Multiple factors are involved in deciding how LTL and FTL shipping prices are defined.
On the basis of pick up and destination zip codes, carriers determine the distance freight must travel. After calculating the distance, they use the freight’s weight and class—based on NMFC codes—to determine the shipment cost.
Carriers will also offer a discounted rate to customers who choose to combine their freight with that of other shippers. These discounts are usually provided by means of the carrier lowering the freight class of the items being shipped, so as to lower the price.
The main factor in determining LTL shipping rates is the presence of accessorials. The term “Accessorials” are added services that shippers may need carriers to provide at the final destination in order to ensure that the product reaches the right hands shortly. Basically, these accessorials take time and slow down the delivery of other shipments, so carriers need to adjust their pricing accordingly. Some examples of common accessorials are Inside pickup, Residential service, Inside delivery, Fuel surcharge, and Arrival notification.
FTL rates are easy to price out since an entire truck is being dedicated to one company’s shipment. FTL shipments rate determined by the cost per mile basis or based on a single door to door rate. FTL shipments are also subject to fuel surcharges.