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TruKKer for Business

Freight Density: Handle Before It’s Too Hot

Amidst everything that matters, freight density for the last 5 years is picking traction amongst shippers and carriers alike. This is mainly due to the significant changes in the way goods are classified and the growing popularity of density subgroups rather than simply setting freight classifications. Such changes in the industry have caused major problems for shippers, and shipping companies seem to enjoy all the benefits. This article highlights various aspects that shippers face in their day-to-day operations in relation to freight density. 

What is freight density?

Freight density is the space filled by items in relation to weight. The space occupied by shipment for the carrier has become as important as the weight, as the carrier wants to move as much shipment as possible to get the best profit for each load. The shipping company determines the price by comparing the actual weight of each shipment with the shipment density. The larger one is the billable weight.

How it impacts you

If freight density is a new term for you, you probably don’t understand why you must pay a lot of ad bills and your monthly accounting is defunct. This can cause a great deal of weakness in the accounting department and make the budget nearly impossible. The LTL carrier is equipped with technology that makes it easy to check the weight and density of the freight, and it is not possible to constantly double-check and change the classification at a higher rate. The shipping company’s forklifts have a built-in weight scale that is calibrated weekly to provide accurate measurements for each freight. 

Most carriers do not have these features, so there is a big difference in weight and classification. These differences will eventually result in reclassification of the advertising bill. Advertising bills that do not appear on the bill several months after you have already closed the book for the month in which it was shipped.

How it’s having the biggest blow to freight accounting

Freight Accounting Shippers will be hit the hardest if they do not properly use the density and weight of their freight when sorting them. This is because if weight and density are turned off, the amount charged by the carrier will always be the amount estimated on the date of delivery. This makes the auditing process much more complex and takes more time for employees to withdraw to update and correct previously closed monthly books. 

For example, a company manufactures and supplies industrial HVAC units. In 2016, they were being swept away by advertising bills that amounted to hundreds of thousands of their money. They’re using a two-tier FAK, and they were misclassifying the freight because they didn’t take the dimensional weight into account. When the carrier weighs, measures and gets the right information on the freight, the freight hits the high price FAK tier. After that, it will show up on the reclassification bill after 1-2 months, and the shipper will have big trouble with auditing and budgeting. 

How it affects your bottom line ultimately

So far, freight density has been wasting or looking at how much time is wasted on the shipping accountant, but it can affect your costs as well. It’s easy to forethink what you’re thinking – if you enter the dimensional weight correctly the first time you would pay the same amount as charging your first carrier. Depends on who you’re working with, but that might be true. 

In the example above, the company was working with a 3rd party logistics company (3PL) to manage freight, including freight and audits. They performed a lot of reclassifications and advertising bills because they didn’t sort the freight properly. This 3PL has a markup rate whenever the bill changes. Now, if this doesn’t happen every now and then, it won’t be a big deal, but as the number of modifications shots up, it will keep adding up. In today’s transportation industry, it is essential to require freight density in warehouses to make the supply chain run as smoothly as possible. Knowing the right categorization right from the start will help you with better accounting principles, budgeting, and forecasting.

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