Before getting started with how to calculate freight rates using a freight calculator, let’s conceptualize what exactly are freight rates and how a freight calculator can be an efficacious way to estimate freight rates. A freight rate or freight quotation is the price at which a certain cargo gets consigned from one point to another. The price is dependent on the type of freight, the mode of transportation, the weight of the freight, the distance between the delivery destination from the source, the cost of fuel, and tariff & negotiated rates. Henceforth, the freight rate is reflective of these factors apart from the basic transportation costs. In order to check freight calculator online and determine the freight rates, you can navigate through the informational guide below for a lucid understanding of how it works.
Freights ready to be shipped. Image Source: canva.com
Parameters on which Freight Rates are calculated
To understand how freight rates can be estimated using a freight calculator, it is essential to know the parameters on which freight rates are calculated. Given below are those parameters-
- Basic price of ocean freight
- Documentation
- Surcharges due to extra security measures imposed by the port
- Customs Clearance- the process of preparing and submitting documents needed to import and export into a country
- Inland Haulage- the transportation from a vendor to the port of destination, and from the discharging port to the point of stripping the ocean freight
- Terminal Handling Charges- also known as Container Service Charges, these are the additional fee quoted on top of the sea freight by the shipping company for handling the containers at the container terminal
- Avoiding currency exchange risk
- Bunker Adjustment Factor (BAF)- also known as bunker surcharge, this touches on the floating part of sea freight charges representing additions due to oil price fluctuations
These are most of the charges/parameters that are included while evaluating the freight rates during shipping under CFR incoterm.
What is a Freight Calculator & How it is Beneficial in Freight Rate Calculations
In layman’s terms, a freight calculator is that indispensable online accounting & budgeting tool that helps estimate the transportation cost of a cargo/freight/consignment from the source to the destination. It is an online application involving a series of mathematical expressions that enable staffs across various shipping companies to create a bill indicating accurate prices of different freight services provided to the potential customers.
- The freight calculator ensures accurate freight costs thus further ensuring that all customers are neither over-charged or under-charged
- The freight calculator helps in calculating the Less Truck Load (LTL) as well as the Full Truck Load (FTL)
- It is further noteworthy that this freight calculator helps to determine the LTL cost on “per thousand pounds” while it evaluates FTL on the number of miles. It further lets us decipher how FTL prices are less than that of LTL
- The freight calculator equips the means for any small, medium or large shipper to deduce the freight rates of various shipping companies very quickly, provided these rates are variable across the companies
- The freight calculator helps to save about 20-40% of the total freight quote and thus further helps in negotiating better pricing deals
- The freight calculator is a boon to the shipping business as it puts an end to guesses & assumptions from the business with its approximation, thus bringing a more transparent outlook of the marketplace
- The freight calculator not only saves money on the freight rates but also economizes on the shipping time by eradicating the need for depending on multiple external sources to get the competitive price list
- The documentation and the dispatching processes that help determine the freight rates are done easily and quickly using this calculator
- The freight calculator avoid any shipper from getting duped, as it provides every shipper with the same price list
- The freight calculator helps shippers determine the gains and losses in handling and shipping, the charges involved, thus playing a significant role in the estimation of freight rates
Image Source: canva.com
Bottomline…
The freight calculator is an indispensable asset as it is not just a budgeting tool but also the means for a shipper to entrust a shipping company. With helping to calculate the time period by which any cargo will be delivered, the number of miles between the source and the destination points, the average weight per head, the total fuel consumption, the freight calculator easily determine the freight rates. Hence, a freight calculator is an online boon to help a customer make a one-time decision on a shipping company, further aiding in establishing a long term relationship, saving on administrative expenditure and that of switching between shipping companies
