How Much Does a Freight Forwarder Charge?

How Much Does a Freight Forwarder Charge?
10 min read
06 February 2023

How Much Does a Freight Forwarder Charge?

Whether you're a startup looking to scale or a longtime ecommerce shipper, freight forwarders are essential to your supply chain. However, their fees can add up quickly if you're not careful.

It's important to be familiar with how much freight forwarders charge, so you can make smart decisions about your shipping strategy.

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Costs based on dimensional weight

Dimensional weight is a factor used by many freight carriers to calculate the cost of shipping packages. It is also called volumetric weight, cubed weight and DIM weight.

Shippers can avoid dimensional weight charges by packing their products in smaller boxes, using less packaging material and minimizing the use of heavy equipment when packing. These strategies can reduce costs by 5-15%.

A freight forwarder is responsible for consolidating and transporting your goods, obtaining all required shipping documents and keeping shipment preparation and export records. They are liable for any claims resulting from the shipment.

Dimensional weight is an alternative way of calculating shipping costs that is largely used by air freight carriers, but now has been adopted by ground carrier companies as well. It enables the carriers to charge for space a package takes up in a truck or container, rather than just for its weight.

To calculate the dimensional weight, simply multiply the length x width x height of the box and divide by a dimensional divisor (which varies from carrier to carrier). For example, UPS, FedEx and DHL Express use 139 inches / lb for domestic rates and 166 inches / lb for international shipments.

Then, whichever number is higher becomes the chargeable dimensional weight for the shipment. This is why some people prefer to call it a “dim weight.”

If you are wondering how much your package is going to cost to ship, the best thing to do is compare dimensional weight to actual weight. The higher the dimensional weight, the more expensive it is likely to be.

This is because freight carriers are able to make more money by charging for the amount of space your package occupies in their truck or container. It is easier for them to sell that extra space than it is to sell the actual weight of the package.

Often, this type of pricing is viewed as unfair by parcel shippers. They claim it is simply a money grab by the carriers to squeeze more profit out of high volume, low-weight shipments. However, the reality is that this type of pricing has been around for years and was created to protect carriers from catastrophic losses on low weight, high volume cargo.

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Costs based on volumetric weight

There are a lot of things that can affect the price of shipping goods. Among the most important factors are weight and volume. These are factors that a freight forwarder uses to determine how much they charge you for your shipment.

This is one of the reasons that you should work with a freight forwarder instead of doing it yourself. They can handle the entire process and make sure that your goods arrive safely at their destination. In addition, they will be able to negotiate lower rates from the shipping lines for you.

As a result, you will save money and be less likely to receive unexpected surprises in your bill of lading. Moreover, it will also be easier for you to manage your business.

When a carrier charges based on volumetric weight, they are ensuring that the space they allocate to your package is maximized. This strategy is also helpful in air freight as it ensures that your package takes up less space in the plane.

A freight forwarder can calculate volumetric weight by dividing your cargo’s volume (Length x Width x Height) by a divisor. This divisor varies between couriers and modes of transport, so it is best to check with your shipper what formula they use to calculate the volumetric weight of your package.

For example, UPS uses the following formula to calculate volumetric weight: L x W x H / 5000. However, this formula is only used by UPS for cross border and international shipments.

If you are sending a large amount of cargo, it is best to consolidate your packages. This way, you will be able to reduce your shipping costs and increase your margins.

Generally, this will decrease the weight of your consignment by about a third. This is because of the way that it will be stacked and will take up a smaller portion of the vehicle. This will help you save a lot of money on your shipment.

This will be especially true if you are shipping items that weigh very little, but have high value. These will be very expensive to ship and will also take up a lot of space in the vehicle.

Costs based on actual weight

Freight forwarders charge their customers based on the actual weight of their shipment. This is a new method of pricing that was introduced by carriers like UPS and FedEx in 2015. It makes sense because shipping trucks and aircraft have a limited amount of space, and this has become an important factor for the transportation industry.

Prior to 2015, freight charges were based on weight. This meant that a heavy box would always cost more to ship than a light one. This is because a large, heavy box takes up more space in the truck or plane than a small, lightweight package does.

Now that shipping carriers know that they can use a more flexible pricing system, they have adjusted their prices to reflect this change. This is called the "dimensional weight" (DIM) cost structure.

Dimensional weight is calculated by multiplying the length, width and height of a package. Then it divides that number by a factor called the "dimensional factor." The factor is often between 366 and 166 cubic inches for every kilogram of cargo.

Since this calculation involves a higher density of the cargo, it is less expensive to ship than when weight is considered alone. It also helps prevent the freight industry from charging customers for extra space they aren't using.

This is a great way for companies to save money by avoiding having to pay for extra space. If you ship multiple items, the freight forwarder can even combine your shipments so that they're cheaper and don't take up too much room.

Having the right understanding of how your freight is being costed can help you avoid unnecessary costs and ensure that your shipment is sent safely. It also allows you to better understand how to pack your items so they're more likely to survive transit and make it to their destination.

If you're not sure what dimensional weight means, it's a good idea to have your freight forwarder calculate it for you. They can do this by taking a closer look at the package and its contents.

Once they've determined the dimensional weight of your shipment, they can work with you to create a custom solution that works best for you. This could mean arranging for the shipment to be placed in a larger container or split into two shipments that are each charged according to its weight.

Costs based on space

When evaluating freight forwarder prices, you must consider the space your shipment takes up. This will determine whether you are paying for the full container load (FCL) or the less-than-container load (LCL). If your goods take up more than one shipping container, you can save money by choosing LCL options.

Another thing to keep in mind is the distance between the origin and destination of your shipments. This can be an important consideration for determining the costs of international transportation.

Costs can be significantly reduced if you ship your product closer to the destination. A good freight forwarder will use their knowledge of international Shipping Express service to find the best route for your cargo.

A forwarder will also look across all their carrier contracts to get you the most competitive rates and schedules available. This can be a big advantage if you are trying to ship large volumes of cargo.

If you are importing or exporting perishable, over-sized, or hazardous goods, your forwarder will also know how to handle them in order to avoid unnecessary expenses like FDA filing fees. They will also make sure the goods are properly packed and palletized to prevent damage or breakage.

Freight forwarders have an extensive network of relationships with carriers, ground handlers, and warehouse operators worldwide. These relationships are essential to ensuring efficient and cost-effective shipping.

The right forwarder can help you manage the entire logistics process from start to finish. This can include the booking of freight spaces, managing documentation and customs clearance, arranging insurance, and coordinating warehousing services at the destination.

In addition, a great forwarder will have strong IT integration capabilities. This is important because it allows them to share data seamlessly, saving you time and money on manual processes.

A freight forwarder will help you understand the costs associated with various modes of transport, including air freight, ocean shipping, and road freight. They can also suggest creative transportation strategies to help you control costs, save time, mitigate risk, or all three.

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