A Freight of All Kinds agreement (FAK) allows you to ship and bill multiple items under a single class. This helps to streamline your shipping process if you are shipping multiple different classed products. FAK can be beneficial to include in your rates, but there are shortcomings that you should be aware of, read on for steps to ensure you are implementing a successful FAK strategy.
Ensure your base class is benefitting you.
This one is pretty obvious. If you usually are shipping items at class 100 or below you wouldn’t want your FAK to rate above class 100. It might save you money on the rare occurrence you ship a higher class but it’s hurting you in the long run. An FAK base rate of 50 would be much more beneficial to you.
Make sure your agreement is up to date.
One common downfall of having an FAK strategy implemented is that a shipper will never address it again once it is in place. This kind of ties back to the first point-- to ensure you are being benefitted by the FAK strategy that you have in place. An FAK strategy that was once good for you, may end up costing you more if you fail to analyze if your weighted class changes. This is much easier to do when all your shipping data is in one place, like on the Freightview platform.
Be aware how FAK can affect your liability coverage.
Often a carrier will lower their liability coverage if you implement an FAK. For example, without FAK a shipment at class 100 may be covered at $25/cwt (hundredweight). That same shipment under a FAK may be covered at $10/cwt. The hope is that you will never have a cargo claim, but it does happen, and liability coverage is an important puzzle piece to consider and ask about when negotiating an FAK strategy.
You shouldn’t be deterred from using an FAK strategy, just be sure to frequently address your current strategy with your carrier representative, understand how your strategy affects your liability coverage and ensure you are getting the most value from your carrier.
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