How a Freight Rate is Calculated: Determining Costs
Most less-than-truckload (LTL) charges are stated as a rate per hundred pounds, or per "hundredweight". Rates are based on several factors, including:
- The distance your shipment is moving.
- The shipment's total weight.
- The density of the commodity.
- Your product's susceptibility to damage.
- The commodity's value.
- The commodity's load ability and handling characteristics.
When shipping within Canada, rates are quoted by LTL carriers on a point-to-point basis. Each shipping lane (Origin/Destination) will have its own rate for every hundred pounds you ship and will be structured so that as the weight of your shipment increases, the rate per hundred pounds decreases. For very light shipments, most LTL carriers state a minimum charge to cover the costs of moving it.
Every commodity shipped within Canada is also subjected to a density application (see page 2). In general, the higher the density (PCF) of the commodity being shipped, the lower the rate per hundredweight.
For example, a shipment weighing 500 pounds and having a density of 5 pounds per cubic foot may cost $35.00 per hundredweight. But that same shipment, having a density of 12 pounds per cubic foot (moving to the same destination) may only cost $25.00 per hundredweight.
When shipping between Canada and the U.S. or Mexico, the last four elements (among other criteria) go into establishing the classification of a commodity (see page 3). Rates are also structured so that as the weight of your shipment increases, the rate per hundred pounds decreases. Again, most LTL carriers will state a minimum charge to cover the costs of moving light shipments.
In general, the higher the class of your product, the higher the rate for every hundred pounds you ship between Canada and the U.S. or Mexico.
For example, a Class 100 shipment weighing 500 pounds may cost $49.77 per hundredweight. But a Class 85 shipment-of the same weight (moving to the same destination) may cost only $42.86 per hundredweight.
Note in the sample matrix how the rates increase as the class goes up. Also note how the rates decrease as the weight break increases. There is a similar rate table for every origin/designation zip code combination serviced by a carrier.
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