Freight Cost Definition: Everything You Need to Know
One freight cost definition is the amount you pay to transport goods from one place to another, whether by land, sea, or air.3 min read
One freight cost definition is the amount you pay to transport goods from one place to another, whether by land, sea, or air. Many United States businesses depend on the ability to buy and sell goods from companies in other countries. It is important, therefore, that businesses learn the different ways freight costs can be applied. They also need to know how freight is documented to minimize confusion.
There are a number of expense considerations that go into figuring the cost of shipping from the seller's location to the buyer's outlet. These include:
- Transportation to the departure location
- Loading onto the vessel
- Marine freight transport
- Transportation to the destination location
With the increased demand for freight shipping, more companies set their shipping prices by freight density rather than by weight. They do this because charging by weight limits the amount they can ship and is therefore more expensive, both in terms of money and space. The greater the freight density, the less space it occupies on the carrying vessel. This decreases the transportation costs for each pound shipped.
There are federal and state laws regulating freight costs. These are designed to protect consumers from being overcharged.
There are two important documents you receive from shippers or logistic companies when you ship goods: the freight bill and the bill of lading.
The freight bill is your invoice. You can use this to pay the bill and keep a record of it.
The bill of lading declares the type and quantity of goods you are shipping. It represents the agreement you have with the shipper to transport these items. The bill of lading shows the weight, value, and description of each item, along with shipping and delivery dates. If necessary, you can use bills of lading in a court of law.