The development of the economy has affected the greater need for transport, and thus the carriers who will quickly, safely, and cheaply deliver goods anywhere in the world.
Transport capacities often know how to exceed demand, which leads to greater competition. The carrier must professionally obtain the correct transport prices. To ensure a successful business, he must know below which prices he must not go.
Transport prices largely depend on the organization of the carrier, technical equipment, and the impact of each expenditure price on the final value of the transport service.
How to define the price of transportation?
The word tariff is derived from the town of Tarifa, near the Straits of Gibraltar. It was the place where fees were charged for the transition from the African to the European continent.
The term tariff first appeared with the development of railway and the railway tariff system in the middle of the 19th century. Later it began to be applied in other transport branches as well.
It is defined as systematic reviews of specific benefits, i.e., prices for a provided service.
When it comes to price, two important terms are tariff currency and tariff contract.
The tariff currency for domestic tariffs is expressed in the national currency of that country. International tariffs can be expressed in euros, dollars, or Swiss francs.
Among the tariffs, the tariff agreement concluded by various legal entities is also essential. The contract agrees on the conditions of the application of tariffs and tariff systems as a whole.
Tariffs are divided into transport, freight forwarding, and others (port, warehouse, terminal, postal). Transport tariffs include railway, sea, road and air transport tariffs.
The amount of transport costs depends on the current tariff situation on transport routes and the delivery time for transport. That is why the freight forwarder must always have an insight into the applicable tariffs in sea, rail, river and road transport of goods.
Depending on the area of application, transport tariffs are divided into:
local - used in a narrow area of a city
internal - refer to the territory of one state
international - used in several countries
Each transport tariff has its price, so the fare is calculated differently. The budget for the most favorable mode of transport is based on tariffs, properties of goods, required transport speed, and other necessary actions (reloading, weighing).
In addition to transport costs, the costs of other participants in the transport process (warehouse, goods controller) are also relevant. The cost-effectiveness of shipping, delivery and transit of goods largely depends on the price of transport.
One of the main tasks of an international freight forwarder is to determine the most economical transport route. A freight forwarder is familiar with the conditions for a lower tariff realization.
This applies in particular to international transport, in which special agreed arrangements are used and conditioned by the necessary transport route and mode of transportation. Any company that relies on freight is continuously looking for ways to reduce costs and increase profits.
Several factors influence the calculation of transport costs. It is good to consider them when making strategic decisions on freight forwarding. Apart from the container or customs clearance costs, most prices vary by type of transport.
Depending on the means of transport, transport prices can be different. The frequency of routes and additional costs, such as fuel and different transport procedures, also have a significant impact.
5 basic factors for calculating the freight rates
Type of transport
The type of transport you choose to ship cargo has a significant impact on the price of the goods. For example, due to the speed of delivery, a plane's shipping products are more expensive than transporting goods by truck.
To correctly calculate the cost of transport, various factors need to be taken into account, especially the type of transportation.
One of the critical elements that affect the price of a shipment is the cargo weight. Carriers check a price table that lists costs and approximate weight, including packaging, pallet, or crate. For a larger quantity of goods per unit, the transport price is more favorable.
The freight forwarder often organizes groupage traffic, and by merging smaller goods of two or more clients, he achieves the conditions for cheaper transport.
To send goods via the Hubbig digital platform, you can specify exactly how many cubic meters you need and send shipments as small as 1m3.
Another factor that determines transportation rates is the density of the shipment. The freight density of your package refers to how heavy it is relative to the amount of space it consumes.
Some items are more substantial and take up a lot of space, while some can be smaller and lighter.
Therefore, it is essential to determine the load density correctly to get an accurate insight into the costs. To calculate the density and class for your shipment, measure the width, length and height of the shipment, including packaging and pallet dimensions.
Transport charges are based on gross weight and dimensional weight. Dimensional weight is applied when the package weight is disproportionate to its size. For example, a box filled with styrofoam will not weigh much but it will take up more space.
Another aspect that will affect the price is the location.
The location and destination of your goods also change the equation for calculating total costs. Besides, some "more popular" routes, such as the one from Montreal to Toronto, are sometimes cheaper than others. Generally speaking, the longer the trip, the higher the price.
If the place of collection or delivery is more difficult to access or requires specialized equipment for lifting, loading, or unloading cargo, the tariff will increase.
Most carriers will consider how close a destination is to larger cities, which makes shipping goods affordable and more accessible.
The longer the shipment time, the higher the tariff will be. When the place you are shipping to is more distant, the carrier will spend more time and fuel, so the price is higher. That is why it is always important to optimize each load.
All transport tariffs consist of general provisions in which the legal regulations of individual transport branches are written.
Navigation manuals with distance tables are also essential. Distance tables determine the distance between geographical points, i.e., individual terminals.
Tariff distance is expressed in kilometers and is one of the most important factors upon which tariffs are based and determined.
After reading the distance, the price of transport per kilometer is calculated according to the tariff tables. Tariff tables contain different possibilities of calculating the fare. Specific cargo will be more expensive to ship - often because the process is more complicated.
Railway transport costs
Railway tariffs are the pioneer in all transport tariffs. When choosing rail freight, you have the option of shipping goods in FCL or LCL containers.
If you want to load an entire container with only your products, the price is relatively easy to calculate. Most rail freight companies charge fixed rates for the FCL type of container, regardless of the weight or dimensions of the shipment.
Rail freight costs are often calculated by volume or weight. However, rail transport costs are sometimes calculated per pallet as well. LCL tanks are generally a bit cheaper, so you can quickly deliver cargo at reasonable prices.
You can book the railway service and any other transport, in just a few clicks, and at a much lower price on our platform.
Road transport costs
Road freight transport is one of the most common forms of transportation. It is widely used throughout Europe, Africa and North America.
In road transport, the weight and size of the goods are essential. The weight and size of your shipment determine the type of truck you need for delivering the products.
If the load is smaller, a smaller means of transport will be used for transportation and vice versa, in the case of more substantial dimensions of goods.
Before establishing an accurate delivery price, it is essential to consider several factors.
For example, if you are shipping products that must be maintained at a specific temperature, the carrier will need to use a heated trailer. If you are shipping an agricultural machine, you will need another type of container that meets your needs.
When preparing the next delivery, do not hesitate to contact us at Hubbig as we will help you calculate the shipping cost of your goods.
Maritime transport costs
In maritime transport, there are two options for shipping: FCL (full container transport) or LCL (groupage container transport).
The two main elements of the cost of transporting goods by sea are:
Maritime cargo charges set by the carrier
Costs associated with the handling and cleaning of goods in ports of loading and unloading of goods
Calculating Prices of FCL Shipments
For maritime tariffs, the price is applied for specific container sizes and a particular route. The sea transport rate also includes additional costs - seasonal, regional, and fuel costs. Rates are generally valid for the current month and adjust to the market.
The price applies for a specific container size and a particular route.
Calculating Prices of FCL Shipments
It is often not worth booking the entire tank. If this is the case, the goods transport in bulk containers. It means that the exporter/importer cargo is stored in the same box. Transport costs are calculated according to the quantity or weight of the shipment.
Air transportation costs
In The Air Cargo Tariff (TACT), the freight rate is set by the International Air Traffic Association (IATA) based in Montreal.
Airfreight rates are usually set by airlines and calculated per kilogram. Speed depends on various factors, and short-haul flights can be more expensive than long-haul.
Domestic and international tariffs are publicly announced and accessible to all under the same conditions. Airlines deliver them independently and without state influence.
Due to the lack of standardization, estimating freight shipping costs can be a complicated process. Nevertheless, there are several methods to help you better understand prices and assess how to save on shipping costs.
Although you can find ways to estimate the cost of transporting goods online, you don’t have to do everything yourself. Incorrect expenditure estimation can be costly, so consider hiring a professional service.
If you are looking for affordable freight rates for any transportation (road, sea, air and rail), the best place to search is the Hubbig digital platform.
All you need to do is enter the goods you are transporting, the weight and dimensions of the cargo, and the departure and destination. In just a few seconds, the application will throw out complete offers and show you carriers that can offer you a transport service.
The price is also visible and displayed, so you can immediately receive all the information and specifications about the potential transport. And finally, choose a carrier that has quality services and the best prices.
Hubbig is here to make it easier and faster for you to find the ideal carrier and fare. Time is money, let us save yours!