Freight rates

Freight rates: The price for the transportation of goods

How much does it cost to transport a certain product from A to B? A look at freight rates, also known as freight tariffs, provides the answers. The price, also known as the freight rate, serves as the basis for calculating the transportation of various freight goods. It should be noted that a freight rate is basically limited to the transportation of goods and that there are also differences between inland and ocean shipping, air freight and freight forwarding.

How are freight rates calculated?

In cross-border freight transport in particular, it is important to plan transportation and the associated costs transparently. It must therefore be known in advance under what conditions and on what terms goods and merchandise can be transported to their destination. The freight rate is therefore generally calculated using certain formulas or tables (so-called tariff tables).

Aspects that influence freight rates:

  • Distance
  • Mass
  • Shapes and dimensions of the transported goods
  • Volume
  • Choice of means of transportation (truck, plane, ship)

An example: In aviation or air freight, a freight rate is usually determined on the basis of the so-called volume weight. The unit, also known as the chargeable weight, is intended to ensure that bulky freight in particular can be priced sensibly in relation to general capacities. Logistics service providers use so-called divisors to calculate such freight rates, and the volumetric weight is also set in relation to the weight. Each company has different pricing models, which explains why certain goods are often linked to a logistics service provider - for example, due to price advantages for intercontinental shipments.

Freight rates as part of the freight contract

The freight rate is calculated on the basis of a basic freight rate and a freight surcharge. While the basic freight is calculated on the basis of weight, surcharges may apply for heavy goods or animal transports as well as for excess lengths, bulky freight and other special cases. However, loading and unloading of the respective freight are already included in the basic freight.

Interesting: In some sectors, so-called "slump clauses" are included, according to which freight rates can be reduced if there are general price reductions on the market. The Baltic Dry Index, which documents such changes and serves as the basis for reduced freight rates, is particularly relevant here.



Image: gwycech / Shutterstock

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