About Freight Charges

General

Freight charges correspond to the amount the customer should pay to for the transport of the goods ordered to the required delivery address. Typically the transport costs are calculated based on:

Sometimes companies use the volumetric weight, which is the weight adjusted with a factor to compensate, e.g., a low weight with a bulky volume.

Basic Data and Requirements

Delivery Terms

The delivery terms is the part of a sales contract that indicates the point at which ownership and risk of loss of merchandise passes from the seller to the buyer, including the transport obligations. Now it is possible to define per delivery terms whether the freight is charged to the customer or not, through the Calculate Freight Charge check box. This trigger the automatic freight charges calculation to the customer order line.

Transport Methods: Ship-via Codes

Depending on the transport method used, the charged amount will be higher or lower, since some methods are faster than others.

Freight Maps and Zones

Instead of defining the distance between the specific site address and the specific customer address, the zones are used to define the distance between the site and a common area where several customers are located.

A set of zones for classifying addresses is called a freight map.

Maps are different for each specific ship-via method, i.e. addresses will be handled differently if air transport is used instead of rail transport.

Zones can be defined with:

The records in the supply chain matrix represent the transport relations between a site and a customer and/or a supplier, and a customer and/or site and a site, per ship-via code. Therefore, the supply chain relations are classified in zones by following the site’s map for the specific ship-via code via through a background job for multiple records. This can be edited manually for handling exceptions to the standard rules. Even if freight information is not entered in the supply chain matrix, the relevant freight map and zone will be automatically found in the customer order or sales quotation. However, when assigning freight maps and zones for customer addresses using the Assign Freight Zones dialog box, it would be useful to make sure that freight is set up before you enter customer orders or sales quotation.

Freight Price List

Charging the customer for the freight is similar to selling a transport service:

The freight price list is the object where the pricing conditions of the transport are defined.

There are basically two pricing models:

It is possible to enter price steps for both models.

When working with price per unit, it is possible to define a minimum freight amount that will be charged per zone.

In some instances, freight can be free of charge given the condition that a customer is buying goods worth more than a predefined amount. So it is possible to define a freight-free amount per zone which is the net amount that should be exceeded in a customer order if freight charges are to be waived.

In some situations, you may need to decide a fixed amount that will be charged per delivery irrespective of the weight or volume. This amount is called the fixed delivery freight amount and it can be defined per zone in the freight price list.

On the price list it is also defined which charge type will be used on the customer order.

A price list can be valid for several sites with the only condition that they belong to the same financial company.

Any prices and amounts in a freight price list are considered as excluding tax unless the price list is defined as using price including tax. A freight price list will only be used on a sales quotation or a customer order having the same usage of price including tax. It is only possible to use price including tax when working in a company using the VAT tax regime.

Calculate Freight Charges for the Sales Quotation Line

There will be an automatic freight calculation each time a quotation line is saved, when the conditions are met. The logic works as follows:

  1. Control towards the delivery terms parameter: Calculate Freight Charge, to see if freight charges shall be calculated or not.
  2. Fetch the right price from the applicable active freight price list for the zone.
  3. Add a new charge line for freight connected to the sales part . The charge price will be the one fetched from the price list and, when working with price per unit, multiplied by the gross weight or volume of the CO line (depending on the type of price list).

Note: The wanted delivery date should have been entered for freight charges to be calculated in the sales quotation.

Freight charges will not be calculated for quotation lines that are decided as lost.

Calculating Freight Charges for the Customer Order Line

There will be an automatic freight calculation each time an order line is saved, when the conditions are met. The logic works as follows:

  1. Control towards the delivery terms parameter: Calculate Freight Charge, to see if freight charges shall be calculated or not
  2. Fetch the right price from the applicable active freight price list for the zone.
  3. Add a new charge line for freight connected to the sales part customer order line. The charge price will be the one fetched from the price list and, when working with price per unit, multiplied by the CO line’s gross weight or volume (depending on the type of price list)

When working with single occurrence addresses it is not possible to fetch the zone from the supply chain matrix relations, as such relations do not exit for a single occurrence address. In order to calculate freight for these lines, the manual function Calculate/Consolidate Freight should be run.

It is also possible to calculate freight for order lines that are delivered directly by an external supplier, and not by the order taking site. In this situation, freight maps are to be connected to suppliers and the supply chain records for the relations between supplier and customers are updated with the corresponding zones.

There are special price lists for direct delivery freight from the supplier.

Consolidating Freight Charges on the Customer Order and/or Sales Quotation

The charge price is calculated per line, for the gross weight or volume each time an order line or a quotation line is entered.

But a different price might apply when looking at the weight or volume of the whole order or quotation, when the lines are to be delivered together.

Therefore, the consolidation logic is run to calculate the prices based on the gross weight or volume of the whole order or quotation. It considers the lines that are to be delivered together that have the same:

The consolidation is run automatically at the release of the quotation and/or order or manually before or after releasing.

The price on the freight charge lines is updated with the calculated values when consolidating.

Calculating Freight Charges for the Shipment

For a particular site, you can decide whether freight charges should be applied for shipments or not. If freight charges are to be calculated for the shipment, when customer order lines are being connected to the shipment, freight charges connected to the customer order lines will be automatically removed and freight will be recalculated for the shipment. Shipment freight charges are not connected to the line. When a new line is added or removed, the existing freight charge line will be updated according to the changed weight or volume of the entire shipment. Therefore, a separate consolidation function is not required for the shipment freight charges.

Customer order lines that have been decided as free of freight charge will be considered as free of freight charge when they are connected to the shipment. When such an order line is connected to the shipment, freight charges will be updated in the same way as any other order line and a new freight charge will be created with a negative price and the relevant charge quantity to reduce the charges for freight free line.

Shipment freight charges can be invoiced by creating invoices per shipment.