Using LTL Freight With An FAK Agreement: What You Need to Know

If your business ships goods, you’re always looking for ways to keep shipping costs low. If you use Less Than Truckload (LTL) freight for shipping, your products are rated by class, and the cost to ship them is determined by that rating. The higher the class, the more you pay in shipping.

For that reason, many businesses have a Freight All Kinds (FAK) agreement with their carrier. An FAK agreement allows you to ship many different items at the same weight class. For many businesses, this agreement is advantageous and gives the best possible pricing for freight. However, there are instances where an FAK can actually end up costing you more money than paying by class for shipment.

How can you know what is right for you? Here are some questions to ask:

Are you shipping a wide variety of products?

If you ship a low variety of freight that spans several classes, an FAK will probably not be beneficial for you. Most FAKs will end up over-valuing your shipment, causing you to pay more for shipping than if you paid by class.

Are you shipping high value items?

In many cases, if an FAK is in place, carriers are only liable for the amount of freight you are paying for, not the value of the freight you are shipping. If you’re shipping expensive items, it might not be worth it to have a lower level of insurance should damages occur.

Are the majority of your shipments in a lower freight class?

If you ship all kinds of goods, but the majority are in a lower shipping class, and FAK may not work out to your advantage. Most carriers won’t be willing to give you a lower rate on your high-class items, which means you’ll be paying more for the low-class items you ship.

Have you implemented a Transportation Management System (TMS)?

If you are using a TMS, and FAK agreement is probably not necessary for your business. A TMS can dynamically rate your shipments, assuring the best pricing and eliminating the need for an FAK.

Is your head swimming with all of these shipment details? Let Silverback help. We make it our business to know how to get you the best pricing on all services, including shipping, without a drop in quality. Contact us today to find out how we can serve your business and help you realize more profits.

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