What is Freight Allowance? - Amware

What is Freight Allowance?

by | Nov 10, 2020 | Less Than Truckload, Transportation Management

Precisely what is “freight allowance” and how does it apply to freight shipping? It’s a question that arises fairly infrequently, but it is a good one to know. Read below to understand what, exactly, freight allowances are.

Freight Allowance 

Freight allowances provide a discount on freight charged to customers (typically) based on how much they purchase. Freight allowances can be a set dollar amount or a percentage. Freight allowances are most often used as buying incentives. In some cases, shippers will offer allowances on freight in much the same way retailers do with price matching. If, say, a competitor is closer to the buyer and can ship a similar product cheaper, the original shipper might offer an allowance to ship at the same rate as the competitor.

For example, you can create a freight allowance with a “Type” of “Dollars” that has two brackets:

 

Bracket Amount Allowance Allowance %
1 $100 0 25%
2 $500 0 50%
3 $1,000 0 100%

 

Assuming the above table:

  • If the customer orders $75, they will pay the full freight charge.
  • If the customer orders $200, they will get a 25% discount off of their freight charge.
  • If the customer orders $750, they will get a 50% discount off of their freight charge.
  • If the customer orders $1,000 or more, they will not be charged for freight at all.
Source:https://acclamare.fogbugz.com/default.asp?W377

Other Key Shipping Terms include:

 

Destination Prepaid (Code: DSTNTN-PPD or DE-PPD)

The supplier ships the goods, at which point the buyer takes delivery; once the goods are received, the supplier covers the shipping costs/freight charges.

Freight Collect

The receiver of the shipment pays the freight charges.

Origin (Code: ORG)

This indicates the shipment or freight’s starting point.

Prepaid and Add (PPA)

The shipper selects the carrier and pays the freight charges upfront, then adds the charges – in full or partial – to the customer’s invoice.

Prepaid Partial Truckload (PP-PRTL)

A customer pays shipping charges in advance for a load that, at under 10,000 pounds, is less than full truckload (TL) yet larger than what qualifies for less than truckload (LTL).

Third-Party Billing (TPB)

A third party, rather than the shipper or receiver, pays the freight charges.

 

A 3PL can simplify your freight shipping by offering a wide variety of freight shipping solutions. Contact us today and discover how Amware’s newly updated, proprietary cloud-based transportation management system (TMS) Amrate 7.0 can simplify your freight process, helping save your company 30% or more annually! Click below for a free trial.

 

About Dan Ramella

About Dan Ramella

Dan Ramella is a member of Amware's executive team, helping drive growth and manage key relationships. With over 20-years experience in the transportation and logistics industry, Dan has helped Amware become one of Northeast Ohio's premier 3PLs

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