When shipping pallets of merchandise across the United States or exporting them internationally, there are a few things a reseller needs to know. This guide will explain to you the basics of freight shipping, the many and varied costs you’ll have to take into account, and how to make the best out of space and weight to save as much money as possible on shipping costs.
What Is A Parcel And What Is Freight?
Put simply, the difference between a parcel and freight boils down to size and weight. Common carriers such as UPS, the US Postal Service and FedEx set upper size and weight limits to determine what is classed as a parcel and what is classed as freight, typically between 70lbs and 150lbs, with a length + girth ratio from 130” to 165”. Anything above these limitations is considered freight, and all the major carriers impose fees of around $50 for parcels that exceed the carrier’s’ weight, length and girth limits.
Freight is transported across the country in a variety of ways. By road, it is carried by covered, flat deck dry van trailers, refrigerated trailers, flatbed trucks, oversized trailers and low deck trailers. Freight is also carried by air, by rail, and by sea.
While there is a reasonably extensive navigable inland waterway system in the eastern United States connecting the Gulf Ports of New Orleans, Baton Rouge, Houston, Corpus Christi and Mobile to inland ports such as Chicago, Cincinnati, St. Louis, Memphis and Kansas City, the western United States contains virtually no inland water transportation network at all, mainly to do with the difficulty in constructing shipping canals in the mountainous terrain of the west. As a result, most freight on the western side of the States tends to go via rail, truck or air.
The United States is home to some of the busiest ports in the world, with huge amounts of cargo arriving and departing from ports such as Los Angeles, Long Beach, New York and Savannah daily.
Sea freight is an important link in the import/export chain. For resellers looking to export goods overseas who have no requirement for the shipment to arrive within a tight timeframe, sea freight is an excellent – and cost-effective – method of transporting large quantities of goods to port destinations around the world.
Cargo is stored in intermodal containers (ISOs), which are standardized containers of either 20 or 40 feet in length, which are stacked and stored in a ship’s cargo hold and unloaded at the ship’s destination. Being intermodal containers, they can be unloaded straight on to the back of a truck or onto a rail freight car when they reach their port destination without the need for the goods inside to be unloaded and repacked first. This makes sea freight a surprisingly cheap and efficient option for many resellers looking to export goods abroad.
Choosing to ship your goods by air as opposed to by land or sea is usually a matter of urgency over any other factors. Time-specific deliveries with a short turnaround and delivery window oftentimes make shipping by land or sea an unviable option – for example in the shipping of perishable goods such as fresh fruit and vegetables – which is where air freight comes in.
Typically, air freight takes between a few hours and ten days to reach its destination, depending on waiting times in airports, inspections, customs requirements, delays and distance traveled. Shipping goods by sea, on the other hand, can take upwards of seventy days depending on distance.
For resellers who want to get their cargo to its destination as speedily as possible, air freight is the ideal solution. However, this method of transportation does not come without added cost.
The most obvious difference between shipping by air as opposed to shipping by sea is cost. Air capacity is limited by weight, whereas sea capacity is limited by volume. Put simply, if the cargo you wish to ship weighs a considerable amount, you’ll pay much higher prices (up to 18 times more) to ship by air than by sea. However, if your cargo is light in weight, you’ll still pay more, but it will typically be in the region of six times more to ship by air than by sea.
Of course, there are also other factors to take into consideration. The cost of handling your shipment at the point of origin, transportation costs to the airport/seaport, customs clearance through two or even multiple ports, handling and transportation from the airport/seaport and delivery charges must all be taken into account before deciding which freight transportation method is best for your business.
As with truck transportation, the price of shipping containers also varies depending on whether the cargo takes up less than a full container load (LCL), or fills a container entirely (FCL). Check with your carrier for up-to-date rates for LCL and FCL loads, and a breakdown of weight/capacity costs.
Some resellers choose to transport their goods via rail. The usual costs for LCL and FCL loads apply, but they are considerably reduced when containers are transported across the country by rail.
As with all forms of freight transportation, rail can be used exclusively to transport goods, or it can be part of an intermodal transport network. An example of this would be a shipment of goods transported in from another country such as China, that is then loaded onto a truck at the port, and then transported to a rail yard where the container is loaded up onto a train and transported to its destination (with an additional truck journey at the other end).
However you choose to transport your goods, integrating rail into the equation can push your transport costs down considerably, especially when compared to transporting it by air.
On-truck Freight Classification for Pallets of Merchandise
Road freight is separated into several different categories. For freight that’s carried by truck, there are three main classifications, which are as follows:
Less than Truckload (LTL)
The typical freight trailer on the road today measures between 40’ – 53’ in length, 8’ – 8.5’ in width, and is between 12.5’ and 13.5’ high. An LTL load is a shipment that does not fill an entire truck. Companies specializing in carrying LTL loads will often carry several different LTL loads from various clients and customers. A typical LTL shipment weighs between 200 and 10,000lbs.
Partial Truckload (PTL)
A partial truckload is a load that doesn’t fully fill a truck but does tend not to be moved on and off trailer and from truck-to-truck with the same frequency as an LTL load. As a result, partial truckloads aren’t subjected to the same stresses LTLs come under, and partial truckloads are classified more for the way they are transported than for their size and weight.
Full Truckload (FTL)
As the name suggests, a full truckload is a shipment that occupies the entirety of a trailer. Different parts of the country have different laws regarding the maximum weight a truck can carry, but as a rule of thumb, an FTL will weigh between 34,000 and 45,000lbs.
The Resellers and Wholesalers Shipping Guide
There’s a basic checklist you should run through whenever you’re planning to send out a shipment. It goes as follows:
Take an inventory.
Package up your shipment correctly.
Correctly weigh and measure your shipment.
Find the right carrier, or cut out the middleman by dealing directly with the supplier.
Make sure you receive a Bill of Lading.
When it’s on the road, track your shipment’s progress.
Confirm your shipment has been delivered and a receipt has been issued.
It’s important to run through a few things before your pallet or pallets of merchandise are loaded onto trucks, rail cars, ships or airplanes. To begin with, it’s important that the goods you intend to ship are the actual ones you intended to ship. That sounds like advice nobody really needs to hear, but mistakes are made and the wrong shipments have been known to be sent out to the wrong customers, so it’s best to check.
Secondly, the goods you are shipping must be listed on a Bill of Lading (see below), and it’s a good idea to add a value to the Bill of Lading, be that cost of replacement, market value or appraised value for insurance purposes.
There are several factors to consider when packing merchandise for shipping. LTL loads, in particular, are often subject to being loaded and unloaded several times during their transitory period. A shipment should be packed in such a way that it can easily survive the various stresses and strains put upon it during shipping, such as being loaded and unloaded by forklift and crane, any shock or impacts it may suffer, any compression it may have to deal with, any vibration it may be subjected to, and other ambient conditions that may occur during transit.
It is important to take note of the weight of your merchandise and to pick the most suitable pallet that’s appropriate to that weight so that the pallet does not come under unnecessary strain during shipping. There are five pallet sizes currently approved by the International Organization for Standardization, of which the most common one in use in the United States is the one measuring 40” x 44”.
The type of pallet you should use depends on the amount of weightit will be expected to bear. For most resellers, a 40lb recycled wood pallet or a lightweight, 14lb plastic pallet will suffice. However, there are other options for heavier loads, such as galvanized steel and aluminum pallets, both of which will bear much more weight, though the weight of the pallet itself will add towards overall shipping costs.
When it comes time to stack your boxes of merchandise onto pallets, it’s important to make sure they are packed as best as possible. Try to avoid overhanging and staggering (where possible) as this can reduce the load-bearing capacity of the lower boxes by up to 40%. Staggering is often unavoidable, but do be aware that it may reduce the load’s structural integrity by as much as 33% during transit. Please see below for the ideal way to stack your pallets of merchandise.
Bill Of Lading – A Quick Explanation
As we mentioned before, each shipment must come with an attached Bill of Lading. A Bill of Lading is a commercially available document issued by the carrier to the shipper. It acts as evidence that the goods have been received by the freight carrier, as well as laying out the contract of carriage and an order to guarantee to deliver the freight to the destination the holder of the Bill states. A Bill of Lading is a compulsory freight document, and is overseen by U.S. Customs and Border Protection.
Certificate of Origin – A document stating the origin of the goods contained within the shipment.
Consular invoice – A requirement in some countries. A consular invoice certifies that the shipment has the name of a co-signer, the co-signee and displays the value of the shipment. The invoice will be certified by the consular official of the country of destination in those countries that require this document.
Dock and warehouse receipt.
SED (Shipper’s Export Declaration) – This is required for any single commodity shipment valued for customs over $2,500. It is required on all cargo destined for Asia and Eastern Europe, and is also required when the shipment requires an export license.
Don’t forget to take out cargo insurance cover when shipping goods across the country or internationally around the world. This will give peace of mind if anything goes wrong and valuable cargo is lost or damaged during transit. There are a variety of different policies available on the market that cater to different modes of transport. There are three main types of insurance package:
All Risks – This covers your cargo against damage from all external causes.
Named Perils – This lists what your cargo is covered for, typically fire, sinking, crashing, etc. This type of policy usually does not cover theft.
Shipment by Shipment – This type of cover does not cover Acts of God such as hurricanes, tornadoes, etc.
What You Need to Know When Shipping Wholesale Pallets
Typically, your average reseller will ship their merchandise in LTL loads via truck transportation. As we have mentioned before, LTL loads are frequently moved around by forklift several times during transit. This puts them under stresses FTLs, PTLs, LCLs and FCLs aren’t normally subjected to. It is therefore important that pallets of merchandise are not only stacked correctly, but also packaged appropriately to avoid damage during transit.
It’s important to get the right strength boxes, for example. Boxes are stacked on pallets one on top of the other, therefore boxes at the bottom must be of sufficient strength to bear the load of those on top of them. During transit, it isn’t just stress and pressure from above that can cause boxes to collapse, but also so-called ‘ambient conditions’ such as the vibration of the truck that can cause stress, so it’s important to take in the weight of the merchandise that’s being packed into the boxes when stacking your pallet.
Other things can also minimize the risk of damage, such as anti-slip mats, corrugated pads that can be placed on the top and bottom of pallets, stretch wrap, straps to hold everything in place, pallet bands and edge protectors. Having these precautions in place can also reduce overall shipping costs as the freight will end up in a different classification band (for an explanation of freight classification, see below).
You should also label everything clearly (see below), and if you think your shipment cannot handle having other pallets stacked on top of it stacked, it should be clearly labeled as such.
If your shipment is bound for export, each box must labelled correctlyaccording to internationally-agreed shipping regulations. Your labeling must include the following:
Country of origin.
Port of entry name.
Number of packages in the shipment.
Size in both inches and centimeters.
Weight in both pounds and kilograms.
Precautions that must be taken with shipment, such as ‘This Side Up’ and ‘Fragile.
Universal Symbols for Hazardous Materials*.
List of ingredients for comestible goods (if required by destination country).
* The Universal Symbols for Hazardous Materials are an internationally-used set of symbols that allow people who do not speak your language to easily identify what is in your shipment. The symbols are as follows:
How To Make The Most Out Of Freight Consolidation
As a reseller, you’ll be looking to make the most of the space available to you, as you’ll be looking to avoid paying over the odds when shipping freight across the country.
Make sure your pallets are packed as compactly as possible. The aim is to consolidate as much product into as tight a space as possible whilst maintaining structural stacking integrity and maximizing the use of space.
Keeping your shipment as lightweight as possible is also key to keeping shipping costs low. Consolidating like-for-like size products into similar-sized boxes, using the lightest (yet strongest) packing materials available and researching the different types of pallets and packing materials available can save you considerable sums of money.
Cutting Out The Middle Man When Buying Wholesale
The aim of the game for the reseller is to cut out the middle man and directly ship your merchandise from the supplier to your warehouse. Many resellers have found dealing directly with companies such as liquidators who ship directly to their customers cuts down on shipping costs considerably.
These include the freight classification, the density of the freight, the distance and the speed at which the freight is transported, the cost of fuel which can vary wildly depending on the states the freight travels through, and other factors such as the weight of the shipment, the timeframe in which the delivery must take place, and any special requirements placed upon the shipment such as the need for a lift gate, delivery to residential areas, the need for a refrigerated trailer and so forth.
All of this must be taken into account and costed as part of your shipping calculations.
A Guide To Standard Freight Pricing
As we previously mentioned, standard freight pricing is subject to a number of factors. Principal among them is:
Freight is arranged into 18 different classes– known as ‘freight classes’ – by the National Motor Freight Traffic Association. Known as National Motor Freight Classification, these classes help the LTL industry quickly organize and price freight based on four factors, which are density, handling, stowability and liability / value.
Examples of the different freight classifications can be seen below:
Your shipment will be categorized into one of the above categories after assessing the four following criteria:
Density refers to how much product is packed into the smallest space. The higher the density, the lower the price will be. Density is calculated by measuring the height, width and depth of a shipment in inches. These three measurements are then multiplied by one another (height x width x depth) to determine the total cubic inches of the shipment. This is then further divided by 1,728, which is the number of cubic inches in a cubic foot. The total in cubic feet is then divided by the number of pounds in weight of the shipment to arrive at the final total of pounds per cubic foot (pcf). This is the shipment’s total density.
The key to keeping costs as low as possible is a shipment’s stowability. As has been explained, neatly packed, aligned pallets are the key as they are stowed easily alongside other LTL shipments on a single truck. Complications arise when a pallet is awkwardly arranged, has one or multiple protrusions, or contains materials that by law cannot be transported with other goods, such as hazardous material. A pallet’s stowability rating affects what you will be charged in fees overall, so remember to pack those pallets as uniformly as possible to avoid extra charges.
The ideal pallet of goods is loaded on to a truck, stacked with other LTL shipments, transported to an easy-to-locate destination and unloaded by forklift with ease. This type of shipment will incur the least costs. Anything that strays from this norm is given a difficulty-to-handle classification, as it will require specialist loading, handling and unloading. As a result, costs will rise.
Liability is calculated based on how likely it is for the shipment to be prone to such forces as damage, theft, damage to other cargo, perishability, spontaneous combustion and potential to explode in transit. Just about everything that it’s possible to imagine is shipped from one part of the States to another part (as well as all over the world), and that includes all sorts of potentially volatile items. A liability assessment will be carried out on your shipment and a classification assigned accordingly.
Other factors are also taken into account when pricing freight. They are:
Distance and Speed
The amount of distance an LTL shipment covers increases the further it goes. Similarly, many LTL carrier offer time specific guaranteed delivery slots. This is considered a premium service and costs are accordingly higher as a result.
The amount of fuel used to transport a shipment increases the cost to ship it. As well as fuel usage by distance, fuel costs vary depending on shipment destination. For example, freight that is transported across states such as California which charge a higher tax rate on fuel will make the fuel cost more than freight transported across states with lower taxation. Most carriers add a standard fuel surcharge to counter fluctuations in weekly fuel costs, and it’s something you should be aware of when calculating your overall costs.
(To get a handle on fuel charges, an LTL surcharge on fuel priced at $2.56 per gallon will incur a 20-22% surcharge, and a full truckload surcharge will typically be around 41%.)
A shipment’s weight in pounds is taken into account and a cost is calculated based on that weight. As we will explain below, many carriers have switched to something called ‘DIM pricing’ as lighter weight LTL pallet shipments have diminished the amount a carrier can charge as opposed to a dimensional virtual charge.
If a reseller has a particular timeframe in mind within which their shipment needs to be delivered, extra costs will be calculated accordingly. If you can stick to the carrier’s schedule instead of your own, you can avoid these extra charges.
Costs will be added if there are special circumstances surrounding delivery. For example, if a delivery requires a lift gate, if the area to be delivered to presents logistical challenges, if refrigeration is required, or if restricted access to a site is required, these will incur extra charges. Check with your carrier for more details.
What’s The Difference Between Standard And DIM Pricing?
For most of freight shipping’s history, shipping costs were calculated by a package’s gross weight in pounds or kilos. However, as packaging methods became more sophisticated and shipments of goods (in particular LTL shipments) became more lightweight due to innovations in packaging and pallet technology, carriers began to lose revenue on smaller loads.
The solution was to introduce virtual weight pricing. In layman’s terms, this is a virtual weight calculated by how much a pallet is likely to take up in a trailer. If a pallet falls below the minimum virtual calculation, it will be charged at a virtual weight price. If, however, it exceeds the virtual weight expectation, the load is charged by its actual weight.
What’s Best For The Reseller? Standard or DIM?
It really does depend on such factors as how well your shipment is packaged, and how lightweight it is, its handling, stowability and liability, etc. Depending on the carrier used, it is sometimes impossible to avoid DIM pricing nowadays anyway, so the best thing resellers can do is consolidate their merchandise into as compact and lightweight a shipment as possible so that they are charged the virtual weight rate as opposed to the higher weight rate.
Tariffs And Liability Limitations
Carriers should be able to supply you with a carrier rules tariff document. This outlines everything you need to know, from fee structures to reshipping fees, cubic capacity rules, and the carrier’s claims procedures as well as much more. It’s a useful document in so many ways and should answer most of the questions you might have about a carrier.
A carrier should also set out their terms of liability in case of legal redress and assessing blame. Their liabilities should be provided to you in a carrier’s limitations of liability document, which you should receive alongside your rules tariff document.
There are ways of shaving small but significant sums of money off your total shipping costs if you follow a few simple rules. Resellers are always on the lookout to make savings when it comes to shipping costs. Hopefully, this guide will help you save money and steer you through the minefield that is shipping freight across the United States and out to the wider world.
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