Chris explains the basic concept of what an FAK is and how it can effect a shipper’s freight pricing.
Hey, everyone. Welcome back. I am Chris Clever, president of FreightPros. And we’re back, talking about freight topics, trying to help our small- to medium-sized freight shippers and really give them the knowledge that they need to make sure that they ship their freight in the most economical and efficient way. And today, we’re going to talk about Freight of All Kinds, or more commonly known as the FAK. We get this question all the time.
Customers want to know what is an FAK? How do I get an FAK? How does an FAK affect me? And in simplest terms, an FAK– or, again, Freight of All Kinds– it’s a pricing tool. And it’s a tool used by the common LTL freight carriers. And what the FAK does, it essentially groups classification ranges so that they are billed at one specific class.
And so in simplest terms, and as an example, let’s say that we are a shipper, that we ship a product that’s a class 92 and 1/2. We might go to the carrier and during our negotiations with them, we might be able to negotiate so that anything between a class 60 and a 92 and a 1/2 will actually be rated or priced at the class 60. So that would then be your FAK range, of 60 to 92 and 1/2, and being charged at class 60.
So in effect, that will generally lower your price. Now, of course, if you’re a carrier, you might give a less of a discount to that customer if you’re giving an FAK. So it might not generally lower your price. But in most cases, if there is an established discount and you’re able to negotiate that FAK, it’s a good thing for you because your price will come down. Now we run into some issues. We are a freight broker. So we’re out there looking for customers.
And we’ll find a customer that may have an FAK in place already with their carrier. And they’ll demand an FAK with us. And from a broker’s perspective, FAKS are a little bit tougher to come by. Now we do have negotiated some blanket pricing with different carriers where those FAKs are already built in. But unless you’re a shipper that’s going quite a bit of volume, it’s tough for us to go out and get customer-specific pricing for you to ensure you get an FAK.
Now that being said, that doesn’t mean that the pricing that your broker, or even another carrier, may have in place or be able to offer you, those discounts might be larger and might actually give you cost savings even without an FAK. Some other pitfalls that we commonly see is a customer will be used to having an FAK and either they or their employees, they might assume that their class is class 60, if we go back to that previous example, even though their class is 92 and a 1/2.
And what happens is when they come over to a new broker or a new carrier, they might just automatically put down class 60 when they’re getting a rate or filling out the bill of lading on that shipment. What happens is then their freight’s going to get re-classed. And the excuse of, well, I always put class 60 with the previous carrier, that doesn’t fly, again, unless that FAK is in place. So, again, to boil it down, an FAK stands for Freight of All Kinds.
It’s a pricing tool. It’s usually coming directly from the carrier. And it groups ranges of classes on LTL shipments. And typically it will bring a higher class down to lower class. And one other good example of a way that an FAK is beneficial to a company, if they are shipping a wide range of products– say they might have 10 diverse products that are going out of the warehouse– if they’re able to negotiate an FAK, then they can just put one class for all those products. So everyone doesn’t have to become a classification expert to figure out what’s the class for air filters, but what’s the class for nuts and bolts.
If they do it at FAK already established, and those things fall within the FAK range, they can list that one class and everything will be rated at the same price. So that’s just some real basic information on an FAK, what it is, how it affects some of our customers, and hopefully that was helpful for you today. Again, Chris Clever, president of FreightPros. Please come to our website at freightpros.com.