Table of contents
Do you have benefit calculation included in your freight agreements? If not, we recommend that you get it.
What is benefit calculation?
Benefit calculation means that it can be Cheaper for you to ship goods that fill or weigh more than they actually do.
This happens because carriers often have prices in rate intervals of, for example, kilograms or cubic metres that are not optimally composed.
The freight agreement can look like the one below.
| Kg | Price per kg |
|---|---|
| 0 - 1 | 20 kr. |
| 1,1 - 2 | 40 kr. |
| 2,1 - 5 | 55 kr. |
How benefit calculation works
Your shipping agreement is divided into rate intervals. For example, in the table above, a rate range would be the price of shipments between 0-1kg.
Instead of kg, it can also be in pallets or cubic metres - depending on your freight agreement. But what these have in common is that Each interval has an associated transport price.
In general, the transport price becomes lower as the amount of goods to be transported increases. For example, the more kilos you ship, the cheaper the price per kilo.
However, rate intervals are not always optimally structured. That's why it may be cheaper for you to ship in a higher interval than your goods actually fit into.
And this is where benefit calculation can save you money.
For with benefit calculation in your contract, the carrier will automatically charge you in the range where you get the lowest price.
Example of an example
Your shipping agreement can have intervals that look like the ones below.
The example is in cubic metres, but the same thinking applies to kg or pallets, for example.
| Cubic metres | Price per cubic metre |
|---|---|
| 0-1 | 450 kr. |
| 1,1 - 2 | 400 kr. |
| 2,1 - 3 | 300 kr. |
In the example above, you can see how the price per cubic metre decreases as the range increases.
But there is here Two relevant instalments where benefit calculation can save you money.
- From 1.1 - 2 cubic metres (cbm) with a price of DKK 400 per cbm.
- From 2.1 - 3 cubic metres (cbm) with a price of 300 DKK per cbm.
If you send 1.9 cubic metres, it will cost you 760 kr.
Calculation: 400 kr. x 1.9kg = 760 kr.
However, if you send 2.1 cubic metres, it will only cost DKK 630.
Calculation: 300 kr. x 2.1kg = 630 kr.
In this case, it will therefore be cheaper for you to send a larger parcel and choose the next interval.
What does it mean to you?
Instead of manually increasing the volume or weight of the package - for example by using a larger cardboard box or adding unnecessary filling - this is where benefit calculation comes in.
With benefit calculation, your carrier will automatically charge you the lowest price.
In the example above, this would mean that the carrier will automatically charge you for the 630 kr, even if you only ship 1.9 cbm.
How to get benefit calculation
Benefit calculation is usually included in sea and air freight agreements, but for road transport you often have to ask for it yourself.
Therefore, we recommend that you check if your carrier offers benefit calculation so that it can be included in your existing freight agreement.
It is A low-hanging fruit and a simple and efficient way to reduce freight costs.
On average, we see it gives a saving of 4.4%.
So that's a significant amount of money you can save by having benefit calculation included in your agreements.
ATTENTION: When comparing freight agreements, be sure to ask the different carriers if they offer benefit calculations. This can be an important parameter in your considerations.
Please reach out if you have any questions - we'd love to help you.
FAQ
What is benefit calculation?
Pre-pricing is a method where the carrier automatically charges your freight in the price range that gives you the lowest price. This means you can save money by being charged at a higher volume or weight range if it's cheaper than what your shipment actually fits into.
Why save money with benefit calculation?
You save money because transport rates are often divided into rate bands, where the price per unit decreases the larger the shipment. Benefit calculation ensures that you are automatically charged in the most favourable range, which can reduce your shipping costs.
How much can you save with benefit calculation?
On average, we see that businesses can save around 4.4 % on their shipping costs by using benefit calculation. However, the savings depend on your specific shipping agreement and shipping patterns.
How do I know if my shipping agreement includes benefit calculation?
Benefit calculation is often included in agreements for sea and air freight, but not always for road transport. You should therefore contact your carrier and ask if it's part of your agreement - and if not, if it can be added.
Does benefit calculation apply to all types of freight?
Benefit calculation can be applied to various shipping methods, including road, sea and air freight. However, whether it is included depends on your carrier and agreement. It is most common in sea and air freight, while in road transport it often needs to be negotiated separately.
How do I get benefit calculation included in my agreement?
To have benefit calculation included in your freight agreement, contact your carrier and ask for it. It's a simple way to reduce your shipping costs and many carriers offer it as part of their service.