Calculation of estimated freight costs

For loads and shipments, Freight calculates the estimated freight costs of loads and shipments during load building. For freight order clusters, Freight calculates the estimated freight costs during freight order clustering.

The Freight calculation engine is also used to calculate estimated freight costs for individual order lines of these types:

• Sales order
• Sales quotation
• Freight order

For information on freight cost revenue calculation for order lines or quotation lines, refer to Freight cost revenue calculation at order line entry. The current topic deals with estimated freight cost calculation during load building and freight order clustering.

The calculation engine is automatically activated when the load building process or the freight order clustering process is carried out.

The calculation engine calculates the freight costs of the loads and shipments while they are created by the load building engine, or calculates the freight costs of the freight order clusters during the clustering process.

The freight cost calculation process

1. For loads and shipments, the calculation engine checks if rating must be based on shipments or loads. If rating must be based on shipments, the calculated costs of the shipments of a load are added to calculate the costs of a load.

   If rating must be based on loads, the costs of the load are divided by the shipments to arrive at the costs per shipment.

   For clusters, rating is based on clusters (the calculation engine sees that the rate basis is not shipment or load, and thus bases the rating on clusters).

   The estimated costs of the freight order cluster are divided over the individual freight order lines based on the setting of the Cost Allocation Based On field in the Freight Rates and Costs Parameters (fmfrc0100m000) session.

2. The calculation engine determines the rate basis number for the shipment, load, or cluster. If the values defined for the rate basis number match those of the cluster, shipment, or load, the rate basis number is allocated to the cluster, shipment, or load.
3. The rate basis number and several other shipment, load, or cluster attributes, such as carriers or service levels, are passed on to Pricing, which uses this information to retrieve the appropriate carrier rate. See Freight rate retrieval.
4. The costs are calculated with the rate retrieved from Pricing, the traveling distance derived from the ship-from and ship-to addresses, and the total quantities of the goods to be transported.

Freight cost recalculation

In the Freight Rates and Costs Parameters (fmfrc0100m000)session, the settings of these fields control freight cost recalculation:

• Recalculation of Freight Costs
• Recalculate Load Costs until Status

If value Automatic is selected for field Transport Costing, freight costs are automatically recalculated for loads, clusters, and shipments each time they are manually changed. The calculation continues until the loads, clusters, and shipments have reached the status preceding the status that is specified in the Transport Costing field.

If value Interactive is selected, the user must confirm whether to proceed before freight cost calculation is performed.

Manual recalculation is always allowed. To manually recalculate freight costs for loads, shipments, or clusters after the load building process or the clustering process is carried out, you can activate the calculation process in the Calculate Freight Costs (fmfrc0240m000) session.

Recalculation can be useful for various reasons, such as after a recent change of the rates in the freight rate books. Before you activate the calculation process, you must select the plans, loads, shipments, or freight order clusters for which to calculate the estimated freight costs.

The Calculate Freight Costs (fmfrc0240m000) session is available on the appropriate menu of the relevant sessions. The calculation engine uses the carrier rates to determine the estimated freight costs.

Freight cost redistribution

If freight costs are recalculated or changed manually, the changed freight costs are proportionally redistributed among the shipments and shipment lines of a load. If the freight costs are recalculated or changed for a shipment line, the costs are added up for the shipment and the load.

See Negative freight costs for examples of the ways in which changed freight costs, including any negative freight costs, are redistributed within load structures.

Freight costs are also redistributed if recalculation is not allowed according to the parameter settings and the structure of a load is changed. For example, a shipment is moved to a different load. In this case, the structures of the originating load and the load to which the shipment is moved have changed and therefore, the freight costs are redistributed for both loads.

All shipments removed from load

If you remove all shipments from a load, for example by moving the shipments to other loads, LN reduces the costs of the load to 0.00. In such cases, LN does not change the total costs for the relevant plan but redistributes the costs over the loads, shipments, and shipment lines of the plan.