What Are Freight Charges

We have all at least once tried to ship products across town or even across the country, and came across the term “freight charges” on the invoice or shipping quote. From the mode of transportation to holding charges and fuel surcharges, understanding exactly what the price includes is crucial for businesses involved in logistics.

That’s why in this guide, we’re going to explain exactly what freight charges are, showcase their types, and unwrap the way they’re calculated. In addition, we’ll provide you with helpful tips, so you can manage your shipping expenses more efficiently.

Let’s start with understanding what freight charges mean!

What Are Freight Accessorial Charges

The so-called “Freight Accessorial Charges” are these extra costs that appear whenever the shipment requires a more specialized approach than the traditional pickup/delivery. These can include many things, such as waiting time, loading dock, limited access deliveries, and more.

These addons are not a part of the regular freight charge; hence, when included, the carrier needs to perform additional work.

We can call these charges “extras” of transporting goods, and picture them as services that are added beyond the traditional route. Some examples include accessorial charges, freight like the liftgate service, specialized handling equipment, and residential delivery, all of which add a bit of an extra charge to the total bill.

Factors that Affect Freight Costs

There are quite a few elements that directly impact the freight rates, and knowing how the total cost is being formed can help you estimate the shipping process.

Here is a quick look at all freight shipping charges factors:

Who Pays the Freight Charges

Who pays the freight charges strictly depends on the agreement between the buyer and the seller. In most cases, this is clearly outlined by the Incoterms used in the contract. For instance, when FOB terms are used, the buyer pays once the goods are delivered. In contrast with the CIF term, the seller includes freight expenses in the price.

Are Freight Charges Taxable?

So, whether freight charges are taxable or not depends on the local tax laws. In some regions, if freight shipping charges are included in the price, they are being taxed. However, if they’re listed a a separate freight shipping service, they might be exempt.

Freight Forwarder Charges - How Much Does a Freight Broker Charge per Load

To be able to estimate the budget better and more accurately, we need to compare how freight forward charges and freight broker fees actually work:

• Freight forwarder charges full entangle services such as handling charges, booking, documentation, and sometimes, even the storage at the loading dock. However, they can also include extras such as a fuel surcharge.
• A freight broker, on the other hand, only connects shippers with the carriers, usually charging a percentage of the freight charge or a flat additional fee.

So, before shipping, it’s important to understand how much does a freight broker charge per load to avoid potential unwanted freight expenses.

How Freight Charges Vary by Mode

The most significant factor that determines the cost is, of course, the mode of transport used in the shipping process. So, to understand the options better, we’re going to review each mode:

How to Calculate Freight Cost Per Unit

Now that we know what freight charges are, and how each of these additional expenses bumps up the price, some of you might want to calculate further. The calculation of the freight cost per unit is a good way for businesses to know their expenses before transporting goods.

You need to begin with the total freight charges for the shipment, which include:

• Accessorial Charges
• Fuel Surcharges
• Handling Charges

Then, divide that total by the number of units in the shipment to get a per-unit cost.

Here’s how to calculate freight charges with an example formula:

Using this calculator, you can always accurately extract the cost per unit and easily compare shipping rates across multiple providers to manage your freight expenses efficiently. You can also use a Freight Charges Calculator, which will simplify the process for you even further.

Tips to Effectively Manage Freight Costs

To manage your freight expenses efficiently, there are a few clever strategies that you can deploy immediately and make your shipping process more efficient:

• Compare Shipping Companies: Always compare shipping companies to evaluate their offers and choose the one that suits you best.
• Use a Freight Charge Calculator: Using a freight charge calculator can help estimate costs per shipment or per unit quickly and identify the best carriers.
• Plan Your Shipments Wisely: It’s always smart to schedule during off-peak times or consolidate shipments can lower overall freight charges.

We hope that you’ve now learned more about the freight charges' meaning and how to manage your freight expenses more efficiently. Best of luck!