6 Different Type of Freight Rate used in Transportation
Let s discuss on diffrent type of Freight rates – what are they used for
1- Commodity rates – When a large quantity of a product moves between two locations on regular basis it is common practice for carriers to publish a commodity rate. The terms and conditions of a commodity rates are usually indicated in a contract between the carrier and shipper. Commodity rates are published on a point to point basis and apply on specified products. it is maximum used by rail Freight.
2- Exception rates – The Original purpose of the exception rates was to provide a special rate for a specific area , Origin /Destination or a commodity when justified by either competitive or High – Volume movements. Rather than publish a new tariff ,an exception to classification was established.
3- Agreed Tender Rate – This is used once shipper provides multiple shipments to a carrier in exchange for a discount or exception from prevailing class rates. The primary objective is to reduce carrier cost with a multiple shipments.
4- Limited Service rate – This is utilised when a shipper agrees to perform selected services typically performed by a carrier, such as trailer loading ,in exchange for a discount. A common example is a shipper load where shipper takes responsibility.
5- Freight All Kind rates – This one is important to logistics operations. Under FAK Rates , A mixture of diffrent products is transported under a negotiated rating rather than determine the classification and applicable freight rate of Individual products, An average rating is applied for total shipment. The purpose of FAK rates are simplify the movement of mixed commodities.
6- Cube rates – This is also called as Density rates.& Volume based rates.Cube rates includes both weight and volume of the shipment. Air carrier have started this with an idea of chargeable weight.
– How to calculate chargeable weight
LxWxH = Cargo volume (Inches)
pounds using Inches – Divide it by 166
KG using inches – Divide it by 366
LxWxH =. Cargo Volume (CM)
Cubic cms divide it by 6000