In the current business landscape where the COVID-19 pandemic has made relying on ecommerce fulfillment more important than ever, it is critical that you are looking at all areas that you can gain an advantage on your competition. One of the areas that you can find opportunities to do so is saving money on your freight shipping. This post will explain what freight shipping is, as well as offer some tips to help make sure you are receiving the best freight rate for your products.
What is Freight Shipping
Freight shipping is defined as the process of transporting commodities, goods and cargo by land, sea, or air. Freight itself can be defined as the goods transported by truck, train, ship or plane.
Any shipment that exceeds the below criteria is considered freight and needs to be shipped as such.
- Packages exceeding 150 lbs
- Packages exceeding 165 inches in length and width combined
- Packages larger than 108 inches in length
What are the Different Types of Freight Shipments?
There are three main types of freight shipments: full truckload (FTL), less than truckload (LTL), and partial truckload (PTL). There is also intermodal freight and express freight.
- Full truckload: Full truckload involves moving bulk or pallet loads that are large enough to justify the use of an entire semi-trailer, typically more than 15,000 pounds. Full truckload can be more cost effective and reduce the opportunity for freight damage with less handling than LTL freight. Full truckload carriers move freight that is loaded into a semi-trailer. Semi-trailers are typically between 26 and 53 feet and require a substantial amount of freight to make such transportation economical.
- Less than truckload: LTL freight is the transportation of relatively small freight. The alternatives to LTL carriers are parcel carriers or full truckload carriers. Parcel carriers usually handle small packages and freight that can be broken down into units less than 150 pounds.
- Partial truckload: A partial truckload shipment is between 6 and 12 pallets with a total weight of over 5000 pounds.
- Intermodal: Intermodal shipping typically refers to shipping with a combination of rail and truck. However, it can involve a variety of transportation modes including rail, trucks or ships to streamline the shipping process. Including rail in your freight shipping can reduce fuel use, lower costs and offer a reliable method of shipping.
- Expedited: Expedited freight refers to time-critical shipments in which freight has to be delivered quickly. Expedited freight is most often transported by truck or air.
How to Get the Best Freight Shipping Rate
Consolidate Shipping
If you ship to and from the same location on a regular basis you might want to consider consolidating your shipments into larger, less frequent shipments. This can be done by stacking similar products together on a single pallet. For example, stacking and shrink wrapping 50 similar-sized boxes onto a single pallet, rather than shipping them individually, has great benefits. You will save money on freight shipping costs, and you will save time by only needing to track one shipment rather than all of them separately.
Select the Best Carrier for Your Route
There are many different types of freight carriers to choose from, including using a smaller regional carrier or one of the larger national carriers. You have to take into consideration that individual carriers are priced differently, depending on where you are shipping to or from. Each national carrier has their own hubs and routes (known as lanes) and cost can fluctuate greatly based on the placement of their hubs and the routes between them. Certain carriers are excellent national freight carriers and are great choices for long, cross-country hauls. The smaller regional carriers might be a better fit for shorter, regional shipments. They can be less expensive if your products only travel a short distance within the region that they service.
Know Your Freight Classification
Freight classification is a standardized method designed by the National Motor Freight Classification (NMFC) to give consumers and carriers a uniform pricing structure when shipping freight. It measures an item’s transportability by density, stow-ability, liability, and ease of handling. Class numbers are between 50 and 500. There are 18 freight classes, with Class 50 being the lowest and Class 500 the highest. The higher the class, the higher the rate of every hundred pounds you ship.
Minimize Empty Pallet Space
Reducing the freight class and minimizing oversize fees on your shipment are two simple ways to save money. To get the freight class as low as possible, make sure the pallet is packed to be as dense as it can be, with no empty space. The more that you can fit on a pallet, the less chance of moving up in freight class you have. It is important to avoid exceeding 60 inches in height whenever possible. That is the limit that oversize fees will kick in and you might be left with a surprise additional surcharge for your freight shipment.
Work with a Third-Party Logistics Provider (3PL)
Selecting the best option for your shipment can be complicated. An established third-party logistics (3PL) provider specializes in overseeing some or all of your supply chain and logistics operations. A 3PL will take on picking, packing, inventory management, order management and processing, reporting, shipping and distribution, as well as reverse logistics. Other common tasks that companies outsource to 3PL providers include: domestic transport, international transport, customs brokerage, and freight forwarding. Most 3PLs have access to TMS software that can not only find the best rates but can compare the pros and cons of each carrier.
“By moving our inventory to Louisville, we got a much higher proportion of our freight to a lower cost option. We were able to see significant cost savings because of Louisville’s excellent location.”
Know Each Carriers’ Rules Tariffs
Most carriers have complex forms that outline hidden fees and rules that could affect your freight shipping costs. This is called their Rules Tariff. There are several factors that can influence these fees. For example, some zip codes have additional pickup or delivery fees and locational surcharges, such as residential fees or limited access charges. Larger cities can often have additional fees due to vehicle congestion which can be added to your freight cost. The Rules Tariff may also contain some accessorial charges or other surcharges. Accessorial charges are for any extra services a carrier performs beyond dock to dock and business to business transportation. Those surcharges are for things like lift gates, residential areas or locations with limited access. Inside delivery is also likely to be a surcharge.
Understand Carrier Lanes
Carrier lanes, or freight route imbalances, impact the rate you will pay for your shipment. The two most commonly used terms, headhaul and backhaul, refer to the leg of the trip, and understanding each term is important in getting the best shipping rate. Headhaul refers to the initial shipment, or the order that gets the truck on the road in the first place. Carriers charge a premium for headhaul because they don’t have any other business in the headhaul lane. Their other trucks are often already full. Backhaul lane is cargo that is shipped on the return trip. No carrier wants to be paying for an empty trailer, so backhaul rates are typically significantly discounted.
Net Cost Vs Line-Haul Rate
When you compare different freight carrier shipping rates and try to find the lowest rate, you might look just at the line haul rates and not any additional fees such as fuel surcharge and carrier rules fees. Discounts can be very misleading. The line haul rates vary greatly from one freight shipping service to another. Having a partner or 3PL can remove the complexity and can help you look at the net cost versus the line haul rate. When you get a quote, you can see the net cost of one carrier versus another.
Bottom Line
Understanding all of the factors that go into what a freight carrier charges for their service can go a long way to ensure that you are getting the best rate available. It can be a complicated process to learn all the freight classifications, understand carrier lanes and additional surcharges. If you partner with a 3PL for your logistics and fulfillment it will eliminate the need for you to know everything to get the best freight rate. They are experts and will do all of the heavy lifting for you to make the process as simple as possible.
There are many benefits to working with a 3PL, if you are seeking logistics support we’d love to hear from you. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support. Send us a note to connect about how we can help your company grow.
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