With multiple shippers sharing the space and cost of a single truck, less-than-truckload (LTL) is typically cost-effective for smaller loads. However, complex variables, such as freight class and density, can make it challenging to calculate freight rates. It is important for shipping coordinators to understand these variables – or partner with an experienced 3PL like Red Kite who does – to find the most cost-effective solution for their LTL load. Here are some of the key factors used to calculate LTL freight rates that all shippers should know.
LTL carriers set base rates that are determined by weight and charged per 100 lbs. Typically, heavier shipments have lower base rates than lighter shipments, such as those in the example base rate table below:
Shippers can use carrier base rate tables to determine the most cost-effective weight for their shipping needs and adjust their load weight as needed. Working with 3PLs knowledgeable about LTL carrier base rates, like Red Kite, can also help shippers make strategic load weight decisions.
Base rates can be calculated by multiplying the rate specified for a weight range by the number of 100 pounds that are in a load. A load that weighs 780 lbs has 7.8 “100 lbs,” so the rate for the weight range it falls under would be multiplied by 7.8 to find its base rate.
Let’s say, for example, a shipper’s load weighs 495 pounds. The load would fall in the “0-499” range in our example table above at a base rate of $55 per 100 lbs. To calculate the load’s base rate, the shipper would multiply $55 by 4.95, getting a total rate of $272.25.
If the shipper adds 5 pounds to their load, it would be bumped to the “500-999 lbs” range and have a base rate of $40 per 100 lbs, for a total base rate of $200. By adding just 5 pounds to their load, the shipper saves about 26% on their base rate.
Density and Dimensions
The density and dimensions of an LTL load are used to determine freight class – a load classification system that factors into rates – so it is important for shippers to ensure they calculate these measurements correctly. Providing incorrect dimensions or density could result in the carrier needing to reclassify your freight, which results in extra time and charges.
Density of a shipment can be calculated using the following steps:
- Measure the length, width and height of the shipment – including the pallet or skid – to determine its dimensions.
- Ex: A load measures to be 40” x 50” x 45”.
- Multiply the shipment’s dimensions (length x width x height) to calculate total cubic inches.
- Ex: 40x50x45= 90,000 cubic inches
- Convert the measurement into cubic feet by dividing the total cubic inches by 1,728, which is the number of cubic inches in a cubic foot.
- Ex: 90,000/1,728 = 52 cubic feet.
- Finally, calculate density by dividing the shipment weight – including weight of the pallet or skid – by total cubic feet.
- Ex: A load weighs 600 pounds and is 52 cubic feet. 600/52= 11.5 pounds per cubic foot.
To establish standardized, consistent freight rates for LTL shipments, the National Motor Freight Traffic Association (NMFTA) created a classification system – known as the National Motor Freight Classification (NMFC) – which groups goods and materials together based on density, stowability, handling and liability.
Before exploring the different freight classes, here are definitions for each factor used to determine freight classification:
- Density: How compact and heavy a load is.
- Stowability: How easily a load can be stacked and stored on a truck and how at-risk it is for damaging the loads around it.
- Handling: How much handling a load requires and how easily it can be loaded and unloaded from a truck.
- Liability: The probability of a load being damaged or stolen while in-transit.
The NMFC has 18 different freight classes, ranging from Class 50 to Class 500, which can be seen in the chart below. Higher freight classes contain loads that require more time, resources and attention to transport. These classes are charged at higher rates to cover the expense of the additional resources necessary to move their loads. Lower freight classes contain loads that can be transported with minimal resources and are therefore charged at lower rates.
NMFC Freight Classes
|Class||Cost||Examples||Weight Range Per Cubic Foot|
|Class 50||Lowest||“Clean Freight” i.e. fits on standard shrink-wrapped 4×4 pallet, very durable||Over 50 lbs|
|Class 55||Bricks, cement, mortar, hardwood flooring||35-50 lbs|
|Class 60||Car accessories and car parts||30-35 lbs|
|Class 65||Car accessories and car parts, bottled beverages, books in boxes||22.5-30 lbs|
|Class 70||Car accessories and car parts, food items, automobile engines||15-22.5 lbs|
|Class 77.5||Tires, bathroom fixtures||13.5-15 lbs|
|Class 85||Crated machinery, cast iron stoves||12-13.5 lbs|
|Class 92.5||Computers, monitors, refrigerators||10.5-12 lbs|
|Class 100||Boat covers, car covers, canvas, wine cases, caskets||9-10.5 lbs|
|Class 110||Cabinets, framed artwork, table saw||8-9 lbs|
|Class 125||Small household appliances||7-8 lbs|
|Class 150||Auto sheet metal parts, bookcases||6-7 lbs|
|Class 175||Clothing, couches, stuffed furniture||5-6 lbs|
|Class 200||Auto sheet metal parts, aircraft parts, aluminum table, packaged mattress||4-5 lbs|
|Class 250||Bamboo furniture, mattress and box spring, plasma TV||3-4 lbs|
|Class 300||Wood cabinets, tables, chairs setup, model boats||2-3 lbs|
|Class 400||Deer antlers||1-2 lbs|
|Class 500||Highest||Low density or high value i.e. bags of gold dust, ping pong balls||Less than 1 lbs|
Freight All Kinds (FAK)
When a shipper has goods or materials in single load that span multiple freight classes, the shipper can negotiate with the carrier to classify the load under one freight class, known as freight all kinds (FAK). Negotiating FAK for a load can help shippers place some of their goods in a lower freight class, therefore lowering their rate. 3PLs like Red Kite have strong relationships with carriers and can use their relationships to negotiate FAK deals that help shippers control their freight costs.
Distance/Origin and Destination
Long distance deliveries, which are usually over 500 miles, require extensive time, labor and fuel to complete. To cover the expense of these resources, carriers charge higher freight rates as the distance of a delivery increases. An LTL shipment to a neighboring city will typically cost less than a shipment to another state.
The origin and destination of an LTL shipment can also impact rates. Some carriers only cover certain geographical regions or major transportation hubs. If a shipper’s load is delivered to a remote region that a carrier does not service, it will need to be transferred to another carrier mid-route to reach its final destination.
Load transfers increase both freight costs and the risk of damage. Shippers who partner with well-connected 3PLs may be able to find a single carrier who services remote origins and destinations. Red Kite, for example, has a wide carrier network across North America and can use their connections to find a carrier who services remote regions.
Additional services required by a carrier, such as weekend deliveries or lift gates, require extra resources and labor. The costs for these resources will likely be passed along to a shipper in the form of a higher freight rate. Shippers sending loads to difficult receiving locations, such as a place without a loading dock, may also pay a higher freight rate to compensate for the extra time a driver spends making a delivery.
Finding the Best Freight Rate for Your LTL Load
Even with the cost-savings that LTL services have, it can be difficult for shipping coordinators to find and negotiate the most cost-effective rate for their load. With all the complex factors used to determine LTL rates, it can also be time-consuming for shippers to calculate rates. Partnering with a trusted 3PL, however, allows shippers to have a team of logistics experts coordinate their LTL freight and control freight costs.
Red Kite Freight Solutions has strong relationships with a network of carriers, giving our team the ability to negotiate fair, competitive LTL rates. The Red Kite team understands the complexities of LTL rates and ensures our customers receive the most efficient solution for their unique shipping needs.