Welcome Message

Hello everyone and welcome to our workshop on “Best Practices In Pricing Of Freight And Options”. This is Pamela Mattes from Freightquote.com. I am excited to host today’s workshop.

eBay has several tools to help make shipping freight-sized items easy. In this workshop, I will demonstrate the differences between different shipping alternatives, pricing, and packaging needs. We’ll take a look at how you can save time and facilitate sales by adding a Freight Calculator to your auction for items weighing over 150 lbs.

We will also take a look at how you can utilize the Freight Resource Center to schedule pickups, create shipping documents, and track your shipments all in a few easy steps.

I’m going to post the workshop messages every couple of minutes. To help you keep track of the workshop, I’ll mark our workshop posts with the phrase “Workshop Message #” at the top. So feel free to jump into the discussion at any time.

Workshop Message #3

Household Goods

Furniture, art, or similar items are usually classified as “household goods” and are transported by specialized household goods (HHG) carriers like Bekins and North American Van Lines.

Express

Very small business or personal items like envelopes are considered “overnight express” or “express letter” shipments, and are transported by carriers like UPS, FedEx Express, and DHL.

These shipments are rarely over a few pounds, and almost always travel in the carrier’s own packaging. Service levels are variable, depending on the shipper’s choice. Express shipments almost always travel some distance by air. An envelope may go coast to coast overnight or it may take several days, depending on the service options and prices chosen.

Parcel/Ground

Slightly larger items like small boxes are considered “parcel” or “ground” shipments, and are transported by carriers like UPS, and FedEx Ground.

These shipments are rarely over 100 pounds, with no single piece of the shipment weighing more than about 70 pounds. Shipments are always boxed, sometimes in the shipper’s packaging and sometimes in carrier-provided packaging. Service levels are again variable; but most “ground” shipments will move about 500-700 miles per day, going coast to coast in about four days. Parcel shipments rarely travel by air, and typically move via road and rail. Parcels represent the majority of business-to-consumer (B2C) shipments.

Freight

Beyond HHG, express, and parcel shipments, you get into the category of “freight shipments.”

To go into more detail around this, we’ll dive into the segments or modes of freight which can move domestically or cross borders between Canada and Mexico. These segments are known as Less Than Truckload (LTL), Full Truckload (TL), Rail/Intermodal and Air

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How LTL Carriers Operate
LTL shipping is a thin-margined business, so costs must be minimized. Two of the biggest costs for LTL carriers are fuel and labor. Most LTL carriers have unionized labor which costs are fixed, so minimizing fuel usage is a significant goal. Therefore maximizing the utilization of every trailer for every mile driven – means trailers contain a maximum level of freight by both weight and volume. The weight and volume characteristics of a set of freight is referred to as "freight mix".
Less than truckload carriers typically have several drivers in a city where shippers are located to collect freight from various customers.

Typically, first a driver will pickup a shipment from a customer location each time a shipment goes by a particular carrier. Once the driver has made several stops and has picked up enough freight to fill his trailer with either enough volume or weight, he returns to his terminal to have his trailer unloaded.

Next, the trailer is unloaded and the individual shipments are then weighed and rated for billing purposes.

The freight is then loaded onto an outbound trailer which will forward the freight to either a breakbulk or other terminal. The freight is then separated based on its final destination and forwarded to to the terminal in its destination city where it will be transferred to the trailer that will deliver it to the consignee.

A shipment may be handled 4 or more times by the carrier, not including the initial loading and unloading! This is why packaging is extremely important.

Click here for additional Packaging Tips.

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Who will move LTL Shipments?
Shipments may be booked directly with the carriers, brokers or online marketplace services like eBay’s preferred freight provider, Freightquote.com.

LTL shipments are transported by regional carriers like AAA Cooper or Averett Express, or by multi-regional or national carriers like Roadway, Old Dominion, or Southeastern.

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Truckload (TL) freight
Next, let’s look at Full Truckload Movements.

While express, parcel, and LTL shipments are always intermingled with other shipments on a single piece of equipment and are typically reloaded across multiple pieces of equipment during their transport, TL shipments usually travel as the only shipment on a trailer and TL shipments usually deliver on exactly the same trailer as they are picked up on.

Characteristics of Truckload Freight
1 Shipments larger than about 15,000 may be up to 40,000 pounds
2 May be up to or 53’ long
3 Transit times are normally constrained by the drivers availability according to Hours Of Service regulation and distance (It is normally accepted that Full Truckload drivers will transport freight at an average rate of 47 US miles per hour (including traffic jams or queues at intersections).

One advantage Full Truckload carriers have over Less Than Truckload carriers is that the freight is never handled in route whereas an LTL shipment will typically be transported on several different trailers.

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How Freight Pricing Works And Key Things To Remember
When shipping freight, it is extremely important to understand pricing, claims, and insurance. Let’s take a look into the differences of how each mode or service is priced differently.

1. Express letter and parcel carriers typically have fairly simple pricing based on package size and service level requested; however, freight pricing is considerably more complicated.
   
   
2. LTL carriers typically charge by freight “class.”
   A The National Motor Freight Traffic Association (NMFTA) issues a publication called the National Motor Freight Classification (NMFC).
   B The NMFC is basically a list of every kind of item that ships via truck. Each item has a class assigned to it based on the item’s density, loadability or mixability, value, and commodity type.
   C Freight classes range from 50 to 500. Denser items such as steel and machinery have low classifications such as Class 50 thru 85. Fragile or bulky items fall into freight classes 125 to 500, and pay higher shipment costs.
   - The lower the freight class -> The lower the cost
   - The higher the freight class -> The higher the cost
   
   
3. LTL rates are also paid on shipment weight. Freight class attention is paid based on total weight which includes item and packaging.
   
   
4. LTL discounts can be negotiated based on shipping volumes. These may range between 40 – 80%.

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LTL Money Saving Tip
Following are a couple money saving tips

1. Receive bigger discounts from brokers or online market places
   Often, an LTL shipper may realize significant savings by utilizing a freight “broker,” online marketplace, or other intermediary instead of contracting directly with a trucking company. Brokers can shop the marketplace and obtain lower rates than most smaller shippers can directly. In LTL marketplace, intermediaries typically receive 70% to 80% discounts from published rates, where a small shipper may only be offered a 40% to 60% discount by the carrier.
   
   
2. Use terminal locations to drop off or to pick up
   Dropping off an item or having the recipient pickup directly at the carrier’s terminals will also create significant savings. This removes potential extra distances that rates may be based on, extra equipment and potential surcharges. Typically using both terminal locations to drop and pickup will save you between 15-20%.