How Are Freight Rates Determined?

March 10th 2025 | by Harper Johnston | 3 Min Read

The Key Factors That Influence Freight Rates

Freight rates are never one-size-fits-all. They depend on several factors that can change based on location, demand, and external influences.

1. Mode of Transport

How your goods travel—by truck, ship, rail, or air—affects the cost. Air freight is typically the most expensive but fastest, while ocean freight is cheaper but slower. Rail and truck shipping fall somewhere in between, depending on distance and fuel costs.

2. Shipment Weight, Size, and Volume

The bigger and heavier your shipment, the more it costs. Freight carriers charge based on weight (for heavier items) or volume (for lighter, bulkier items). Less-Than-Truckload (LTL) shipments often use freight class ratings to determine cost, while Full Truckload (FTL) rates are based on mileage and truck capacity.

3. Distance and Route

The further your goods need to travel, the higher the cost. But it’s not just distance—some routes are more expensive due to tolls, port fees, or geopolitical issues. For example, recent disruptions in the Red Sea have forced ships to take longer routes, increasing costs.

4. Freight Classification

Freight is classified based on density, handling requirements, liability, and storage needs. More fragile or hazardous goods require extra care and cost more to transport.

5. Fuel Prices and Surcharges

Fuel is one of the biggest cost drivers in shipping. As fuel prices fluctuate, so do freight rates. Many carriers apply fuel surcharges to cover these unpredictable costs.

6. Supply and Demand

Like any market, shipping costs increase when demand is high and capacity is low. Peak seasons, such as holiday shopping months or post-pandemic shipping surges, can send prices soaring.

7. Additional Services & Special Handling

Extra services—like expedited shipping, liftgate delivery, temperature-controlled storage, or customs clearance—add to the overall cost. The more specialized your shipping needs, the higher your rate.

8. Economic and Geopolitical Factors

Trade agreements, tariffs, port congestion, and global conflicts can all influence freight rates. For instance, new tariffs on imports from Mexico and Canada could impact North American shipping costs.

How to Get the Best Freight Rate

Knowing what affects freight rates is one thing, but how do you ensure you’re getting the best deal? Here are some simple steps:

Optimize Shipment Size: Consolidating shipments can reduce costs.
Plan Ahead: Avoid last-minute shipments, as urgent deliveries cost more.
Use Technology: Freight rate management tools like AccuRate automate pricing updates and help you find the best rates instantly.

FAQs About AccuRate

What is AccuRate?

AccuRate is a freight rate management tool that automates the process of calculating, updating, and applying shipping rates in real-time. It eliminates manual data entry, reduces errors, and ensures businesses always work with the latest shipping costs.

How does AccuRate help businesses?

By centralizing freight rate management, AccuRate saves time and improves accuracy. Businesses can integrate it with existing systems to streamline operations and prevent overpaying for shipping.

Can AccuRate handle different shipping modes?

Yes! Whether you’re shipping via truck, rail, air, or ocean, AccuRate supports all modes and adjusts rates based on your needs.

Is AccuRate easy to integrate?

Absolutely. It connects with TMS, ERP, and quoting systems, ensuring seamless freight rate updates across all platforms.

Final Thoughts

Freight rates are constantly changing, but understanding what drives these costs can help you make smarter shipping decisions. Whether it’s fuel prices, distance, or additional services, each factor plays a role in determining what you pay.

Tools like AccuRate take the guesswork out of freight pricing, giving businesses a competitive edge.

Want to simplify your freight rate management? Start using AccuRate today and take control of your shipping costs!