Volumetric Charging & Freight Calculations

Calculating the cost of export freighting

Simon Arnold, Director at Unity Logistics looks at volumetric charging and freight calculations, and offers some insight into what goes on behind the scenes when you ask for a freight quotation.

Unity Logistics is a freight forwarding agency based in Rotherham, South Yorkshire who help businesses to arrange their international transportation.

Intro

Anyone involved in international shipping will be we well aware of the costs involved, but less people are aware of how freight rates are calculated.

An understanding of these calculations can make for easier planning, budgeting, forecasting, more efficient packing and even upselling.

Whilst some companies have their own way of calculating freight charges the vast majority of the industry adopts the same general methods. This post has been designed to give a brief overview of freight calculations, though it does more specifically apply to cargo being shipped loose or by ‘groupage’.

Why is volumetric charging needed?

It allows for cargo which is small and heavy to be charged fairly against cargo which is large and light (think small box of lead against large box of feathers).

What is volumetric charging?

Because dimensions and weights are different units of measurement, we apply a formula to the dimensions of the goods in order to convert them in to a ‘weight’. This ‘weight’ is what is known as the volumetric (or dimensional) weight.

Calculating your chargeable weight (the heavier of the two and the one used to calculate your freight charge)
The calculation varies slightly dependent on the mode of transport in question; largely speaking, this is it to accommodate for variation of space and weight allowances for each mode of transport.

Step 1: Ascertain the cube of the goods (in m3) and the gross weight (in Kgs)
Step 2: Using the ratio tables below, convert your m3 in to Kgs
Step 3: Note your chargeable weight

Ratio table

Sea

1m3

=

1,000kgs

Road

3m3

=

1,000kgs

Courier

5m3

=

1,000kgs

Air

6m3

=

1,000kgs

Or to put it another way

Sea

1m3

=

1,000kgs

Road

1m3

=

333.33kgs

Courier

1m3

=

200kgs

Air

1m3

=

166.67kgs

Illustrative example

If 8x pallets at 120 x 100 x 60cms weigh 1,600kgs in total, the cube of the goods calculates to be 5.76m3 (8* (1.2 * 1.0 * 0.6)) and the gross weight is 1,600kgs.

Calculation

Volumetric Weight

Actual Weight

Chargeable Weight

Sea 5.76 * 1000

5,760kgs

1,600kgs

5,760kgs

Road 5.76 * 333.33

1,920kgs

1,600kgs

1,920kgs

Courier 5.76

1,152kgs

1,600kgs

1,600kgs

Air

5.76

960kgs

1,600kgs

1,600kgs

 

*Where there is imbalance between the volumetric weight and the actual weight, so long as you do not increase your chargeable weight in the process, you could hypothetically increase the lesser of the two and your freight rate would not change.

Now what?

The chargeable weight is then multiplied by the freight rate (this rate is specific to a carrier). By knowing your chargeable weight and knowing your freight rates you should be able to keep a very good eye on the costs involved, particularly if you are undertaking repeat shipments.

How Freight Rates are Most Commonly Charged?

Sea: most commonly charged per 1,000kgs. Often a minimum charge is applied for shipments less than or equal to 1,000kgs

Road: most commonly charged according to the actual weight. Often a minimum charge is applied for shipments less than or equal to around 25kgs

Courier: per destination per 1kg. Often only a nominal minimum price because the overall freight charge is often relatively nominal itself

Air: most commonly charged per 1kg. Often a small minimum charge for shipments less than or equal to around 40kgs

Other Considerations

If your cargo can not be stacked, or has non-standard dimensions not only do you pay for the space you physically use, but you also pay for the space you prevent others from using as pallets are designed to fit coherently in to trucks and containers.

If a pallet is 120 x 80 x 60cms and is ‘non stackable’, a company may well calculate the volumetric weight using dimensions of 120 x 80 x 230-240cms (230-240cms being the height of most standard trailers or sea freight containers). Oddly this is more common across road freight than any other mode of transport.

Also, be careful when measuring the dimensions of your goods as it is always the furthest dimensions that should be used.

Topics: Freight Forwarding and Transport & Logistics
Menu
Export Action Plan