Whether you are an importer or exporter, or a freight forwarder, you might have come across terms like actual weight, volumetric weight or dimensional weight and chargeable weight among a host of others, when issued quotes or invoices. That informs you should understand how to calculate chargeable weight appropriately.
First-time exporters and importers are enjoined to ensure proper understanding of how to calculate chargeable weight.
We’ve have received numerous calls from about being oblivion of how their freight charges were determined.
Some have expressed little or no attention to details on the mathematics computed to arrive at the chargeable weight. But while some do, they, however, feel ripped-off of their hard earnings, notwithstanding. Quite a number, out of improper information, see the charged rate as uncalled for as they expected a ‘reasonable’ rate.
As a business owner, knowing how to calculate chargeable weight is as good as your overall intent to keep your business yielding more gains. This is important as any form of change or adjustment may affect freight bills, anytime and anywhere.
So, do you ever wonder how these charges are calculated or determined?
In this post, we would be shedding light on what chargeable weight is, and most especially how you could calculate the chargeable weight of your shipments.
What is gross weight?
Gross weight is also known as the Actual weight. It is the total weight of the cargo and includes both the weight of the shipment and the pallet put together.
The actual weight refers to the exact weight of the product plus the packaging of the product, including the pallet of the product. That is the combined weight of the packaging materials, including the contents inside.
To calculate the gross weight of a package of an air freight shipment, we have package weight + pallet weight = Gross weight.
For example, if a package weighs 200lbs, and the pallet weight is 100 lbs, the Gross weight stands at 300 lbs. We have the gross weight of 136kgs, when converted to kgs.
What is Volumetric Weight?
The volumetric weight, otherwise known as dimensional weight refers to the size of the package and is calculated as the length of package x height of package x width of the package. That is; (L x H x W).
Dimensional weight can help save a lot of money as consolidation and repackaging can be done which would cut shipping cost.
Calculating the Volumetric Weight
The volumetric weight of air freight is calculated as L x H x W x 167. That is Volume x the air cubic conversion factor. Volume is measured in cubic metres (cbm), where 1cmb = 61,024 inches.
Differences between Gross Weight and Volumetric Weight (dimensional)
Volumetric weight deals with a focus on the space occupied by the shipment while gross weight focuses on the lightness or heaviness of the package.
What is Chargeable Weight?
Chargeable weight is the amount of weight charged on your invoice. It can either be the gross weight (actual) or the volumetric weight (dimensional) of your shipment, whichever one is greater. The formula is as determined by the IATA policy.
The estimated weight of a package or consignment is calculated based on its dimensions, i.e. length, width and height of the package (L x W x H).
Have you ever heard that no matter the weight, the size does matter!?
So, when you have a package of particular weight to ship, as important as the weight is, the size matters much more and must be put into serious consideration.
It is important to know that in some cases, whether the Volume weight is higher than Gross weight or Gross Weight is higher than Volume Weight, the greater is taken as chargeable weight.
This is according to IATA rule of whichever is lower on rate and whichever is higher on Weight. In order to establish the chargeable weight, it is calculated as 1 metric ton = 6 cubic meters.
Why we calculate the chargeable weight of air freight shipments?
So far we understand there are two different measurements in determining the chargeable weight of your shipment. But, why do we calculate this?
Imagine a shipment of cotton and steel. It is quite obvious that the clothes shipment will occupy more space when compared to a shipment of steel. The steel shipment will be weighing more. Should both be charged using volume or should they be charged using weight?
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Illustration for Clarity Purpose
For clarity, in order to define chargeable weight and at what condition a shipment is charged for, we are going to use an illustration.
This is a small box that weighs 10kg
…and this is a big box weighing 10kg as well
Typically, the cost of shipping the big box will be charged on the size. While the cost of shipping the smaller box will be charged on the weight.
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This is so because every vehicle, aircraft, and container have a weight capacity and size capacity.
So, the big box might occupy the capacity of the aircraft or container or maybe the van (as the case may be), but will barely touch the weight capacity, unlike the small box. Since typically, large items with a lightweight take up more space than the small, yet heavy items.
On the other hand, the smaller box will reach the weight capacity of the transport mode, but may not occupy the entire space. That’s why the Airlines charge according to Chargeable Weight.
Carriers have therefore calculated weight to volume conversion to take into consideration. But how is this calculated? Isn’t it rather complicated? Especially that the charges vary on the different methods of transport and the carrier used.
Volumetric Weight Measurement of Air, Sea and Road Freight
1cbm = 167kgs for air freight, sea freight it is 1cbm = 1000kgs and road freight 1cbm = 333kgs
How we Calculate the Chargeable weight (using a typical Quote).
We usually work out the chargeable weight by taking whichever is the greater of the gross weight and the volumetric weight. The chargeable weight is used a lot in forwarders’ quotes and invoices.
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It is important to remember that transport prices based on weight are almost always calculated using chargeable weight. Only a few air freight surcharges are still based on gross weight but these are becoming fewer and far between.
We must not forget that as the formula for calculating volumetric weight changes with the mode of transport, when our consignment uses more than one mode of transport, different chargeable weights will have to be calculated to work out the overall cost.
Example: chargeable weight calculation in multi-modal transport
A typical quote might include, among other things, the following items:
Sea freight: 45 USD W/M
BAF: 15 USD W/M
Collection: 0.05 EUR / Kg (*)
Handling: 12 EUR t/m3
Clearance: 65 EUR.
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