Freight Cost per Unit

This is the last step, and it is the one that turns a shipping decision into a number the rest of the business recognises. A rate, applied to a chargeable weight, divided over the units on the bill: $c_u = R W_c / n$.

The rate is quoted per hundredweight. A hundredweight is 100 lb, written cwt, and it is the unit LTL freight has been priced in for a very long time — which is why the rate box on this page offers it. A rate of $42.50 per cwt on a 1,200 lb shipment is 12 hundredweight at $42.50, or $510.00 for the shipment. Spread over 24 cartons that is $21.25 each. The arithmetic is trivial; getting the inputs right is not.

Three things this formula deliberately leaves out, each of which moves the real invoice. There is almost always a minimum charge. Below a few hundred pounds the rate per hundredweight stops mattering and you pay the floor, which is why splitting one shipment into two can cost more than shipping it whole, and why very small LTL shipments are often better off in a parcel network. There are accessorials — liftgate, residential delivery, inside delivery, redelivery, appointment, limited access — and there is a fuel surcharge, which is a percentage that moves weekly and is applied to the linehaul rather than to the total. A quote without accessorials is not a quote. And the rate itself depends on the class, which depends on the density, so the density work on the earlier pages feeds directly into the $R$ in this one.

That last dependency is worth pausing on, because it is where the whole shard comes together. A packaging change that raises density can lower the class and lower the chargeable weight at the same time — two independent improvements from one change. That is unusual, and it is why density work repays effort that would be wasted almost anywhere else in a freight budget.

Run backwards, the formula is a negotiating tool. Start from the freight cost per unit the product can carry, which is a margin decision rather than a logistics one, and solve for the rate per hundredweight you need. That is a far better opening position than asking for a percentage off a tariff, because it is a number you can defend and a number the carrier can price against. Solved for the count, it answers the consolidation question — how many units have to travel together to bring the freight per unit down to a target — and that is where order minimums come from. It has a limit, though: past a certain weight an LTL shipment stops being cheaper per pound than a truckload, and the right answer becomes a full trailer rather than more units on a smaller bill.