The first thing you need to know about freight calculation is no matter if the market is down and competition is high, if you don’t know exactly how much it costs to keep your fleet on the road, you are in serious danger of breaking your carrier.
We both know that the crisis is there, and you often end up subjecting yourself to pick up freight for values that you would not have accepted before. The problem is that maybe you think that these freights are giving at least a little profit, but what if you discover that, in fact, you are at a loss? So, Managers should always monitor worker behavior in some way.
The correct strategy that you should use is to serve your customers in the best possible way, but for that you need, in the first place, to make some profit from the operation.
Find Out What Freight Calculation is for
Imagine that a colleague of yours decides to buy a truck, imagine now that he does not know exactly all the costs related to the activity of road freight transport.
Because he doesn’t know much about the subject, he may think about the following costs first:
- fuels, such as diesel for example;
- vehicle maintenance;
- tire wear;
- washing and lubrication.
Looking only at the accounts mentioned above, he starts to do his calculations, and suddenly he arrives at a freight price and starts charging for that amount.
The problem is that the accounts I mentioned above represent only some of the components of freight-weight, which is the weighted charge of the goods transported.
However, there are several other costs to be included in the freight value, such as freight-value, risk management and other fees, called generalities.
In addition to all this, it is essential that you embed your profit, which is the biggest reason for you to carry the Ups freight.
Because it is a complex activity, involving many variables, it is essential that you do the calculation of freight, as this ensures that you are charging the correct price.
What You Need to Know to Calculate Shipping Costs
The correct freight calculation takes into account some variables related to the cargo. Get to know each one of them in the next topics and learn how to reach fair value in the collection.
Knowing the volume of the cargo you are going to carry is very important because there are situations where the cargo is very bulky, such as mattresses, for example, and the risk of you losing money by charging only by weight is great.
It is the weight of the cargo that defines how much your truck will spend on fuel, in addition to implying maintenance, tire wear and other factors, so the market rule is to charge freight per kilogram transported.
Distance between pickup and delivery
You need to know exactly where you are going to collect and where you are going to deliver the goods, as this will define your travel operating costs. In addition, it is very important to know if there will be more than one collection and delivery point.
Charge amount on the invoice
The main function of knowing the value of the invoice is to measure the risk that you will run when making the transport, as it is necessary that you insure this cargo. Pay attention to “half note” situations, illegal practice of some shippers to pay less taxes.
Road transport is not a simple activity, and you can often face unforeseen costs, so it is important to know the details of the trip to know if you need to charge for fees such as:
There are a number of other generalities that you will see in an article in the series later on.
How to Calculate Freight
There is no use looking for new trucks, training your team and providing the best service, if the price you are charging is not able to fully pay the bill. Therefore, there are several ways you can use to calculate freight, from a simple calculator to programs on your computer, or directly on the internet.
I would say that they are all valid, as long as you know exactly what is being calculated.
Nowadays, with the crisis that we are experiencing, it is not possible to charge an amount that does not even pay your expenses, but you can not simply throw a number, just because you imagine that this is the market average.
You need to know the essence of your costs, to have an accurate idea of how much you can charge for each of your Ups freight.
In doing so, I guarantee that you will get a competitive price in the market or, in the worst-case scenario, you will know in detail why you cannot continue as you are.
However, in addition, you need to consider some key points. In the topics that follow, I’ll explain each one better. Come on?
Types of Freight Contracting
The hiring of freight happens, in general, in some different ways. It all depends on the contractor’s need and the volume of cargo that will be transported. Understand better below.
When we talk about a “normal” mode of cargo transportation, we are referring to a contract in which the carrier collects at the sender and delivers directly to the address of the recipient. It is the most common operation and helps to better understand how all others work.
In this model, taxes related to the company’s tax regime or according to state registration legislation should be applied.
In this case, the carrier chooses not to provide the services using its own resources to carry out the delivery. In this case, it hires a carrier to perform the work, which is an excellent strategy to expand the area of operation and ensure delivery on time.
Despite being similar to subcontracting, this practice has some peculiarities that need to be observed. For a better understanding, let’s assume a route from point A to point C.
In subcontracting, only the subcontracted carrier is responsible for the entire route. In the re-dispatch, the main carrier transports from A to B and hires a partner, who will travel from B to C – in this case, the re-dispatch refers to this second stage in the process.
The intermediate re-dispatch looks like the “normal”. However, here, the carrier is unable (or does not want to) collect the cargo at the origin and deliver it to the destination. Therefore, the work is passed on to other carriers.
In order to better understand the operation of this operation in practice, we will assume a route that goes from point A to point D. One of the business partners is responsible for taking the goods from point A to B. Subsequently, the main carrier makes the journey from point B to C and, finally, another partner ends the service taking the items from C to D (arriving at the destination).
Cargo types also influence how carriers position their operations. In the following topics, I explain the two modalities better.
In stocking loads, the shipper (owner of the goods) hires a carrier to take a load that will fill (or almost) the truck body. This means that, in the case of a trailer, the volume or quantity of goods must be sufficient to fill the available space.
Examples of stocking loads include fuels and commodities (corn, soy, among others). However, in addition to this, it is also very common to see cases of transportation stocking in the industry. If a food company needs to supply the distribution center, for example, it is very likely that the cargo will be closed.
In short, in this case, the service contractor pays to use all the available space inside the truck (even if the load is not enough to fully fill the vehicle’s capacity). Thus, the cargo transported belongs to a single customer.
In fractional transportation, the customer pays for using fractions of the space available within the same truck. In this case, contrary to what happens with the stocking load, several goods from different customers are being transported at the same time.
A good example of how this works in practice is a beverage truck that transports various products that will be delivered to different establishments, through a predefined route.
This type of operation is more complex since it involves shipping planning, scheduling, possible delivery scheduling and very effective route planning (necessary to optimize operating costs).
However, it is worth mentioning that the same carrier can work with these two transport models, depending on the customer and the type of contract that is performed.
Fees and Taxes
The calculation of freight never concerns only the value of the goods and the distance traveled. There will always be fees and taxes that affect pricing and influence the total price that will be charged. Find out more about them.
Ad Valorem is a percentage fee charged on the value of the cargo. It is charged to cover the cost of insuring the cargo while it is in the carrier’s possession. The value is formed based on variables such as the value and characteristics of the goods, the distance traveled and the transit time.
GRIS is the fee charged in order to cover the costs of the carrier in relation to actions aimed at combating and preventing cargo theft and theft. It is also charged with a percentage (the base value is 0.30% over the NF value and a minimum of R $ 3 for each CTe generated) and is linked to the distance traveled and the load value.
Traffic Restriction Fee (TRT)
It is used to cover the extra expenses that transporters have when they need to provide services in places that impose restrictions on the circulation of cargo vehicles, in addition to loading and unloading in those places. The charge is made on a percentage that affects the value of the freight.
Delivery Difficulty Rate (TDE)
The idea of this fee is to reimburse the carrier for the extra costs generated from the difficulty of completing a delivery at certain locations. This includes delays during unloading, specific customer requirements or difficulty accessing the site.
It is negotiated directly with the contractor and has a charge that can vary from R $ 20 (minimum) up to 20% of the total freight.
It is charged with the objective of reimbursing the carrier with respect to the costs of transporting cargoes weighing less than the Careers Login stipulated minimum. Also called minimum freight, it applies when the goods are below the established level and the value depends on the carrier (but it is usually R $ 50).
Finally, the toll is passed on to the contractor whenever the planned route passes through these points on the highways. In the case of fractional loads, it is charged based on an apportionment how do I sign up for upsers among all the NFs in the vehicle. Thus, customers pay a fair value for that fee.
The Importance of Spreadsheets
This spreadsheet will certainly make your life easier, regardless of whether you own a carrier or an autonomous trucker.
The Spreadsheet for Transportation Stocking
In the case of stocking freight, what is done is a shipper asking for a quote and it is prepared to deliver according to the characteristics Employee Website passed by the contractor. For example, if it is necessary to take a load from register Curitiba to Fortaleza and it weighs 15 tons, the company must pass this information on to the carrier to make the right calculation.
Usually, we are talking and a few thousand reais (and capacity is made over long distances). It has a high cost and a calculation is made that is passed on to the customer. The stocking freight calculation spreadsheet has two types:
- stocking with own fleet;
- stocking with an outsourced fleet.
The tool serves precisely to make this budget more accurately and pass on the correct information to the shipper.
The Spreadsheet for Fractional Transportation
The fractional spreadsheet has the same function, but the difference is that the values are much smaller. Usually, the customer calls and wants an instant quote, already passing on information about the load (distance, volume and weight).
In this case, it is important to have a pre-established table in hand to say, based on two variables – weight and distance, how much you are going to charge sign in. The spreadsheet does just that, it gives a ready table so that you can even print and have quick access when passing the quotation.
As a rule, companies that work with fractional freight have predetermined routes and this tool works very well in these cases – since routes are usually already planned in advance.
- More and More Retired Employees Pay Profits
- Discounts and Benefits for Employees = Lower Rotation at Low Cost
- Delay in Delivery of International Orders Irritates Consumers
- Paying a Competitive Salary Will Make a Difference in 2020
- Delivery Driver – Whats their Work and Functionalities
- TNT Express – A Review of Courier Services
- The Importance of Transport in the Logistics Chain
- UPS – Global Logistics and Messaging Giant Expands in Colombia
- UPS starts Distributing its Delivery Packages with Drones
- Role of Transportation in Logistics Field
- Minimum Wage and Inequality Between Autonomies
- Purolator – A Review of Purolator Express Courier Services
- XPO Logistics – SWOT Analysis and Salary Information
- Saia Freight – A Moving Company With a Difference
- 6 Basic Modes of Transport in Operational Cargo Management
- Aramex – Corporate Shipping Rates
- Artificial Intelligence in Supply Chain Management
- How to Plan Retirement, Beyond the Pension Plan
- Logistics is the most Assertive Investment, says CEO of Blackstone fund
- Comparison between FedEx, UPS, and USPS
- The Digital Transformation of UPS that saves Millions
- Track with UPS
- UPSers – Login to UPS Employee Portal
- Life Insurance Law 2020: Coverage and Advantages for Worker
- Implementing Health Benefits Programs in the Workplace
- Ups – From Package Delivery to Passenger Transport
- Air Freight – What Should Be Taken Into Account to Quote?
- Apply for UPS Jobs
- Experts Analyze the Situation of the Truck Industry in Latin America
- Advantages of using DHL Express courier services
- 401K Savings Plan – Best Retirement Plan with More Benefits
- Cargo Consolidation: Competition Increases in the Global Market
- Courier and Parcel – Matter of Time, Money and Effort
- The Importance of Having Good Health Insurance
- Canada Post – Know about Postal Operator in Canada
- Delivery Process of a Package in Correos