When to Use FAK Rates: Timing, Triggers and Alternatives

When should you use FAK?

Freight All Kinds (FAK) is best deployed when timing and simplicity matter: when shippers need predictable costs, when shipments contain mixed commodity types that are not hazardous or specialized, and when carriers and 3PLs aim to streamline quoting and billing. Knowing the right moments and triggers helps beginners decide whether FAK is the right tool for a particular shipment or contract.

Common timing scenarios:

• Contract negotiations—FAK is often negotiated as part of annual or multi-year service agreements. If a shipper and carrier expect steady volumes with a mixed product mix, including FAK in the contract provides stability and reduces administrative overhead.
• During consolidation or consolidation launches—When a 3PL or freight forwarder begins consolidating small shipments from many shippers, FAK can simplify the pricing model used for those consolidated loads.
• Seasonal spikes and promotions—Retailers and manufacturers with variable inventories (e.g., holiday goods) use FAK to avoid reclassifying large volumes of SKU changes and to keep quoting fast under tight timelines.
• Rapid quoting needs—Sales teams offering quick quotes to customers find FAK useful because it removes the requirement to determine precise commodity class or NMFC codes at the time of quote.

Trigger events that prompt FAK use:

• High SKU variability across shipments
• Low incidence of excluded cargo types (hazmat, refrigerated, oversized)
• Need to reduce invoicing disputes and speed payment cycles
• Desire to simplify carrier procurement and benchmarking

When not to use FAK:

• Shipping hazardous materials or regulated items that require precise documentation and special handling.
• Transporting temperature-sensitive or perishable goods that require specific cold-chain equipment and monitoring.
• Moving oversized, overweight, or project cargo that needs route surveys and special equipment; those moves should be priced individually.
• When product-level profitability analysis is essential—if accurate per-item transport cost allocation is required, FAK’s aggregated nature obscures granular costs.

Short-term vs long-term use—FAK can be used both short-term (e.g., a seasonal FAK for the holiday window) and long-term (multi-year contracts). Short-term use is helpful when market conditions are volatile and shippers want quick action. Long-term use benefits operations with steady mixed volumes and where both sides seek predictable cash flow and capacity planning.

Alternatives to FAK and when they apply:

• Commodity-class or NMFC pricing—Use this when you require accurate cost allocation by SKU or when items have significant differences in density and handling.
• Spot pricing—Appropriate when shipments are irregular and the market is favorable; spot pricing can capture low-cost opportunities but lacks predictability.
• Item-specific contracts—For specialized freight, dedicated contracts that price per item or per handling requirement are more suitable than FAK.

Operational guidelines for deciding when to use FAK:

1. Assess the product mix across representative shipments—if most goods are general cargo with similar handling requirements, FAK is a good fit.
2. Identify exclusions and ensure operational systems can flag them—don’t assume FAK covers everything.
3. Model cost impacts—simulate how FAK affects unit transport costs compared to commodity pricing, especially if your mix changes seasonally.
4. Include clear contractual triggers—define when FAK will be revisited, such as volume thresholds or regulatory changes.

Practical example

A regional appliance distributor negotiates a seasonal FAK for small appliances and accessories during a promotional quarter. Large refrigerators and specialized units requiring lift-gate service are excluded and quoted separately. The FAK simplifies billing for hundreds of small shipments during the campaign and speeds up order processing.

Summary

Use FAK when simplicity, speed, and predictability are more valuable than granular cost allocation, especially for mixed, non-specialized goods. Avoid FAK for regulated, perishable, or oversized freight. The best approach is to define clear contractual boundaries and to periodically reassess whether FAK remains the right choice as product mixes and market conditions evolve.