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Freight rate

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Cargo

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Freight Rate, the cost of transporting goods is reflective of a number of factors aside from your normal transportation costs. Some of the main determining factors of freight rate are: mode of transportation (truck, ship, train, air craft) weight, size, distance, points of pickup and delivery, and the actual goods being shipped.One of the earliest forms of freight transportation was by water. Many of the earliest settlements were built along or near seacoasts and navigable inland waterways. As these settlements grew, roads and later railroads and pipelines had to be built to transport freight to and from the navigable waterways, thus connecting the inland points of pickup and delivery which could not be reached by navigable waterways. The development of roads, railroads, and even pipelines allowed for the expansion of settlements inland and away from water ways. Transportation by ships is very limited in nature. If there are no navigable waterways close to the pickup point and destination then a good will not be transported by a ship. Rarely is any good transported solely by ship, usually goods coming into ports by ship must be unloaded and transferred onto another mode of transportation i.e. truck or railcar for transportation to its final destination. With the expansion of railroad systems and the development of more efficient trucks, the transportation of freight by ships became less cost effective. Networks, of roads and train tracks which once carried freight from coastal and inland waterway ports to destinations which were not accessible by means of marine transportation, greatly expanded making freight transportation from port to port overland more efficient and more affordable than the marine transportation of freight.

How Freight Rate is Determined
The cost which a shipper (the consumer or business providing goods for shipment) or consignee (the person or company to whom commodities are shipped) is charged for the transportation of goods is determined by a number of factors. The main factors in determining the freight rate are: mode of transportation, weight, size, distance, points of pickup and delivery, and the actual goods being shipped. All of these factors play their own independent role in determining the price or rate at which the freight will be transported but they are also all interconnected. When determining which mode of transportation will be used to deliver the freight to its destination there are many things which need to be taken into consideration which will all have an effect on the freight rate. Federal, State, and Local authorities all have their own laws and regulations with regards to the size, weight, and type of freight which can be transported on their roads. Transportation of freight by Rail, Water, or air craft all have their own regulations which take into account Federal, State, and Local regulations as well as safety concerns which contribute to the rate at which freight is transported. In general, the more freight you transport, the cheaper it is. This is an important factor in the rate charged to people or companies shipping freight. There are many businesses out there whose sole purpose is to make the transportation of freight cheaper and easier for small businesses and individuals who need to move freight.

Consolidators: a firm which groups together shipments from different companies into a single shipment. Customs Broker: A person or firm, licensed by the treasury department of their country when required, engaged in entering and clearing goods through Customs for a client (importer). Freight Forwarder: A person whose business is to act as an agent on behalf of the shipper to arrange transportation services. A freight forwarder frequently makes the booking reservation. In the United States freight forwarders are licensed by the FMC as Ocean Transportation Intermediaries and are only designated freight forwarders for export shipments. Non-Vessel-Operating Common Carrier (NVOCC): A cargo consolidator in ocean trades that will buy space from a carrier and re-sell it to smaller shippers. The NVOCC issues bills of lading, publishes tariffs and otherwise conducts itself as an ocean common carrier, except that it will not provide the actual ocean or intermodal service Most of the freight shipped within the United States travels by truck or railcar, but many of the people and businesses shipping freight do not have enough of a good to fill a whole truck or rail car every time they need something shipped.

Consolidators, customs brokers, freight forwarders, and NVOCC’s can be a factor in determining freight rate because of their experience, business relationships, and the volume at which they operate. These factors help keep the freight rate down for small businesses and the individual with a shipping need.