Density Based vs Dimensional Pricing

July 9, 2020

Written By: Mitch Kinek

Dimensional Pricing:

A pricing technique by carriers that uses dimensions to determine pricing. This enables carriers to present pricing in a manner that will cover the cost of bigger pallets and crates.  Typically, the volume of the shipment is divided by a specific dimensional factor to determine the rate. i.e. (Length+Width+Height) / Dimensional Factor.  One thing to note here is that weight is not the only important factor in determining the cost, as light packaging takes up a great deal of valuable space on a carriers’ trailer.

Density-Based Pricing:

The standard pricing technique used by LTL carriers. Most LTL carriers list a discount percentage off a rate base.  The percentage of the discount is largely insignificant relative to the importance of the selected base the discount is based off.  Once the base rate and discount are agreed upon, through using the weight and volume of the shipment, density is calculated to fit the shipment into the correct class, which is associated with the National Freight Motor Classification (NMFC) number.  The NMFTA is a member-based non-profit consisting of LTL carriers and is considered essentially the authority of classification within the LTL market. This is because the NMFTA publishes the NMFC classification for every commodity shipped. When it comes to Density-based pricing a good rule of thumb is:  the denser the product is, the cheaper the rate. There are currently 18 classes ranging from class 50 to class 500.  The lower the class typically, the denser the freight.  This is not always the case, and there are many exceptions.  For example a dense commodity like a granite countertop, is also high value and while dense may not be classified as low class.  

 

Which should I ship with?

The fact of the matter is, it depends on your product, lane, cargo liability needs and the accessorials you regularly use. While TLI has contracts in place for both types of pricing for our shippers, there is no standard of which is better. It all depends on what you are shipping, and which makes the most sense for your supply chain needs. For our shippers, we make both pricing structures readily available so shippers can always secure the appropriate capacity at the best rate for their unique product and lane.

 


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