider the freight class of the shipment.
It is similar to LTL where you only pay for the space your freight took up because it doesn’t fully occupy a trailer. It is also similar to FTL because PTL shipments en route to their destination are rarely transferred to another truck and less people handle it.
Flatbed shipping is the method used for transporting products that can’t be moved to and from a dock or doesn’t fit the dimensions of a dry van trailer. Examples of these products include industrial machinery and equipment, concrete beams, rebar, baled tires, etc. The flatbed trailer is usually 48 ft long and 8.5 ft wide, with different deck lengths for step decks, double drops, and removable goose necks. The cargo can be loaded from all angles by the crane or forklift and is secured by either chains, straps, corner protectors, or tarpaulins.
Ocean freight shipping methods
Goods shipped through ocean freight are stored inside ISO containers, which are 8 ft. wide, 8.5 ft. tall, and 20 to 40 ft. long. These containers also come in different types (e.g. insulated, refrigerated, dry freight) to accommodate many kinds of products.
And shippers have two options how to use a container, which are:
- Full container (FCL). This allows the shipper to use the whole container whether it’s full or not. Their cargo is protected from other shipments and there’s no waiting in order to fill the container.
- Less-than-container (LCL). This is for shipments that don’t take up the whole container. Also known as share-a-container, it allows the shipper to only pay for the space he consumed inside the container.
This uses a combination of trucks, trains, and cargo ships to move freight and the shipment is signed under a single bill. The shipment is stored in an intermodal/ISO container and doesn’t require direct handling. Depending on what you’re available options for shipping your freight, this method can be cheaper and more environmentally-friendly because it consumes less fuel.
This is the same as the intermodal method where it also utilizes several modes of transportation to carry your freight. However, it is different from intermodal because you deal with each carrier individually instead of consolidating the process through a broker.
This method is for shipments that are time-sensitive or urgently needed, at the cost of being the most expensive. It uses a dedicated truck appropriately sized for your shipment and makes little to no stopovers so the freight is delivered faster. For overseas shipping, air freight is chosen for expedited cargo because of its speed and safety.
What are the factors that determine freight rates?
Aside from the kind of freight shipping service and method you choose, there are other factors that affect your shipping costs. It’s important to be aware of all of these so you can find a cost-effective solution for your cargo.
The length, width, and height of your shipment matters because carriers charge you according to how much space it takes up in the container. Different products have different volumetric weights, which can be higher even if the shipment isn’t necessarily heavier.
The actual weight of your shipment is also compared to its volumetric weight and carriers would determine the cost based on which is higher.
The value of your freight can determine how much you need to pay for insurance and most carriers consider higher-value shipments to be more of a liability. High-value items also usually need insurance to help you minimize losses in case these are lost or damaged in transit.
Different shipping methods and freight services offer different levels of delivery speed but generally, you have to pay more for faster delivery times. This factor may be prioritized higher depending on the urgency and perishability of your shipment.
The further your shipment needs to go, the more you have to pay for shipping because of greater fuel costs. Some destinations are categorized into zones and the ease of access for carriers can also affect how much they’ll charge you.
Different countries have different duties and taxes as well as related laws that might affect the entry of your shipment. Duties and taxes are paid at both the import and export clearance in customs and these might be additional costs on top of the shipping fees.
Delays due to a myriad of reasons can be unpredictable and carriers would also charge you on the additional time that you’re using their services.
Factors that affect LTL shipping rates
LTL shipping is a very popular method of freight shipping and it has its own unique set of factors that affect your costs of shipping. If you’re looking into LTL shipping for your business, considering these would be very helpful.
If you’re considering LTL shipping for your freight, the freight class is a quicker method of determining shipping costs. It takes into account these four aspects of your shipment:
- Density. This is determined by dividing the weight by the volume and is labeled in lbs/cu. ft.. Generally, this is the most significant factor in determining the freight class.
- Handling. Certain products may require more people or specialized equipment to transport safely and that also adds additional labor costs.
- Stowability. Cargo that is oddly shaped or difficult to stack also affects shipping costs because it requires specific treatment.
- Liability. Products that are more likely to be lost, stolen, or damaged during shipping are considered to be more expensive to ship.
It ranks the majority of products into 18 classes, with 50 being the lowest and 500 being the highest. Lower classes are heavier items and cheaper to ship while higher classes are lighter items and more expensive to ship. Here’s a table showing the class name, examples of products under each class, and weight range (lbs/cu. ft.).
|Class||Examples||Weight range (lbs/cu. ft.)|
|Note: cargo fits on a std. Shrink-wrapped 4X4 pallet||< 50|
|55||Bricks, cement, mortar, hardwood flooring||35 - 50|
|60||Car accessories and parts||30 - 35|
|65||Car accessories and parts, bottled beverages, books in boxes||22.5 - 30|
|70||Car accessories and parts, food items, automobile engines||15 - 22.5|
|77.5||Tires, bathroom fixtures||13.5 - 15|
|85||Crated machinery, cast iron stoves||12 - 13.5|
|92.5||Computers, monitors, refrigerators||10.5 - 12|
|100||Boat and car covers, canvas, wine cases, caskets||9 - 10.5|
|110||Cabinets, framed artwork, table saw||8 -9|
|125||Small household appliances||7 - 8|
|150||Sheet metal car parts||6 - 7|
|175||Clothing, couches, stuffed furniture||5 - 6|
|200||Sheet metal car parts, aircraft parts, aluminum table, packaged mattresses||4 - 5|
|250||Bamboo furniture, mattress and box spring, plasma TV||3 - 4|
|300||Wood cabinets, tables, chairs, model boats||2 - 3|
|400||Deer antlers||1 - 2|
(Low density/high value)
|Gold dust, ping pong balls||< 1|
These depend on the route and on the carrier, which quote you on a centum weight (CWT) or per 100 lbs basis. Even if LTL carriers have similar rates, they would change their base rates if they need to change the amount of their trucks on the road or the volume of freight they’re moving.
Aside from further destinations that would incur higher fees, lesser used routes or unserviced locations are more expensive because they’re less profitable for the carrier.
These are baseline rates that carriers won’t adjust regardless of the volume of the cargo or the usage of the route. Make sure to look for these in the fine print so you can maximize your shipping costs.
These are often additional fees charged on top of the general rates, which include:
- Accessorials. These are for services that help make pick-up and delivery operations smoother (e.g. inside delivery, Saturday delivery, residential pick-up and delivery, gate service, etc). These can be negotiated before you push through with the shipping contract.
- General rate increase (GRI). Also known as general rate restoration, these are applied on routes and are usually announced annually or semi-annually. You can request for an update if the carrier isn’t transparent about this.
- Cargo ready date. This refers to the date your shipment will be picked up that you agreed upon with your carrier. You will be charged more if your shipment isn’t ready because your carrier would have to adjust again.
- Pallet fee. If you’re not using your own pallets, carriers will charge you for using theirs. It is much cheaper to have your own pallets in your warehouse.