What is FAK (Freight All Kinds)?

FAK stands for Freight All Kinds in the shipping industry. These are rates that are applicable to all types of goods and not restricted to any particular commodity.

But what is a FAK, and how does it affect your shipping rates? Let's find out.

What is a FAK?

All commodities are assigned a classification by the National Motor Freight Traffic Association (NMFTA). The values range from 50-500 and take into account the difficulty involved in moving the goods. Since it is more difficult to move the product at higher classifications, the price per hundredweight increases.

Finding the correct classification for freight can already be a difficult task for shippers shipping multiple types of products but became even more confusing for those shipping different classed commodities on the same skid. The solution to this issue was to create a FAK. The FAK groups multiple classes of freight into a single class.

Efforts were made to choose an average class for shipments in order to streamline the process and reduce the need for reclassification. The goal was to reach a price point that was fair to the shipper and the carrier.

What Factors Determine FAK?

FAKs are only one of a number of factors that determine the LTL freight rates. Shipping rates for LTL freight movement depend on the following factors:

• Density - The density of a shipment is determined by taking its total weight and dividing it by the total cubic feet taken up by the item. The density is used to calculate the class of the shipment.
• Weight - The more a shipment weighs, the less you pay per hundred pounds.
• Distance - A higher price per hundred-weight is standard for transportation over longer distances.
• Base Rates - LTL carriers establish their own base rates per 100 pounds (CWT). Transportation rates vary between carriers and are based on the type of freight.
• Minimums - LTL carriers are protecting themselves by boosting the absolute minimum charge (AMC) for smaller shipments. This is due to higher carrier costs for smaller shipments than for heavier ones.
• FAKs - Clients and freight carriers negotiate a FAK. It is essentially simply an agreement that the carrier will transport multiple products with different classes as a single freight rate. This can lead to substantial savings by clients as they can significantly reduce the amount paid on higher-class shipments by combining them in a FAK.

How Can a FAK Help Your Rates?

Shipping companies can benefit from negotiating a FAK with their carriers. Furthermore, it is often more advantageous to move certain types of freight when using a FAK pricing strategy. Here are some examples of situations where shippers will benefit by utilizing a FAK to determine their shipping costs.

When shipping freight in a low freight class

Low-class shipments often attract carriers who are willing to negotiate since their operations ratios are better for lower-classed shipments.

Shipping mixed freight pallets

A pallet with different freight classifications will be classified according to the items with the highest classification. If you ship goods in this manner, negotiating a FAK can lead to considerable savings. *See the example above.

Shipping density-based commodities

Density-based shippers such as industrial distributors that focus on narrow product categories can often achieve lower shipping rates by negotiating a FAK with their carrier.

Conversely, there are some shipping scenarios that do not lend themselves to FAK-based pricing strategies. Among them are:

Shipping high-value items

FAKs can cause issues when attempting to file claims for damaged goods. It is often the case that a carrier will only be responsible for the freight class of the shipment, not the actual class of the individual items. Your high-priced goods will only achieve the protection of the averaged FAK classification.

There is a majority of lower-class freight in your shipment

An FAK doesn’t really make sense from the carrier’s or the shipper’s perspective if the majority of the shipment is comprised of lower-class freight.

TMS Integration

A transportation management system (TMS) can eliminate the need for FAKs since you can dynamically rate shipments of multiple classes easily.

A Few Final Thoughts

As you can see, FAKs definitely have their place in the world of LTL shipping. In some instances, they can provide substantial benefits for shippers and carriers. Be sure that your particular shipment can take advantage of what a FAK has to offer.

If you’re unsure of how to negotiate a FAK or are looking for further assistance in gaining the best possible rates for all of your shipments, contact us today.