How LTL Freight Pricing Works: What Determines Your Rate

LTL pricing confuses everyone at first. Unlike parcel shipping where you plug in a weight and ZIP code and get a number, LTL rates are built from a stack of variables that interact in non-obvious ways.

Understanding how these variables work won’t just satisfy your curiosity. It’ll help you quote more accurately, avoid surprise charges, and spot opportunities to pay less.

The building blocks of an LTL rate

Every LTL quote starts with a base rate calculation, then layers on additional charges. Here’s what goes into it.

Freight class

The National Motor Freight Classification (NMFC) system assigns every commodity a class from 50 to 500. This is the single biggest factor in your per-pound rate.

Class 50 items (dense, easy to handle, durable) ship at the lowest rates. Think steel parts, sand, or cement. Class 500 items (light, bulky, fragile) ship at the highest rates. Think ping pong balls or gold dust.

Most manufactured goods fall between Class 70 and Class 150. The difference in per-pound cost between Class 70 and Class 150 can be 3-4x, so getting your classification right matters enormously.

Weight

Heavier shipments cost more in total but less per pound. Carriers use weight breaks, which are thresholds where the per-hundred-weight (CWT) rate drops. Common weight breaks are at 500, 1000, 2000, 5000, and 10,000 pounds.

This creates an interesting dynamic: sometimes shipping slightly more weight actually costs less because you cross into a lower rate tier. More on this in the deficit weight section below.

Dimensions and density

Two shipments can weigh the same but cost very different amounts if their dimensions differ. A 500-pound shipment packed tightly on one pallet takes less truck space than 500 pounds spread across three pallets.

Many carriers now use density-based pricing in addition to or instead of class-based pricing. They calculate your shipment’s density (pounds per cubic foot) and price accordingly. This means accurate dimensions on your BOL are as important as accurate weight.

Distance and lane

Pricing varies by origin-destination pair. A 500-mile shipment on a busy freight lane (say, Chicago to Atlanta) might cost less than a 300-mile shipment to a rural area with limited carrier service.

Carriers publish rate tables by origin and destination ZIP code ranges. These tables reflect their network costs: terminal density, driver availability, and backhaul opportunities on each lane.

Fuel surcharge

Nearly every LTL carrier applies a fuel surcharge as a percentage of the linehaul (base) rate. This percentage changes monthly based on the DOE (Department of Energy) national average diesel price.

Fuel surcharges typically run 25-35% of the linehaul rate, which makes them a significant portion of your total cost. Each carrier has their own surcharge table, so two carriers with identical base rates can have different total costs.

Minimum charge

Every carrier has a minimum charge per shipment, regardless of how small or light it is. Minimums typically range from $75 to $250. If your calculated rate comes in below the minimum, you pay the minimum instead. This is why very small LTL shipments (under 200 pounds) are sometimes better off going parcel.

A worked example

Let’s walk through an actual rate calculation for a common shipment:

Shipment details:

• 2 pallets of automotive parts, 1,200 lbs total
• 48” x 40” x 48” per pallet
• Class 85
• Pickup: Toronto, ON
• Delivery: Chicago, IL
• No accessorials needed

Step 1: Base rate calculation. The carrier’s tariff shows a rate of $18.50 per CWT (per hundred pounds) for Class 85 freight at the 1,000-pound weight break on this lane.

Base rate: 1,200 lbs / 100 = 12 CWT x $18.50 = $222.00

Step 2: Fuel surcharge. Current fuel surcharge is 29.5% of linehaul.

Fuel: $222.00 x 0.295 = $65.49

Step 3: Discount. The shipper has a negotiated 65% discount off tariff.

Discount: ($222.00 + $65.49) x 0.65 = -$186.87

Step 4: Total before accessorials.

$222.00 + $65.49 - $186.87 = $100.62

Wait, that seems low. And it is. This is the discounted tariff rate, and it illustrates why published tariff rates are essentially meaningless in LTL. Nobody pays tariff. Discounts of 50-80% are standard because carriers set tariff rates artificially high and then discount from there.

The actual market rate for this shipment from a competitive carrier would be roughly $350-$550, depending on the carrier and time of year. Tariff-minus-discount math is just how the industry arrives at that number.

Deficit weight: when heavier is cheaper

This is one of the quirkier aspects of LTL pricing. Weight breaks can create situations where your shipment technically costs less at a higher weight.

Say your shipment weighs 900 pounds, Class 100:

• 500 lb weight break rate: $22.00/CWT = 9 x $22.00 = $198.00
• 1,000 lb weight break rate: $17.50/CWT = 10 x $17.50 = $175.00

Even though your shipment only weighs 900 pounds, the carrier will charge you at 1,000 pounds because the math produces a lower total. This is called “deficit weight” billing. It’s actually in your favor since the carrier picks the calculation that results in the lowest charge.

Understanding weight breaks helps you plan. If you’re shipping 950 pounds and adding another 50 pounds of product would push you to 1,000 and trigger a lower rate, it might make sense to consolidate.

FAK agreements: simplifying classification

If you ship a variety of products at different freight classes, a Freight All Kinds (FAK) agreement can save money and headaches. Under a FAK, all your freight ships at a single agreed-upon class regardless of the actual commodity.

For example, if you ship a mix of Class 70, 85, and 100 freight, a FAK at Class 77.5 means everything ships at that rate. You save on your higher-class shipments and pay a bit more on the lower-class ones, but the administrative simplicity and overall savings usually make it worthwhile.

FAK agreements typically require consistent shipping volume. Carriers offer them to retain and attract business.

Why prices vary between carriers

You’d think two carriers quoting the same lane would come up with similar numbers. They often don’t. Here’s why:

Network efficiency. A carrier with terminals in both the origin and destination cities has lower costs than one that needs to interline (partner with another carrier) to complete the delivery.

Lane balance. If a carrier has lots of freight going northbound but less coming south, they’ll price southbound lanes aggressively to fill empty trucks on the return.

Capacity. A carrier running at 95% capacity will price higher than one at 75%. This changes weekly.

Discount structure. Two carriers can have different tariff rates and different discounts that produce different net prices.

Surcharge formulas. Fuel surcharges, residential fees, and other accessorials vary significantly between carriers.

This is exactly why comparing multiple carriers for every shipment makes such a big difference. The cheapest carrier changes depending on the lane, weight, class, and timing.

How FreightSimple helps

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