How To Calculate Cost Of Freight Shipping

While you consider shipping your products overseas or abroad, you, obviously will also need to consider the investment in doing so. It is one of the trickiest cost to predict and yet has the ability to impact your bottom line.

We all know, the 3 most common modes of freight shipping usually considered – road freight, sea freight or air freight. The cost of freight shipping varies based on the mode, air freight being most expensive in majority of the cases. But, it’s not just the modes that need to be taken into consideration, but also a few other variables that will further help you calculate the cost of freight shipping.

Variables To Consider Calculating the Cost of Freight Shipping:

  • Cargo Dimensions:
    Dimensions of a shipment is considered important because many of the carriers consider volumetric weight, also known as dimensional weight, of the cargo, rather than the actual weight. Volumetric weight is considered when the goods may not be actually heavy, but due to the packaging (that may be required), they end up taking more space.
  • Cargo Weight: This refers to the actual weight of the shipment to be sent. Like we mentioned above, higher of the volumetric and actual weight will be considered to calculate freight shipping cost. Cost of shipping is calculated based on volumetric weight or actual weight, whichever is higher.
  • Destination of the shipment:
    The shipping cost will also depend on the distance between the origin and the destination of the shipment, which may be further categorized into zones depending on the shipping mode. Thus, shipping zone will also contribute to the cost of freight shipping. Additionally, factors like fuel costs, ease of access, destination restriction like remote location, accessibility can add up to the cost as well.

  • Value of the shipment contents:
    While this has secondary impact on the shipping cost, it is important to note that shipping a high-value freight will add up to your cost, because, in such cases, getting an insurance is always preferred. Insurance keeps the shipper at ease and offers claims in case the shipment is lost, damaged or stolen when in transit.
  • Delivery Speed / Time:
    This is very much interlinked to the delivery mode that you choose. You need to consider how soon you want your shipment to reach its destination, basis which you can choose the freight shipping mode, each having their own transit time. Faster shipping will enable quicker delivery, but an increased cost of freight shipping.
  • Custom Clearance:
    Duties and taxes highly vary based on the country you are trading into, type of freight, it’s value and related laws. The custom duties need to be paid during both import and export clearance of the cargo, which should be considered while calculating the cost of freight shipping. This cost varies and in uncertain, therefore, a proper provision of such costs should be made.
  • Unforeseen delays:
    Needless to say, there can be multiple factors that could result in unforeseen costs. While such costs can be exacted, it is important you consider such situations when calculating a freight shipping budget. Such unforeseen situations could arise due to unexpected delays, stolen cargo, damaged cargo or even lost items.  

  • Incoterms of your international sales contract:
    If you are exporting your products, Incoterms will play a role in deciding responsibility and costs that you will have to take up. There is a total of 11 Incoterms, each having different liability and costs – you should consider these into account while calculating freight shipping charges

These are some of the basic aspects that you should consider while calculating the freight shipping cost. It may look like just a few points, but truly calculating the cost can be confusing and frustrating and may include several other unexpected costs based on your freight type and requirements.

While, there is no doubt you can do it on your own, but an expert freight forwarder like ProConnect Integrated Logistics can help you with a quick quote based on some basic information provided by you. Give us a try now, get quote here.

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