Since we’ve discussed shipping class rates in the about density-based pricing post, it is worth mentioning weight breaks and classification, an important part of freight pricing. When it comes to finding the best rate for a company’s shipping needs, freight class and weight are two pricing factors that shippers should evaluate before making the final decision.
The process of comparing carriers’ prices can be tricky in LTL freight service. All LTL carriers set up their own base rates that can vary widely. CWT, centum weight or hundredweight, means base LTL rates are quoted per 100 pounds. Each carrier has a CWT calculation, based on freight classification rates, shipment weight, and route distance. Freight classification consists of 18 NMFC classes that ranges from the low 50 class to the high 500 class; the lower the class, the lower the price. But it works differently with weight range; the greater the weight of the shipment, the less that the shipper will pay for 100 pounds of freight.
LTL shipments weigh between 150 and 20000 lbs., so most class rates have 5-6 weight breaks with a minimum charge per shipment. Here is an example:
• Minimum charge per shipment
• Less than 500 lbs.
• 500 lbs. but less than 1,000 lbs.
• 1,000 lbs. but less than 2,000 lbs.
• 2,000 lbs. but less than 5,000 lbs.
• 5,000 lbs. but less than 10,000 lbs.
• 10,000 lbs. but less than 20,000 lbs.
If freight price is based on a 1,000 pound shipment, the next weight break is at 2,000 pounds. At a certain weight threshold it will cost less to rate 2,000 pounds of freight weight rather than 1,000 pounds. When shipments become cheaper at the next rate level, it is called weight break. When the weight break point is reached, the rate of the next heaviest weight group is used and minimum weight for that break is applied.
Example table of class rates and weight breaks:
Such a table applies for freight moving between two destination points’ zip codes. The table shows an example of how percentage reduction rates fall with shipment weight increase. The left column consists of freight rates and the top row lists weight breaks – from the lowest to the highest. And pricing in the middle represents cost per hundred weight (CWT). For example, a shipment weight of 2,000 lbs. rated at class 65 will cost $817.
Although class rating systems including all its weight breaks appears complicated, it is critical to understand how this system works, for proper cost planning and negotiation with carrier partner. Working with a 3PL like PLS Logistics Services can provide you with a team of experts that are well versed in class rating systems and can make sure you needs are met in a cost effective manner. This allows you to focus on your core business.
Continue Reading: Beginners Guide to LTL Freight Shipping
To learn more, contact one of our LTL experts today.