Every year, more than 8 billion tons of freight are moved by maritime and air transportation. If you run an export or import business, it is important to know how to calculate the freight costs of your shipments. Freight companies will usually quote a single rate based on your shipment's weight or measure, measure in this context meaning volume. For example, you may be charged $100 W/M for a shipment. If you are not familiar with the freight business, this rate can be confusing. To make things even worse, freight companies will use different weight and measure standards depending on which country they are based in and the type of transport they provide.
Determine what weight and measure units your freight company is basing its quote on. If this is not specified in your quote, you will have to contact their sales department. Commonly used weight and measure units include cubic meters, cubic feet, metric tons (the metric equivalent of 2,204.6 pounds), the short ton (2,000 pounds), and the long ton (the equivalent of 2,240 pounds).
Calculate the weight and measurement of your shipment in the units used by the freight company you plan to use. For example, if your freight company uses metric tons and cubic meters, you should use these measurements to describe you shipment's weight and volume.
Multiply your shipment's weight by the W/M rate. Multiply your shipment's volume by the W/M rate. The shipping company will charge you the larger of the two amounts. For example, if your shipment has a volume of 10 cubic meters and weighs a metric ton, and the freight rate is $100 W/M, you would have two possible shipment prices: $1,000 by volume and $100 by weight. In this example, your rate would be the larger amount: $1,000.
Add the cost of any freight adjustments your shipping company applies to your transport costs. Freight adjustments could include a currency adjustment factor (CAF), which is used to cover changes in currency value, or a bunker adjustment factor (BAF), which is used to cover the cost of fuel during times of unstable oil prices.
- As a rule of thumb, you will be charged per weight for heavy shipments and by volume for lighter shipments.
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