Freight Shipping Options: Understanding Freight Modes & Rate Pricing

Freight shipping services are an essential part of transporting goods throughout the global economy for businesses through various freight modes to deliver their supply chain and logistics requirements. The main topics of this blog are to discuss the various freight shipping options available to shippers, touch on specialized needs of some industries and outline factors that drive freight shipping rates to help you make informed decisions when selecting from available freight shipping options for your business.

Understanding Freight Shipping

Freight shipping is used by businesses to move massive amounts of products worldwide by using various modes of transportation such as ships, planes, trains, trucks and a combination of multiple modes to deliver items to customers. 

Let's explore the definition of freight and its common characteristics along with the role it plays in global supply chains.

Definition of Freight and Its Characteristics

Freight transportation refers to the bulk movement of goods from one location to another using different modes of transport that can either travel via air, sea or land through the following freight modes: truck, rail, plane, ship or a combination of two or more which is called intermodal. 

The main characteristic of freight shipments is the size, weight and the number of options available to ship from and deliver to an infinite number of combinations, with the infinite number of combinations being the biggest challenge for the freight and logistics industry.

Other factors to consider when moving freight include:

• The nature of the product: Hazardous materials, temperature controlled, fragility and value require specialized handling, marking and insurance during transit.
• Packaging requirements: Some items may need specific packaging types like pallets, crates, barrels or slip sheets due to their shape, consistency, fragility or warehouse requirements.
• Delivery timeframes: Urgent deliveries might necessitate expedited shipping options via air cargo instead of slower ground-based or water-based methods.

The Role of Freight Shipping in Global Supply Chains

In today's interconnected world economy, raw materials are sourced globally while finished products reach customers across continents; efficient logistics play a vital part in ensuring smooth operations. Freight shipping is the backbone of these global supply chains, enabling businesses to transport large volumes of goods cost-effectively and reliably.

Some key roles that freight shipping plays in global supply chains include:

1. Economies of scale: By consolidating multiple shipments into a single mode of transportation companies can save on per-unit costs while maintaining high levels of efficiency. An example would be the consolidation of multiple LTL shipments shipping from the same origin and combining them into a truckload with similar destination region where the truck driver could efficiently deliver a multi-stop load.
2. Reliability: Established carriers and freight brokers offer consistent transit times and dependable service, which helps businesses plan their inventory management more effectively.
3. Flexibility: With various modes available for transporting goods - from full truckload (FTL) to less than truckload (LTL) or intermodal services combining train/sea/truck - shippers have numerous options at their disposal based on factors such as budget, delivery deadlines and shipment size/type. For further clarification, domestic intermodal involves moving 53’ containers via truck and rail, while international intermodal is a combination of ship, truck and rail via 20', 40', and 45' ISO containers.
4. Risk mitigation: Using reputable freight carriers with robust tracking systems ensures better visibility over shipments throughout the entire journey, reducing potential risks associated with lost or damaged goods during transit.

Understanding the basics of the freight shipping options in today's supply chain market are essential for any business looking to optimize its logistics processes. From knowing what constitutes a freight shipment to recognizing its importance in global supply chains, this knowledge will help you make informed decisions when selecting suitable carriers and shipping methods for your company's needs.

Key Takeaway: 

Freight shipping involves moving large and heavy items using various modes of transportation. It plays a crucial role in global supply chains by providing economies of scale, reliability, flexibility, and risk mitigation. Understanding the basics of the various freight shipping options is essential for businesses to optimize their logistics processes and make informed decisions when selecting suitable carriers and shipping methods.

Types of Goods Shipped via Freight

Freight shipping is quite remarkable when you think about it because it can transport almost anything from an infinite number of origins to an infinite number of destinations, making it a vital part of the global supply chain. While freight can handle most items, some require specialized carriers due to their nature or value. Let's explore some common examples of items requiring freight delivery and those needing specific handling.

Exceptions Requiring Specialized Carriers

In addition to these common examples of goods shipped, certain items demand unique attention from specialized carriers because they pose risks during transit. These include hazardous materials (HAZMAT), perishable products, product specific temp-controlled or valuable commodities with high theft potential. Let's take a closer look at each category:

• Hazardous Materials (HAZMAT): Chemicals, explosives, or radioactive substances are classified as hazardous materials and require specialized carriers with proper certifications to handle them safely. This ensures that these dangerous goods are transported in compliance with federal regulations like the Federal Hazardous Materials Regulations (HMR).
• Perishable Products: Fresh produce, meat, or dairy products have a limited shelf life and need temperature-controlled transportation services. These shipments often utilize refrigerated trucks or containers to maintain optimal conditions throughout transit.
• Valuable Commodities: Precious metals, jewelry, or fine art may be targeted for theft during transport. To mitigate this risk, they typically require secure shipping methods provided by specialized carriers who offer additional security measures and insurance coverage.

Investigating all the available freight shipping options and picking the best is essential for businesses looking to transport their items in a productive and cost-efficient manner. By understanding the types of items commonly shipped via freight services, companies can make informed decisions about which mode of transportation best suits their needs while ensuring safe delivery of their valuable cargo.

Key Takeaway: 

Freight shipping is a crucial part of the global supply chain that can transport almost anything, from furniture to construction supplies. While most items can be shipped via freight services, certain goods require specialized carriers due to their nature or value, such as hazardous materials, perishable products, product specific temp-controlled and valuable commodities with high theft potential.

Different Modes in Freight Shipping

Freight shipping is crucial for transporting goods across the country, and there are various modes available to cater to different shipment requirements. The type of freight service you select will be contingent upon a number of variables. In this section, we'll explore various freight shipping options: Full Truckload (FTL), Less Than Truckload (LTL), domestic 53’ intermodal transportation, expedited air, rail and ocean.

Full Truckload (FTL) 

Full Truckload (FTL): FTL is ideal for large shipments that require an entire truck's 53' capacity. This mode offers several advantages over other methods; it provides faster transit times since there are no stops or transfers along the way; and has the flexibility to handle any origin to destination combination. Truckload shipments can also bring refrigerated trailers for perishable items or flatbeds for oversized loads going to construction sites. 

Additionally, truckload minimizes handling risks because your cargo remains untouched from origin to destination. 

• Pros: Faster transit times, minimal handling risks, cost effective, flexibility to handle any origin / destination combination.
• Cons: Higher cost compared to domestic 53' intermodal, a highly fragmented market. 

Less Than Truckload (LTL)

Less Than Truckload (LTL): LTL is perfect for smaller shipments that don't need an entire trailer's space, but exceed parcel carrier limits. By consolidating multiple customers' freight into one vehicle, carriers offer competitive rates on freight that a shipper cannot utilize a full trucking trailer, hence its name. 

However, LTL may take longer due to additional stops required during transport dues to transfer between trucks at cross-dock centers before reaching their final destinations, as LTL carriers use what is called a hub-and-spoke network to drive the efficiencies in this freight mode.

• Pros: Cost-effective for smaller shipments, flexible pickup and delivery options.
• Cons: Slower transit times, increased handling risks due to multiple stops and transfers, potential damage due to the multiple stops as the product is fed through the LTL hub and spoke network to reach its final destination. 

Intermodal Transportation

In some cases, combining different modes of transportation can offer significant advantages in terms of cost savings and environmental impact. Intermodal freight shipping involves using two or more transport methods (e.g., rail, trucking) within a single journey. 

For example, an intermodal shipment begins with a truck that arrives at the origin dock with a 53' intermodal container positioned on a chassis.  Once the shipment is loaded the truck takes the intermodal container to the rail intermodal ramp where it is lifted onto a rail well car to then proceed on its long-haul portion of the shipment to the destination ramp. Once at the destination ramp, a truck arrives with a chassis that the intermodal container is then transferred off the train. The truck then delivers the goods to its final destination where the product is removed from the container.

The primary benefit of intermodal transportation is that it allows businesses to leverage the strengths of each mode while minimizing their weaknesses. Rail transport offers lower fuel costs per mile and offers a more sustainable solution compared to trucking, while truck provides the flexibility of being able to pick-up and deliver freight from just about any location. By combining these methods strategically through an experienced logistics provider optimizes both cost efficiency, eco-friendly alternative and service quality.

• Pros: Lower overall costs due to leveraging efficiencies between modes, reduced environmental impact, improved security through containerization.
• Cons: Potential delays during transfer points, lane mileage should be 650 miles or more, and no more than 25% of the total combined miles of truck and rail should be via the dray trucking service. In other words, intermodal does not provide all the flexibility trucking offers.

Air Freight Services

Air freight services involve transporting goods via airplane rather than by truck or train. This method of transportation is typically used for high-value or time-sensitive shipments that need to reach their destination quickly. However, because of its higher cost compared to other modes of transportation, it's important to consider whether the benefits outweigh the additional expense.

• Pros: Speed, safety and flexibility are why many shippers use air freight services for their critical shipments.
• Cons: Cost and limited routes are why shippers often look for expedited trucking services with team drivers.

Ocean Freight Services

Shipping products across the ocean can be a cost-effective option for companies looking to transport large quantities of goods. 

• Pros: Ocean freight services are a cost-effective eco-friendly option, as compared to airfreight, when shipping large quantities of product from one continent to another.
• Cons: While ocean freight is a great alternative to shipping from one country to another its transit time is often a month or more and there are issues associated with adverse weather or port congestion that can cause additional delays and cost.

Rail Freight Services

For businesses seeking efficient and cost-effective shipping solutions, rail freight services offer a compelling alternative to traditional truckload transportation.

Of all the freight shipping options, rail transport is the least understood among common shippers because of its specific use within a select group of industries. Rail freight is particularly advantageous for long-distance shipments or those involving large volumes of goods. If your company regularly ships heavy, bulky products across state lines or coast-to-coast, rail service could be an excellent fit.

Besides distance and volume considerations, certain types of cargo are better suited for train transport than others. For instance, commodities such as coal, grain, or other bulk items often move by rail due to their weight and size.

• Pros: The per ton-mile cost of rail can be significantly less expensive than trucking, especially over longer distances, as is the fuel-efficiency and sustainability.
• Cons: Rail service does not offer near the flexibility of trucking and train transits are often deterrents in a shipper selecting rail from all the freight shipping options.

Factors Determining Freight Shipping Rates

Given the various factors influencing freight shipping rates, businesses must be knowledgeable of them to make informed decisions when selecting carriers and services. By understanding the variables that affect freight shipping costs, businesses can reduce expenses while ensuring quality freight transportation service. As a general rule the lowest cost per pound to the highest cost per pound on the freight shipping options available are as follows:

• Ocean
• Rail
• Intermodal
• Truckload
• LTL
• Expedited Truck
• Air Freight

But to really grasp the full impact of cost one needs to look at the various factors driving freight costs in order to optimize service, cost and capacity requirements for the business.

Total Shipping Capacity Consumed

The overall size and weight of your shipment play a significant role in determining the cost of freight transportation. Carriers typically charge based on either dimensional weight (the volume occupied by your goods) or actual weight (the physical mass), whichever is greater. As such, it's crucial to accurately measure both dimensions and weight before requesting quotes from different carriers and selecting the correct mode that best meets the need. 

The answer is not always straightforward on dimensions and weight. As a general rule, as the total shipment weight approaches 8,000 pounds and more the shipper should quote truckload pricing because it will most likely be cheaper than LTL. Similarly, if the dimensions of a shipment approach 30% or more of the dimensional capacity of a trailer a shipper should make comparisons between truckload and LTL to ensure the best price.

Distance Traveled & Destination Location

The distance between the origin point and destination directly affects fuel consumption, driver hours, equipment wear-and-tear, as well as other logistical considerations. Consequently, longer distances generally result in higher shipping costs. Additionally, remote locations may require specialized equipment or additional time for delivery - further increasing expenses.

Fuel Surcharges & Accessorial Charges

Rising fuel prices often lead carriers to implement surcharges that are passed onto customers. These fees vary depending on market conditions but can significantly impact overall shipping costs if not accounted for properly during rate comparisons. 

Furthermore, accessorial charges cover extra services provided by carriers beyond standard pickup/delivery tasks - such as liftgate usage or inside deliveries - which also contribute towards total expenditure.

Freight Classification System

The United States trucking industry specifically operates under a standardized classification system called National Motor Freight Classification (NMFC). This system assigns a class to each type of product based on factors like density, stowability, handling and liability. Higher classes generally correlate with higher shipping rates due to increased difficulty or risk associated with transporting the goods.

Comparing Rates from Different Carriers

To ensure you're getting the best possible deal for your freight shipment, it's essential to compare rates from multiple carriers. Online tools  can help simplify this process by providing instant quotes from various providers based on your specific needs - including budget constraints, timeline requirements and desired delivery dates.

Tips for Reducing Freight Shipping Costs

• Negotiate contracts: Establish long-term relationships with preferred carriers and negotiate volume-based discounts or other favorable terms.
• Consolidate shipments: Combine smaller orders into larger ones whenever possible in order to take advantage of lower per-unit shipping costs offered by FTL services.
• Select appropriate service levels: Choose slower transit times if speed is not critical - this will typically result in cost savings without compromising overall quality of service.
• Avoid unnecessary accessorial charges: Ensure accurate information is provided upfront regarding any special requirements so that additional fees are minimized during transit/delivery processes themselves. If a shipper knows that the vast majority of its shipments will have a typical accessorial charge it's better to speak up and include it in pricing negotiations on the front end of the relationship.
• Select the least expensive freight mode: Where and when possible, choose the least cost freight mode. Of course, not all available on every freight lane but for reference on cost per pound starting with the most expensive and moving down to the least is: air freight, expedited LTL & TL, LTL, truckload, intermodal, rail and ocean.
• Leverage freight decisions through technology, not hard copy freight routing guide: Today's transportation management system software is fairly inexpensive and relatively easy to implement so take advantage of the opportunity to rate, and route optimize through technology to review all the carrier and broker contract rates within your company's possession to maximize freight savings on all the freight shipping options at your disposal.

Key Takeaway: 

Understanding the factors that determine freight shipping rates is crucial for businesses looking to reduce costs and improve efficiency. These factors include total capacity consumed, distance traveled, destination location, fuel surcharges, accessorial charges, and classification. To minimize expenses, companies can negotiate contracts with preferred carriers, consolidate shipments whenever possible, select appropriate service levels based on transit times needed and avoid unnecessary accessorial charges by providing accurate information upfront.

Most Common Freight Shipping Documents

Understanding freight shipping documents is essential for any company involved in the transportation of goods. These documents serve as a contract between the shipper and carrier, outline what's being shipped, provide instructions for handling and delivery, and are used to resolve any disputes or issues that may arise during transport.

Bills of Lading (BOL)

The Bill of Lading (BOL) is perhaps the most crucial document in freight shipping. It acts as a receipt issued by a carrier acknowledging they have received specified goods from the shipper. The BOL also outlines terms for transporting these items to their destination.

Packing List

A Packing List details exactly what is included within each shipment - such as item numbers, descriptions, quantities, and weights. This information helps carriers handle shipments correctly and aids customs officials with inspections if necessary.

Commercial Invoice

This document provides critical data about your transaction including seller/buyer details, description & value of goods, etc., which can be important for customs purposes when shipping internationally.

Freight Bill

The Freight Bill or Carrier’s Invoice is essentially an invoice from the carrier detailing all charges related to your shipment – like pickup/delivery fees or fuel surcharges among others.

Cargo Insurance Certificate

If you’ve opted to purchase additional insurance coverage beyond what’s typically offered by carriers through their limited liability policies; this certificate will provide the proof required in a cargo claim.

Conclusion to Freight Shipping Options

In summary, understanding the factors determining freight shipping rates is crucial for businesses looking to optimize their supply chain operations while keeping costs under control. By carefully considering variables such as total capacity consumed, distance traveled, destination location, fuel surcharges, accessorial charges, and classification, companies can make informed decisions when selecting carriers and services, ultimately reducing expenses and improving overall efficiency within their organization. 

Streamline your supply chain and reduce costs by understanding the different freight shipping options available across all freight modes.

Factors such as product size, distance traveled, and delivery timelines should be taken into account when determining the best mode of transport for your goods.

Make informed decisions about how to get your products from point A to point B in the most efficient manner possible.

Check out these credible sources for more information on freight shipping and don't always look to the largest freight providers in the industry. Often the best answers will come from the medium-sized logistics companies that are of the size to have high quality teams and the time to sit down and explain your company's freight shipping options in detail.