Nitika Sharma_301301215_INTL704-Mod-03-Activity Rate Breakpoint

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Industrial Engineering

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Jan 9, 2024

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Course Code: INTL 704 Course Name: Global Logistics Activity: Rate Breakpoints A rate breakpoint is the weight at which you receive a rate discount based on the weight of the freight. In other words, the weight where the first rate loses its prime and the next rate takes over. Formula To determine the weight break, use the following formula. X is equal to weight break A is equal to lower rate bracket (example 1M =1000) B is equal to next highest rate bracket (example 2M =2000) C is equal to freight rate relative to A D is equal to freight rate relative to B X = (B X D) / C Example 1000 2000 58.21 49.39 translates to: X = 2000 X 49.39 / 58.21 = 1696 lbs. Anything above the 1696 lbs., is the point where you enjoy a break on the rate. You can use the rate in the next weight bracket – usually a lower freight rate. © 2020 CENTENNIALCOLLEGE.CA All rights reserved. 1

INTL 704 CENTENNIAL COLLEGE Global Logistics Example To send freight from Montreal to Trois Riviera, the rate for 10,000 lbs. is $3.45/cwt and the 20,000 lb. rate is only $1.85/cwt. The rate breakpoint between 10,000 lbs. and 20,000 lbs. is 10.724 lbs. If the freight weight is higher than 10,724 lbs., it is cheaper to declare the weight of 20,000 lbs. To ship 15,000 lbs., you can chose one of two options: 1. Declare 15,000 lb and pay a freight charge of $3.45/cwt x 150 cwt = $517.50 2. Declare 20,000 lbs and pay a freight charge of $1.85/cwt x 200 cwt = $370.00 The second option saves us $147.5 and is therefore much cheaper. © 2020 CENTENNIALCOLLEGE.CA All rights reserved. 3

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