Translogistics Blog

How are air rates determined?

July 23, 2020

  • Air Expedite shipments are priced by a certain amount per pound based on the level of service selected
  • The rate per pound rises as the service level becomes faster in terms of transit days – Economy Service would be the lowest price per pound and First Flight Out would be the highest price per pound
  • Charter Aircraft is based on spot rates only and based on availability and size of jet needed – these charters can easily cost tens of thousands of dollars
  • As LTL uses freight class to compensate carriers for low density freight, the airlines use a similar tool called Dimensional Weight. Space on an aircraft is very valuable, so the airline cannot price air freight on a strictly “per pound” basis – it must take the cubic volume of the shipment in mind as well
  • Dimensional Weight is determined by multiplying the shipment length (in inches) x the shipment width (in inches) and the shipment height (in inches) and divide by a factor of 194 – the shipment will move as the resultant weight of this formula or the actual weight, whichever is higher
  • For example, suppose we have a shipment that is 48” x 40” x 24” pallet that weighs 232 pounds – 48x40x24 = 46,080 cubic inches – we divide that by the factor of 194 to arrive at a resultant weight of 237 pounds – since the resultant weight is higher than the actual weight of 232 pounds, the shipment would be priced considering a weight of 237 pounds dimensional weight
  • For international shipments, including shipping from and to Puerto Rico, the Dimensional Weight factor is adjusted to 166. In the example above, if this shipment shipped internationally, we would divide the 46,080 cubic inches by 166, which would provide a resultant weight of 278 pounds , which is again higher than the actual weight of 232 pounds
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Required information to route international ocean freight

July 23, 2020

  • Origin (Shipper) City, State and Zip Code
  • Destination (Consignee) City, State and Zip Code
  • Shipping Date and Time – When is the specific time or “window” that the shipment is to be picked up by the carrier?
    • Note – As mentioned above, it is optimal to have the customer provide us with 3 day notice or more to secure equipment – specific appointment times may or may not be required
    • Note – It is also very important to tell the customer how long the expected transit time is to ensure that they have enough time built in to their lead times to have the flexibility to utilize ocean transportation
  • Delivery Date and Time – When is the specific time that the shipment is to be delivered by the carrier?
    • Note – As mentioned above, a U.S. shipper generally only manages the transportation to the destination port and will not be responsible for the final delivery to the consignee – once the ship docks, the ship company will inform the final consignee that the container will be unloaded from the ship and will be available for pick-up – at that point, the consignee will schedule the trucking company (drayage) of their choice to retrieve the container from the port and deliver it to the consignee
  • Customs Clearance – When a U.S. company exports material to a foreign country, the foreign country is responsible for selecting and paying a customs agent to clear the goods into their country – some ship companies will want to know who the customs agent is ahead of time so they can attempt to pre-clear the goods or at minimum know who to contact when the container(s) arrive in port
  • Number and Types of Pieces Shipping – How many pallets, bundles, cartons or pieces are shipping?
  • Weight and Size of the Shipment – How much does the total shipment weigh? What is the size of the shipment? This information will help us determine if we can utilize LCL service or if we will need to book an FCL shipment – If we do require a full container, the weight and size of the shipment will allow us to determine what size container we need to order
  • Commodity of Shipment – What product(s) does the shipment consist of? The ocean carriers will only be concerned with the commodity – they are generally not concerned with the National Motor Freight Classification of the commodity – they will also need to know if any part of the shipment contains Hazardous Material or not, as these products require special handling and consideration – the actual commodity will however be needed for Customs
  • Purchase Order and / or Other Reference Number – what is the customer’s Purchase Order Number? What paperwork do they need it listed on? Is there any other reference number that the customer would like included on their paperwork?
  • Value of Shipment – Is the product high value? Is additional cargo insurance required? Additional cargo insurance can generally be purchased at a quoted rate by the carrier
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How are ocean rates determined?

July 19, 2020

Ocean shipments can move via two main methods – FCL (full container load) and LCL (less than container load) – their pricing is calculated very differently FCL
  • FCL shipments are much like domestic truckload shipments – the requestor purchases the right to utilize the entire container – they are also priced much like domestic truckload with a rate per container
  • There are 3 separate movements which comprise an FCL ocean shipment – origin inland drayage, ocean transportation from port to port, and destination inland drayage – the IncoTerm will determine who is responsible for which portions between the seller and the buyer
  • There are lots of line item charges to be aware of when quoting an FCL container, which is why you want to ensure you are always getting all-in costs and to verify you are comparing apples to apples when getting quotes.  Many times, companies do not include all the fees in their original quote
  • For smaller shipments that will not fill the capacity of even a 20’ full container, LCL (less than container load) service is available – this is priced much like a domestic LTL shipment – by weight and cubic volume
  • As with FCL shipments, LCL shipments consist of 3 separate transportation charges – LTL portion from origin to port, LCL ocean transportation from port to port, and LTL portion from port to destination
  • The LTL portions are priced via standard LTL pricing
  • The ocean transportation portion is billed by the greater of the rate as determined by weight or the rate determined by cubic volume – the cubic volume rate is used for the same reason that freight class is used in standard domestic LTL service – it helps avoid using too much of the container for the low weight of a low density product without the carrier being properly compensated for the space used
  • LCL transportation also requires additional transit time – it is of vital importance to communicate any delivery or due date requirements up front prior to booking an LCL shipment
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Inbound Freight

July 15, 2020

You can not measure what you don't see!

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About Our Blog

For the latest insights, tips and commentary surrounding the logistics industry, look no further.  Shippers will find thoughts from the award-winning team at Translogistics covering everything related to your transportation processes and plans.  If you have a question we are readily available at insidesales@tli.email 

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