Deficit Rating

Definition

Think of deficit rating as a glitch or area of hidden cost-saving opportunity in LTL rating. At its heart, LTL rating/shipping is a hundred-weight freight rate X the weight of your shipment. A hundred-weight rate is typically tiered. The higher the weight of the shipment the lower the hundred weight rate. The numbers below are for example only.

Weight Range                              Charge per                              Example

Hundredweight

Tier 1   0-499lbs,                       = $100.00               (250 pounds x $100.00 = $250.00)

Tier 2   500-999lbs                    = $  90.00              (650 pounds x $90.00 = $585.00)

Tier 3   1,000-1,999lbs              = $  80.00               (1,500 pounds x $80.00 = $1,200.00)

Tier 4   2,000-4,999lbs              = $  75.00               (2,500 pounds x $75.00 = $1,875.00)

Tier 5   5,000-9,999lbs              = $  70.00              (7,500 pounds x $70.00 = $5,250.00)

Tier 6   10,000-20,000lbs            = $  65.00               (15,000 pounds x $65.00 = $9,750.00)

Within these weight tiers there are areas where it may be less expensive to use the next weight tier up.

Example
  • If you were to ship a 490 pound shipment you would typically use the Tier 1 rate:
  • Tier 1  Rate 0 – 499 = $100.00   490 pounds x  $100.00 = $490.00
  • By using the next tier, Tier 2, your rate changes to $90.00 per hundredweight.
  • 490 pounds x $90.00 = $441.00 saving you $49.00
  • If you were to ship a 4,700 pound shipment you would typically use the Tier 4 rate:
  • Tier 4  Rate 2,000 – 4,999 = $75.00 = $3,525.00

Example #2

  • By using the next tier, Tier 5, your rate changes to $70.00 per hundredweight.
  • Tier 5  Rate 2,000 – 4,999 = $70.00 = $3,290.00 saving you $235.00

Check with your multi-carrier shipping system provider to determine if your system can calculate these rates and discounts. For more information, contact us.

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