Calculate Rated LTL Shipment

When there are tiered rates based on total weight min/max range, there is usually some weight within a given tier where there would be more advantageous pricing if the shipment were rated at a higher weight than the actual weight of the shipment.

 

For example, let's say the rate/100 lbs for shipments weighing 1-499 lbs = 14.38, and the rate/100 lbs for shipments weighing 500-999 lbs = 10.29.

 

The shipment we are rating = 450 lbs.

 

The freight calculation would be (450/100 * 14.38 = 64.71).

 

However, if the shipment would have been 500 lbs the freight calculation would be (500/100 * 10.29 = 51.45) - ACTUALLY CHEAPER than the 450 lb rate.

 

LTL carriers will typically enforce what is known as break even (or alternate) pricing; in other words if it would be cheaper to ship using a weight greater than the actual weight of the shipment, then they will bump the weight used to calculate freight to the minimum weight of the next tier.

 

The break even point calculation is to take the calculation for the minimum weight at the next highest tier and divide it by the rate for the tier using the actual weight of the shipment - this will give you the weight within a tier where any weight greater than the result it would be better off to rate using the minimum weight in the next highest tier.

 

In the above example this would be (500/100 * 10.29 divided by 14.38 = 3.5778 * 100 = 357.78)

 

This means that any shipment weight within the 1 - 499 lb tier weighing more than 357.78 lbs it would be cheaper to use the 500 lb rate.