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Major manufacturers and other companies can have annual freight shipping costs well in excess of a million dollars. If those companies are able to save ten to twenty percent on the transport of the items they ship, those savings go right to the bottom of the balance sheet as profit.
You do not need to be a freight broker or transportation expert to realize substantial savings if you understand how freight is classified and how weight can play an important part in your overall shipping costs. When items are shipped in less than truckload (LTL) quantities, the trailer can contain many different types of items.
The National Motor Classification is a reference guide that assigns a class to every item shipped. The class can range from 50-500. A lower number means that the item is shipped at a lower rate per pound. If you are able to ship an item at a lower classification, you will pay a lower freight bill.
Rates for each classification are further broken down into weight categories. You will pay more per pound if you ship 500 pounds than if you ship 5,000 pounds. When you have a load that is close to the next weight break, it is often cheaper to ship the item by its "as weight." For instance, if you are shipping 9,500 pounds of a class 70 item, it might cost you $12.50 cwt (cost per hundred pounds) at actual weight, but only $10.00 cwt if you ship it "as" 10,000 pounds.
Calculating the actual shipping charges at actual weight, it would cost you $1,187.50 (9,500 x 12.5 cwt). If you shipped the 9,500 pounds as 10,000 pounds, the same freight would only cost you $1,000 (10,000 x 10.0 cwt).
A second twist on using "as weight" instead of actual weight, is to add another item that has a low classification to your shipment to boost the weight of the main shipment up to a higher weight break. For instance, if you are shipping 3,000 pounds of a class 300 item, you can add another item that weighs 20 pounds and is a class 50 item. If you use the "as weight" and push the load up to 5,000 pounds, you will pay the lower class 300 rate on the 3,000 pounds and the remaining 2,000 pounds will be rated as class 50, a much lower rate.
Every situation is different and you have to do some quick calculations to see if it is worth boosting the weight to the next level. Depending on the class of the item and several other factors, it becomes advantageous to go to the next higher weight level when your actual weight is about 80 percent of the next higher category.
|Jennifer Mathes, Ph.D.|