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A freight rate (historically and in ship chartering simply freight) is a price at which a certain cargo is delivered from one point to another. The price depends on the form of the cargo, the mode of transport (truck, ship, train, aircraft), the weight of the cargo, and the distance to the delivery destination. Many shipping services, especially air carriers, use dimensional weight for calculating the price, which takes into account both weight and volume of the cargo.
For example, bulk coal long-distance rates in America are approximately 1 cent/ton-mile. So a 100 car train, each carrying 100 tons, over a distance of 1000 miles, would cost $100,000. On the other hand, Intermodal container shipping rates depend heavily on the route taken over the weight of the cargo, just as long as the container weight does not exceed the maximum lading capacity. Prices can vary between $300-$10,000 per Twenty foot equivalent unit (TEU) depending on the supply and demand of a given route.
In ship chartering, freight is the price which a charterer pays a shipowner for the use of a ship in a voyage charter.
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.
