FOB: Pricing Your Products to Position at the Wholesaler
Article 2: Decoding FOB Pricing: Exploring Types of Freight and Freight Options
When it comes to FOB (Freight on Board) pricing, understanding the various types of freight and freight options is crucial. Decoding the complexities of freight can help you make informed decisions and optimize your pricing strategy. In this article, we will delve into the different types of freight and explore the available options, providing valuable insights to enhance your understanding.
Types of Freight
a. Domestic: Over the Road (OTR) Freight: Over the road freight refers to transportation by trucks or trailers. This is a common method for domestic shipments and offers flexibility in terms of pick-up and delivery locations. Think of it like using Uber Black instead of Uber Pool. However, keep in mind that utilizing limited truck load (LTL) shipping, which is a partial truck, can get your products to their destination faster but at a higher cost compared to full truckload.
b. Rail Freight: Rail freight involves transporting goods by train. It is often used for long-distance transportation and can be a cost-effective option for bulk shipments. However, keep in mind that even when using rail freight, trucks are still involved in getting the products to and from the railways and warehouses. While it may lengthen domestic shipping timelines in the USA, it offers cost-saving benefits for larger shipments.
c. Direct Import (DI) Freight: Direct import freight applies to purchasing products from outside the country, typically in larger quantities such as full containers. This method is commonly used for international imports and requires careful coordination to ensure timely delivery and compliance with customs regulations. When utilizing direct import, there is typically consolidation of items and additional coordination involved. Standard direct import orders often take between two and four months to reach USA destinations.
Choosing the Right Freight Option
When selecting a freight option, it is important to consider several factors:
a. Cost: Evaluate the costs associated with each freight option, including transportation fees, handling charges, and any additional services required. This can include differences like…
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