Redwood Logistics: Understanding FAK (Freight All Kinds)

Managing freight classifications across multiple product types can be a complex and costly challenge for shippers. When you're shipping different commodities with varying classifications, how do you streamline pricing and avoid overpaying? The answer lies in FAK—Freight All Kinds—a rate structure applicable to all types of goods rather than any particular commodity.

But what is a FAK, and how does it affect your shipping rates? In this blog post, we'll explain what FAK means, the factors that determine FAK rates, and how to know when FAK pricing can benefit your shipments.

What is a FAK?

When you ship commodities, each item is assigned a classification by the National Motor Freight Traffic Association(NMFTA). These values range from 50-500 and reflect the difficulty involved in moving your goods. Since it's more difficult to move products at higher classifications, you'll pay more per hundredweight.

Finding the correct classification for your freight can already be difficult when you're shipping multiple types of products—and it becomes even more confusing when you're shipping different classed commodities on the same skid. The solution to this issue is the FAK. The FAK groups multiple classes of freight into a single class.

By choosing an average class for your shipments, you can streamline the process and reduce reclassification risk. The goal is to reach a price point that's fair to both you and the carrier.

What Factors Determine FAK?

FAKs are only one of several factors that determine your LTL freight rates. Your shipping rates for LTL freight movement depend on the following factors:

• Density - The density of a shipment is determined by taking its total weight and dividing it by the total cubic feet taken up by the item. The density is used to calculate the class of the shipment.

• Weight - The more a shipment weighs, the less you pay per hundred pounds.

• Distance - A higher price per hundredweight is standard for transportation over longer distances.

• Base Rates - LTL carriers establish their own base rates per 100 pounds (CWT). Transportation rates vary between carriers and are based on the type of freight.

• Minimums - LTL carriers are protecting themselves by boosting the absolute minimum charge (AMC) for smaller shipments. This is due to higher carrier costs for smaller shipments than for heavier ones.

• FAKs - Clients and freight carriers negotiate a FAK. It is essentially simply an agreement that the carrier will transport multiple products with different classes as a single freight rate. This can lead to substantial savings by clients as they can significantly reduce the amount paid on higher-class shipments by combining them in a FAK.

How Can a FAK Help Your Rates?

You can benefit from negotiating a FAK with your carriers. Furthermore, you'll often find it more advantageous to move certain types of freight when using a FAK pricing strategy. Here are some examples of situations where you'll benefit by utilizing a FAK to determine your shipping costs.

When shipping freight in a low freight class

When you ship low-class freight, you'll often attract carriers who are willing to negotiate since their operations ratios are better for lower-classed shipments.

Shipping mixed freight pallets

When you have a pallet with different freight classifications, it will be classified according to the items with the highest classification. If you ship goods in this manner, negotiating a FAK can lead to considerable savings. \See the example above.*

Shipping density-based commodities

Density-based shippers such as industrial distributors that focus on narrow product categories can often achieve lower shipping rates by negotiating a FAK with their carrier.

When FAK Pricing Doesn't Work

Shipping high-value items

FAKs can cause issues when you attempt to file claims for damaged goods. Often, your carrier will only be responsible for the freight class of the shipment, not the actual class of the individual items. Your high-priced goods will only achieve the protection of the averaged FAK classification.

There is a majority of lower-class freight in your shipment

A FAK doesn't really make sense from the carrier's or your perspective if the majority of your shipment is comprised of lower-class freight.

When you use a TMS

A transportation management system (TMS) can eliminate the need for FAKs since you can dynamically rate shipments of multiple classes easily.

A Few Final Thoughts

As you can see, FAKs definitely have their place in the world of LTL shipping. In some instances, they can provide substantial benefits for you and your carriers. Be sure that your particular shipment can take advantage of what a FAK has to offer.

If you're unsure of how to negotiate a FAK or are looking for further assistance in gaining the best possible rates for all of your shipments, contact us today.