If you use truck freight to receive merchandise from your suppliers or to ship to your customers, and you suspect you are paying too much, this how-to guide is for you.
There Are Some Basics You Need To Know
Truck-freight pricing is based on negotiation, and the starting point is providing your freight broker or trucking company sales representative with the information he or she needs to quote the lowest price.
To begin, gather the all the information you will need.
- Determine loading, unloading environments. Identify the ship-from and ship-to addresses, including the accurate zip code and determine if there will be anything unusual about the truck loading and unloading process at either location. The ideal situation is a loading dock and/or a fork truck available at both locations. But, if hand loading or use of a power lift gate will be needed, you need to know this before you start. Likewise, if the pickup or delivery point is a residential location instead of a commercial one, it is important to know this as well.
- Identify packaging, weight. Next, you need to know how your shipment will be packaged and what the total ship weight will be, including any pallets that will be used. Most truck freight shipments are comprised of corrugated boxes stacked on wooden pallets and held in place by plastic stretch wrap or fiberglass or steel banding. But if your shipment is individual boxes, drums, crates or something else, this needs to be part of your RFP (request for proposal) information.
- Define freight class. The most difficult part of fact gathering is defining the freight class number. There are 18 freight classification levels and each is associated with a pound-per-cubic-foot density. The higher the density, the lower the class number and the lower the shipping cost. 1,000 pounds of books will have a lower freight class number and will cost much less to ship than 1,000 pounds of light bulbs.
Estimating The Density Of Your Shipment Is Vital
Before you contact your freight broker or shipping company rep, estimate the density in pounds per cubic foot of your shipment first. Your broker or rep will need this information to give you the best freight class code. (And, the less guessing, the lower the cost.)
Figuring shipment density is easier than it sounds. Begin by totaling the weight of the merchandise including the weight of the pallets that will be used. Then multiply the outside length, width and height of the palletized shipment to find the physical volume in cubic feet. Density is total pounds divided by total cubic feet, and it is reported as pounds per cubic foot.
The Wild Card: Dimensional Weight
Just as UPS, FedEx and U.S. Postal Service have dimensional weight factors that can impact your final ship cost, the same is true for truck freight rates. If the ship weight divided by the cubic feet yields too low a number, a minimum weight (known as the DIM weight) will be substituted. Density is always based on the extreme outside dimensions of the shipment, and a small box on a big pallet could accidentally trip a DIM surcharge.
Your best defense is to fully discuss with your carrier or broker sales rep the possibility of a dimensional weight minimum being imposed. If yes, you may be able to repackage the shipment or switch to a smaller pallet size to eliminate the problem.
Now You Are Ready To Shop For Deals
If you ship by truck freight frequently, you may have already negotiated a master contract with an individual shipping company that considers discounts and extra charges.
But, if you are an infrequent shipper, the best way to shop for a good deal is through an online freight broker. There are dozens of excellent companies in this industry and you can quickly find their websites using the search term “truck freight quotations.”
In my experience, most freight brokers work on a similar format. You can either enter the shipment information explained above to an online questionnaire or call a customer service number to relay the information to live person.
Either way, you will quickly receive a list of prices from a number of different shipping companies, and those net prices include a generous discount—in many cases over 50 percent. In effect, the shipping carrier will give you a volume discount because of the broker’s involvement and will pay the broker a fair commission for its assistance.
A Real World Example Makes The Process Easier To Understand
I am in the order fulfillment business and my company uses two leading freight brokers: Freightquote.com and FreightCenter. In this example, a shipment of 3,000 books printed by a vendor located in Saline, Michigan 48176 will be shipped to my location in Traverse City, Michigan 49686.
There is a loading dock and fork truck at each location, both locations are commercial and not residential, and there are no extra services needed (such as COD terms or call ahead for a delivery appointment).
The books are packed in corrugated boxes and strapped to two 48” x 40” pallets and each pallet is 60” high—as reported to the client by his printer prior to shipment. The density is therefore 2 x (48 x 40 x 60) = 230,400 cubic inches, divided by 1,728 cubic inches in a cubic foot, which equals 133.3 cubic feet.
The books weigh 3,000 pounds and the pallets weigh 50 pounds each counting the steel strapping. The shipment density is therefore 3,000 + 50 + 50 = 3,100 pounds divided by 133.3 cubic feet, which equals 23.25 pounds per cubic foot.
When I provide this information to each freight broker, I receive a set of price quotes ranging from a low of $303.49 to a high of $880.42. I confirm the shipping order with the lowest priced carrier and the broker provides all the documentation needed.
Some Insider Tips You Should Know
First, there is no such thing as free delivery. If delivery is included in the price of the merchandise that you buy for resale, it would be a good idea to have your next shipment quoted with and without free delivery. You can then price the shipping cost as a standalone transaction to see if you are overpaying for delivery.
Likewise, if you use a fulfillment company or have a drop shipping arrangement with a supplier, you can see if either will share any in-bound or out-bound shipping discounts that they have negotiated with their shipping company. My fulfillment company provides discount sharing and we have saved our clients and their suppliers hundreds of thousands of dollars.
Class codes depend mainly on shipment density, but there are class codes pre-established by the National Motor Freight Traffic Association for certain types of merchandise, and sometimes those alternative class codes could save you money. Your carrier or broker rep can be a big help with this issue.
Freight discount percentages as a standalone number can be deceiving. Potential savings can be wiped out by a wrong class code, surprise surcharges and uncompensated transit damage claims. Unfortunately, freight-billing errors are common, so it is important to compare the final bill as received to the initial quote, for every shipment.
The most common reason for refusing carrier compensation for in-transit loss or damage is inadequate packaging. Load shifting, vibration and rough handling are unavoidable in the trucking business and the more protection you can provide to the merchandise, the better.
Overall, the best way to lower your costs is through plenty of comparison shopping and perhaps working through a third party such as a freight broker or forwarder.
Even if you are an infrequent truck freight shipper, you can use today’s Internet-based technology to comparison shop among the many excellent regional and national shipping service providers. The key to success is gathering all the information you need in the right format before you start.