LTL: FAK Explained

FAK stands for Freight All Kinds. If a shipper has an FAK it means that they have an agreement with their carrier or service provider (3PL) that allows different items falling into multiple different freight classes to be billed and shipped at the same class. An FAK may be beneficial for shippers with several commodities shipping at multiple classes, but it doesn't always make sense. A shipper’s volume, product mix and product types (value) are all things that should be taken into account before an FAK is considered.

Let’s say a shipper has several commodities ranging from class 50 to a class 77.5. This shipper may want to consider asking for an FAK 50, which if implemented would allow all of their shipments ranging from class 50 up to a class 77.5 to be rated and billed at class 50. This would provide savings for some of their shipments. More specifically it would save them money on the shipments that had historically shipped above a class 50 and below or equal to class 77.5. And since the range in product class is relatively small (50 – 77.5) it is not unreasonable to request.

Now let's say that another shipper has several commodities ranging from class 50 up to class 500. In this case the wide range of product classes makes an FAK a somewhat unreasonable request. With capacity tight and driver shortages being the elephant in the room it has become increasingly difficult to get carriers to extend FAK's as they have done in the past. Carriers want good, dense freight that fits their network and the ltl environment, and they are currently turning away profitable business in favor of better, more profitable freight. It is a carriers market right now, and it seems it will be this way for a while.

One of the most important issues to consider before pursuing an FAK is that the carrier's domestic claims liability limits are significantly reduced with regards to the dollar amount they can be held liable for in the event that damages are incurred and found to be the fault of the carrier. In many cases the claims liability limits on domestic ltl shipments that move under an FAK are only covered at $1/lb. If the the shipper is sending out high value items they will be facing increased exposure to losing money on damaged products. They may get better rates under an FAK with their higher class items, but one damaged shipment could negate all of the savings.   
 

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