Air cargo is one of the most in-demand services for global shipping transactions. Businesses spent $1.64 trillion on air shipping services and logistics in the U.S. alone last 2018.
In 2019, foreign carrier shipments to the U.S. accounted for $8.5 billion, primarily from Asian countries. Freight shipping rates will depend on the fuel cost, equipment, vehicle (and maintenance), storage space for the item, taxes, and such.
If you're considering freight shipping services for your products, you have to check what's left on your bottom line after all expenses are accounted for.
When you're starting a business, one of the essential factors in ensuring that your products are shipped efficiently and affordably is understanding how shipping rates work.
You can then use this information to find ways for reducing costs or protecting yourself from unnecessary hikes with cargo carriers who charge differently based on time & distance traveled—all without sacrificing customer satisfaction!
Factors that Affect Freight Shipping Costs
Weight, Dimensions, and Density
When it comes to freight shipping, the bulk cost of the fee is in how much space your parcel takes up in the truck.
For example, 100 pounds of feathers will require more room than another item that weighs an equal amount but has lower dimensions (such as bricks).
Shipping costs can vary depending on the type and size of your package. For example, if you are shipping a dresser, it would be less expensive to send in pieces rather than fully assembled.
For fully-assembled furniture, this would require space (hence the stand-up or S.U.) category of 125). A DIY-type would need lesser space, thus belonging to the knockdown (K.D.) category of 85. Unassembled furniture usually belongs to a lower freight shipping cost category.
Suppose you're unsure what kind of shipping category your product belongs to. In that case, you can consult a reliable shipping freight consultant and ask for a cost-efficient way to handle your product shipment.
When shipping your product, the shape and packaging can impact costs. For example, along with the feathers versus bricks model from earlier, a 38-pound kayak may weigh around 40 to 65 pounds with roughly seven to nine feet in length.
Now, let's say another item weighs the same as the kayak but is placed inside a crate. Which one do you think would incur more cost?
A kayak is more extensive and has an awkward shape. This type of parcel takes more space and will be more difficult to load than a crate of the same weight.
In addition, shipping freight rates also vary for complex and fragile items. Glass, furniture, robotics, and industrial equipment are some of the things that fall under this category.
These items require special handling, therefore, require additional expense to deliver the items to their intended destination.
Added freight shipping costs are expected for unique shipping add-ons or accessorials. For example, you're shipping to a remote location or require the company to call before delivery, which will impact your shipping expense.
Some shipping companies offer a free freight shipping calculator on their website to give you a glimpse of the initial costs. Locations with limited access or transportation are usually farms, private commercial spaces not open for public access, carnivals, storage units, churches, and schools.
So, suppose you have shipments requiring accessorials or special shipment requirements. In that case, a reliable flat-rate freight shipping company could provide a more efficient and budget-friendly way of handling your packages.
Depending on the item shipped, packaging could put additional costs on your freight shipping costs. Fragile items such as electronics will require special packaging to prevent damage.
Heavier or more expensive materials require more dunnage or special boxes intended to keep the item cushioned and protected from challenges that come with transportation.
Custom boxes can be especially difficult to store during peak times, adding more freight shipping costs. These special boxes require manual folding and taping and will not work well using an automation system.
Freight shipments handling fragile items like glassware, ceramics, liquid-based products, and musical instruments often come with extra costs.
If the packing slips up and arrives damaged at your customer's doorstep, then all that hard work of building a customer relationship is gone. Any boxes used for fragile products require strong exterior protection that can handle the challenges of logistics risks and accidents.
You can avoid the reputational damage that comes with damaged goods, returned products, and costly replacements by working with a professional freight shipping company handling fragile shipments.
Mode of Transportation
There are many factors to consider when deciding what type of transportation works best for your packages.
Common elements include which countries to ship to and its proximity from each other play a crucial role in deciding the type of freight transportation (e.g., ship vs. land) to use.
Ocean shipping is typically cheaper than air when it's not an option to use roads. Air freights fees are based on weight and size or chargeable weight. However, ocean shipping usually takes a month to reach its destination compared to air shipping which only takes a few days.
How much does freight shipping cost if you're beating a deadline? Or are you looking to ship perishable goods in bulk? With urgent shipments usually done through air shipping, you need to anticipate additional costs of products requiring special packaging and space.
But, if you're not beating a deadline, this type of shipping transportation could prove to be more expensive, and you would be better off if you ship the item by ocean, train, or truck.
Airfreight shipments are ideal for products that are high on demand, and it is also suitable for businesses with little to no storage spaces for large inventory volumes.
Perishable goods such as food, flowers, and medicines typically use this kind of freight shipping.
When searching for cost-efficient shipping freight rates, consider the budget and when the parcels will need to arrive.
Origin & Destination
The cost of shipping a package can vary depending on where it's going and how far away that destination is.
For example, air freight forwarding services are more expensive where it needs to fly over long distances of water. Destinations requiring two (or more) separate flights could add up costs on your final freight shipping costs.
To maintain both profitable and competitive businesses, you must take the time to analyze your costs.
NMFC Freight classification
When you ship your cargo, the type and weight will determine the pay rate for freight classification. All LTL (Less than Truckload Freight) shipments made in America are classified into one or more standard categories.
These shipments are based on the National Motor Freight Classification (NMFC) standards, an industry-approved method to measure costs associated with moving goods by trucking or rail throughout North America.
NMFC uses four classifications to categorize a freight:
- Density: The best way for carriers to save money and time is by shipping denser freight. It's more cost-effective since smaller and compressed packages require less space.
- Stowability: It's a package's ability to be stored. Odd-shaped, excessively long, or tall objects usually take more space, hence additional costs upon shipment.
- Handling: Unique packages that require specific handling procedures (such as those handling chemical or hazardous items) will require additional costs on top of the initial freight shipping estimate.
Freight classes are used to determine how much a shipment costs. Items that can be shipped without difficulty using standard pallets fall under Class 50.
However, high-value items with low density (such as gold dust) fall under Class 500, requiring higher freight shipping costs.
High-value goods and hazardous materials are risky to ship, which is why carriers have particular insurance policies for these types of shipments.
When talking with your chosen freight service provider, ask for the freight shipping estimate for these types of loads.
There are carriers specializing in shipping hazardous materials. Containers for these products can withstand any explosion or fire from mishandling.
Volatile cargoes carry a higher freight cost to avoid liability costs associated with shipping such items. These also cost much more than non-hazmat classes.
Hazmat shipping is not like any regular shipment. You will need to research the U.N. hazmats that you're shipping and find an appropriate carrier for this type of freight.
Then, you will be required to send an application to the shipping company sends through a quote. Expect a higher freight shipping cost than the standard shipping fee.
The most sensitive goods, such as perishable items and foods, require additional services to avoid damage.
Additional charges are included for special refrigeration for storage and proper handling techniques to prevent bruising or pulping of delicate products that usually come with express delivery.
How much does freight shipping cost for special packages? Here are some of the items you'll encounter with air freight costs:
- Accessorial fees
- Fuel surcharges
- Handling fee
- Pick-up and delivery charges
- Airport transfer fee
- Customs brokerage charges
- Airport transfer charges
In some instances, air carriers delegate particular tasks to their logistic partners. Here are some of those you might encounter:
- Returns management: Many retailers and 3PLs want a quick and easy process for the customer when it comes to returns. By offering return management services in addition to their supply chain capabilities, they can streamline this critical aspect of business, making sure consumers receive refunds faster while also providing an excellent experience from start to finish.
- Warehouse services: Third-party logistics companies offer a cost-effective way for businesses of all sizes to process their warehousing operations. Companies can reduce the time and money spent maintaining an onsite facility by outsourcing this service. It also allows you to access new technologies that may not be within your financial means if you're starting or don't have much experience running such facilities.
- Blast Freezing: This new technology is used to preserve fresh produce and meat products. The product is quickly frozen with the help of frigid air and high-speed agitation to keep its taste or texture intact for transport across long distances.
- Last-Mile Delivery: The last mile is often the most challenging part of delivering anything, including freight. That's why so many businesses require a passenger van service for their customers who want delivery on site. This service has become even more important recently, especially with eCommerce stores selling directly to consumers.
- Packaging and Kitting: When it comes to packaging, there are many options for businesses of all sizes. Some companies outsource their goods and send you the package without any hassle or worry about how they will be shipped. Third-party vendors may also need kitting services to ensure that each product gets its box from the warehouse stock.
- Temperature Controlled Shipping or Container: When shipping and storing food, beverages, or pharmaceuticals, the safety of your product depends on two things: temperature (keep it below 40 degrees)and how long they're going to be stored. The cold chain logistics provides refrigerated environments to keep these goods cool and safe from damage during transportation.
How to Reduce Freight Shipping Costs
Running a business is expensive, but there are ways to make it less costly.
Cutting back on freight shipping costs could give your hard-earned money the mileage you need to increase revenues and save more on consequent shipments.
1. Look for other options
Standard transportation methods include ocean, ground, and air shipping. Numerous international goods often use ocean shipping since it's cheaper than freight shipping costs. For local shipments, taking a railroad shipment may be more affordable than using truck services.
Outsourcing transportation to third-party businesses could save you as much as 5 percent of your freight shipping cost.
When it comes to transportation, shippers with a fleet of their own tend to pay 25 percent more than logistic companies. You should always make sure that you work with reliable companies with a good reputation in this business.
2. Seek a reputable broker
Using a freight broker can cut down on your shipping costs. They can negotiate for lower shipping freight expenses and give you access to markets to ensure you're getting the best deal possible.
Brokers also offer Transportation Management Systems (TMS), which allow users to set up shipments anywhere through their secure cloud account, making it easy as pie when planning for shipments via email or phone call.
3. Ship by country
The process of consolidating your goods into one country can help reduce costs by up to 25 percent. Massive companies like Colgate and CVS have also adapted this concept and have lowered costs on shipping freights.
However, when you're considering consolidating goods, it could mean more extended delivery periods. Several businesses opt for smaller volumes, so their clients still receive without spiking labor costs.
4. Keep all expense invoices
As you ship more and accumulate more than the flat rate freight shipping charges, keeping records of your invoices is essential.
If you encounter any problems during shipment (such as for overweight items), you can fix this issue by showing previous receipts containing the exact specifics of the item shipped.
The most common type for these extra expenses? Reclassing and reweights. You need documentation on what's going into each package or container, such as weight measurements from all parts from previous shipments.
5. Have an insurance
It is crucial to ensure that all items are protected from handling and logistics when shipping any freight.
With the right cargo insurance coverage, you can protect yourself from financial loss if anything happens during transport, whether it is damaged or lost items.
Although some air carriers have insurance, they are usually below the value of the item shipped. So, if you're sending any high-value or delicate products, taking on third-party insurance would give you the leverage you need against the risks.
6. Look for better packaging choices
The design and packaging of your product are essential factors in the cost-efficiency of your shipment. The amount of packaging you need for your merchandise can vary depending on the weight and dimensions.
A carrier will often use airbags to help protect goods against potential damage caused by bumping into each other while being carried aboard an airplane cabin. Talk with your freight service provider and ask for options to best maximize your shipment.
7. Check for interline options
The great thing about interlining your shipment is that it can significantly reduce freight shipping estimate costs. You'll be able to take advantage of cheaper rates for shorter hauls.
However, the trade-off would be a more extended time waiting for shipment. So, if you have expensive goods that need to be delivered in a short period, interline might not be a good option.
8. Add more to your shipments (but not often)
If you want to save on freight, encourage your customers and retail partners by offering bulk discounts. Shipping ten pallets at once are more efficient than sending two every day.
Try adding in-store perks like free shipping for orders over a certain amount of money or an additional gift with their purchase. Giving your clients incentives to buy bulk could save you a lot of money in freight shipments in the long run.
9. Utilize Freights of All Kinds (FAKs)
Freights of All Kinds or FAKs is an agreement between carriers and senders to cut freight shipping costs through bundling services like freight class rates.
Working with an experienced broker to lower flat rate freight shipping fees is beneficial. Being able to negotiate FAKs but still move goods efficiently can save you time and money in the long run.
10. Use a Load Board
The load board saves time and money for all concerned. Shippers can post their loads, and brokers will find the best carriers that can transport them at competitive rates.
The best way to reduce costs is by looking for carriers that can carry your product as backhaul. Carriers prefer this because it helps them make money on the miles they aren't using, saving you from paying empty freight fees.
11. Find the correct freight class
The freight industry is tough to navigate, with rates changing constantly. Freight classes tend to change, and several freight companies are slowly moving away from the NMFC codes, where most are designated by density.
This is because LTL industry participants want to follow policies that make sense for them rather than follow one set rulebook based on how much damage could occur during transport.
Ask every month or so for frequent items you ship from your broker. Most brokers have access to classing database so you can finalize a flat rate freight shipping fee. As for truckload shipping, there's no need to worry about re-classes.
12. Ship during off-peak schedules
Shipping on Fridays will often result in more timely delivery than during other times of the day. Most customers prefer having their products ready for store stocking by Thursday, so they can shop over the weekend and ease into their Monday routines with little to no delays.
Mondays are also considered low-traffic shipping days and could save you as much as 10 percent from your regular shipping fee.
13. Cultivate a long-term relationship with your chosen carrier
It's not uncommon for businesses to flee from one carrier to another, especially when the prices are offered at a lower rate. But what many people don't realize are the benefits of investing in their relationship with one carrier.
Perks could include helping you find other customers located nearby to reduce dead miles. When these freight shipping companies have more clients, they can give you a lower shipping rate in the long run.
When the carrier's capacity tightens, chances are they are likely to accommodate long-term clients with steady shipment volumes.
14. Research tariffs
When shipping internationally, it is essential to be aware of the potential costs associated with doing so.
Tariffs can help save you money and provide some protection for shipment against sweatshops.