Understanding FAK rates in trucking can be beneficial when moving cargo domestically using LTL (Less Than Truckload) shipping. The NMFTA (National Motor Freight Traffic Association) introduced this system decades ago, and truckers still use it. Freight Of All Kinds, or FAK, is a pricing model given to commodities moved by LTL trucking. This model is a tariff classification system grouping 18 distinct freight classes ranging from 50 to 500. The higher the class, the more complex the freight is to ship and the greater the cost. NMFTA determines FAK rates by transportation distance, density, weight, difficulty of moving, etc.
The NMFTA initially created FAK rates as a method of simplification for both the trucking carrier and the shipper. Carriers had the advantage of not looking at the shipment to see if the shipper grouped into the correct class. Shippers benefited from easing the invoicing process and not having to itemize every commodity in the bill of lading. The FAK system also streamlines the shipping process for freight forwarders by classifying several freight classes into one group. It is essential to know that specific freight cannot have FAK rates. Some examples are high-risk freight like military cargo, certain hazardous materials, relief goods, or cargo transported for charity, etc.
When Are FAK Rates In Trucking Beneficial
One of the main ways FAK rates may benefit a shipper is if mixed freight pallets are shipped. The average freight classification will determine the whole pallet when mixed freight pallets with several classifications are shipped. This means savings can occur since carriers move higher and lower classes together at a cheaper cost. Shippers with lower-class freight can benefit from FAK rates as well. Due to their decent operation ratios, carriers tend to be flexible regarding FAK ratios for lower-class shipments.
Transporting commodities that are density-based can also benefit from FAK ratios. Density-based commodities are shipments of two or more pallets of the same commodity that may be classified differently. For example, car parts are the same product but can be classified differently due to weight and density. Shippers moving density-based goods can negotiate for reasonable FAK rates and expedite their shipping process.
When May FAK Not Be Beneficial
While there are several instances where using a FAK is an ideal choice, FAK can also have a negative effect. Shipping expensive and high-value freight can lead to monetary loss using an FAK. If the high-value commodity gets damaged during the transportation journey, the carrier is only liable for the class being paid. Since FAK rates are an average of different classifications, claims for damaged goods will be less than the commodity value. FAK may also not be suitable if most freight shipped is in the lower classes. If a small amount of the shipment is of a higher classification, the FAK rate will be affected. The rate will rise due to the average, and truckers will charge lower-class goods at a higher class.
While different trucking carriers allow for FAK negotiations, many truckers may not. Contacting a freight broker to learn more or if you have any questions about shipping freight is helpful. If you need to transport an LTL or FTL shipment domestically, contact A1 Freight Solutions at 305-821-8995. We offer other trucking solutions such as drayage, heavy hauling, temperature-controlled, and more for your shipping needs.