Posted in Operations and Supply Chain Terms, Total Reads: 252
Definition: Freight Charge
Freight charge refers to the freight rate or the price that is charged by a carrier for delivering cargo from the source location to the destination point. It is the charge that is paid by a person who wants the goods transported from one location to another.
Freight charge depends on the mode of transportation used for transporting the cargo. The mode of transportation can be truck, train, ship or airplane. The freight charge also depends on the weight of the cargo that is to be transported.
The distance between the source and the destination is another factor on which the freight charge depends. Many shipping companies and airline services use the dimensional weight to calculate the freight charges. In case of dimensional weight, for calculating the freight charges, the weight of the cargo as well as the volume of the cargo is taken into consideration. The volume is taken into consideration as the cargo may occupy a certain space in the transportation mode for being carried from one place to another.
For example, if the freight charge is $ 1/ton-kilometre, it means that for carrying 100 tons of a cargo over a distance of 1000 kilometres would cost $100,000.