Freight rates: The price of transporting goods
How expensive is it to transport a certain product from A to B? Answers to this question can be found by looking at freight rates, also called freight tariff or tariff. The price, also known as the freight rate, is the basis for calculating the cost of transporting various types of freight. It should be noted that a freight rate is basically limited to the transport of goods and that there are also differences between inland and maritime shipping, air freight and freight forwarding.
How are freight rates calculated?
Especially in cross-border freight transport, it is important to plan the transport or 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 calculated in principle on the basis of certain formulas or tables (so-called rate tables).
Aspects that influence freight rates:
- Distance
- Mass
- Shapes and dimensions of the transported goods
- Volume
- Choice of the means of transport (truck, plane, ship)
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 freight chargeable weight, is intended to ensure that bulky freight in particular can be priced reasonably in terms of general capacity. Logistics service providers use so-called divisors for the calculation of such freight rates; in addition, the volume weight is set in relation to the weighing weight. Each company has such different pricing models, which explains why certain goods are often linked to a logistics provider - for example, because of price advantages for intercontinental shipments.
The freight rates as a 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 cargo or animal transports, as well as for excess lengths, bulky freight and other special cases. However, loading as well as unloading of the respective cargo are already included in the basic freight.
Interesting: In some industries, so-called "bear market" 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.
